Breakfast | US CPI data unexpectedly slows down, three major indices rise, the seven tech giants lead the gains, Tesla rises over 3%

Market Overview

The US CPI unexpectedly cooled, strengthening rate cut trades, coupled with Micron's earnings report boosting sentiment, the S&P 500 rose nearly 0.8%, ending a four-day losing streak. On Friday, the triple witching day, the largest options expiration in history will occur. European stocks hit a record closing high.

The seven tech giants led the gains, with Tesla leading the way, up 3.45%. Micron surged about 12%. Trump's executive order lowered the regulatory level of cannabis, causing cannabis stocks to plummet. Trump Media soared over 40%.

The dollar initially fell and then rose during the day, ultimately gaining slightly. The renminbi strengthened again after a day, approaching 7.03 after the US CPI.

US Treasury yields fell across the board, with the 10-year yield dropping 4.5 basis points after the CPI data, nearing 4.1%.

Bitcoin failed to break higher again, dropping 5.5% from its daily high. Ethereum briefly fell below $2800, down over 7% from its daily high.

Gold fluctuated throughout the day with risk assets, ultimately closing near flat, while silver declined significantly, falling near the $65 support level. Crude oil hovered at low levels, with WTI maintaining around $56, as the mid-term expectation of oversupply remains a major suppressive factor.

During the Asian session, the ChiNext index fell over 2%, with Mu Xi declining, while China International Capital Corporation, Dongxing Securities, and Xinda Securities surged. Military and storage chip stocks rose in the afternoon, and Hong Kong stocks rebounded in the afternoon, with coking coal and coke futures rising over 5%, and palladium hitting the limit up.

Key News

Wu Qing attended the establishment meeting of the Academic Committee of the China Capital Market Society and held an expert seminar on the "14th Five-Year" plan for the capital market.

Trump: The next Federal Reserve chairman must be a “super dove,” and the candidate will be announced soon. Trump praised Waller and Bowman.

US inflation unexpectedly slowed, with November core CPI rising 2.6% year-on-year, the lowest since 2021. The most favored candidate for Federal Reserve chairman, Hassett: The CPI report is shockingly good, and the Federal Reserve has a lot of room to cut rates. However, economists doubt that the government shutdown distorted the data, with some pointing out clear errors.

The number of initial jobless claims in the US last week fell to 224,000, reversing the previous surge trend.

In October, Japan and the UK increased their holdings of US Treasuries by over $10 billion, while China's holdings decreased, and Canada's dropped significantly.

The European Central Bank remained on hold for the fourth consecutive time, reiterating that inflation will return to the 2% target in the medium term, without providing clear easing guidance. Lagarde hinted that the ECB is not in a hurry to act: the policy is in a favorable position, with no preset interest rate path, and all options should be considered. Reports indicate that the rate cut cycle is very likely over.

The Bank of England “hawkishly” cut rates by 25 basis points, narrowly passing 5 to 4, stating that further judgments on easing will be more difficult.

Germany unprecedentedly raised its bond issuance scale for next year to €512 billion, providing funding for infrastructure and defense

Strengthening AI programming capabilities to compete with Google! OpenAI has released GPT-5.2-Codex, mastering both software engineering and cybersecurity. A new AI bullet is coming! Reports indicate that OpenAI is exploring “tens of billions or even $100 billion in financing.”

Codenamed “TorchTPU”! Google and Meta are collaborating to replicate CUDA, further threatening NVIDIA. Meta is reported to release new image and video AI models in the first half of next year, researching and developing world models.

Trump Media Group surged over 40%, as the company plans to acquire the fusion company TAE, with plans to start construction of a fusion power plant next year.

Market Report

US and European Stock Markets: The S&P 500 rose 0.79%, closing at 6774.76 points. The Dow Jones increased by 0.14%, closing at 47951.85 points. The Nasdaq rose 1.38%, closing at 23006.361 points. The European STOXX 600 index closed up 0.96%, at 585.35 points, setting a record closing high.

A-shares: The Shanghai Composite Index closed at 3876.37 points, up 0.16%. The Shenzhen Component Index closed at 13053.97 points, down 1.29%. The ChiNext Index closed at 3107.06 points, down 2.17%.

Bond Market: The yield on the US 10-year Treasury bond fell by 3.90 basis points, to 4.1139%. The yield on the 2-year Treasury bond fell by 2.50 basis points, to 3.4579%.

Commodities: COMEX gold futures fell 0.25%, to $4362.80 per ounce. COMEX silver futures fell 2.28%, to $65.375 per ounce. WTI January crude oil futures rose 0.38%, to $56.15 per barrel. Brent February crude oil futures closed at $59.82 per barrel.

News Details

Global Highlights

Wu Qing attended the establishment meeting of the Academic Committee of the China Capital Market Society and held an expert seminar on the “14th Five-Year Plan” for the capital market. At the meeting, participants proposed forward-looking and constructive opinions and suggestions on how to implement the capital market “14th Five-Year Plan,” mainly including further improving the inclusiveness and adaptability of the issuance, listing, and trading system to attract more high-quality enterprises in new productive sectors to go public; expanding the supply of patient capital, long-term capital, and strategic capital; continuously activating the mergers and acquisitions market, strictly normalizing delisting; promoting the governance and regulation of artificial intelligence applications in the capital market; strictly cracking down on financial fraud, and strengthening investor protection and education, etc. Trump declares: The next Federal Reserve Chair must be a "super dove", will announce the candidate soon. Trump made it clear that the next Federal Reserve Chair must be someone who believes in "significant interest rate cuts," stating that "mortgage rates will decline further." Trump had previously called for rates to be lowered to a "crisis level" of 1%. He believes the next Federal Reserve Chair should consult with him on interest rate settings.

• Trump praises Waller and Bowman, says he will announce the Federal Reserve Chair candidate in the coming weeks. Trump stated that he is currently interviewing three to four candidates for the Federal Reserve Chair position and expects to decide soon on who will succeed Powell. "I think each of them would be a good choice." When asked about Federal Reserve Governor Waller, Trump mentioned that they would meet again on Wednesday and praised him as outstanding. "I mean, he has been there for a long time."

U.S. inflation unexpectedly slows, November core CPI rises 2.6% year-on-year, the lowest since 2021. The Bureau of Labor Statistics stated that due to the federal government shutdown, the agency was unable to collect most of the price data for October. This data gap limited the Bureau's ability to calculate broader inflation indicators and the month-on-month changes for many key categories in November. The Bureau reported that the core CPI rose 0.159% over the two months ending in November. Analysts believe that despite data noise and technical disruptions, the trend of cooling inflation provides hope for the market and strengthens the discussion space for future rate cuts.

• Don't celebrate too early about U.S. CPI cooling: Economists suspect government shutdown caused data distortion, some point out clear errors. Several economists pointed out that housing prices, a major component of CPI, remained basically flat over the two months, raising doubts about the entire estimate. "New Federal Reserve News" cited economist Sharif's criticism, stating that the CPI data suggests that officials actually assumed that rents and owners' equivalent rent (OER) for October were zero, which is fundamentally incorrect and "completely unacceptable." Sharif believes that the missing rental data for October may have artificially suppressed the November inflation data. Other economists believe that it may be necessary to wait until January to confirm the inflation situation with the release of December data.
• Top candidate for Federal Reserve Chair Hassett: CPI report is shockingly good, the Federal Reserve has plenty of room to cut rates. White House economic advisor Kevin Hassett welcomed the latest consumer price index (CPI) report on Thursday He stated, "I'm not saying we can declare victory on the price issue yet, but this CPI report is shockingly good. Wage growth is outpacing price increases, and American taxpayers will receive substantial refunds next year, while the government will also help drive down mortgage rates. The Federal Reserve has plenty of room to cut interest rates."

Last week, the number of initial jobless claims in the U.S. fell to 224,000, reversing the previous surge trend. Due to seasonal disturbances from the Thanksgiving holiday, the number of initial jobless claims in the U.S. fell to 224,000, reversing the abnormal rise from the previous week, and overall remains within the consistently low range of the past few years, with no significant signs of deterioration in the labor market. Analysts believe that companies remain cautious in their hiring intentions, and the uncertainty brought by Trump's tariff policies is suppressing expansion plans.

In October, Japan and the UK increased their holdings of U.S. Treasury bonds by over $10 billion, while China's holdings decreased, and Canada saw a significant drop. In October, the total amount of U.S. Treasury bonds held by foreign entities decreased by $5.8 billion to $9.24 trillion. Japan's holdings of U.S. Treasury bonds increased by $10.7 billion in October, reaching $1.2 trillion, the highest level since July 2022. Industry insiders pointed out that the latest data further indicates that there is almost no evidence supporting the so-called sell-off of U.S. securities in the fixed income space; it is more like a hedge against the U.S.

The European Central Bank has kept rates unchanged for the fourth consecutive time, reiterating that inflation will return to the 2% target in the medium term, without providing clear easing guidance. Lagarde hinted that the ECB is not in a hurry to act: the policy is in a favorable position, and no preset interest rate path has been established, all options should be considered. Reports: ECB officials indicate that the rate-cutting cycle is very likely over.

• The European Central Bank has maintained interest rates unchanged for the fourth consecutive time, with the deposit rate at 2%, and reiterated that inflation will return to the 2% target in the medium term. Due to increased economic resilience, the central bank did not provide clear easing guidance, diverging from rate cuts in the UK and the U.S. The market has begun to reduce rate cut bets, instead pricing in the possibility of rate hikes as early as 2026, with the euro strengthening slightly.
• Lagarde stated that the central bank's interest rate policy is in a "favorable position" and "does not mean we are static," and will continue to make decisions based on data at successive meetings; the central bank did not discuss rate hikes or cuts on Thursday, and cannot provide forward guidance given the current uncertainty; the eurozone economy is resilient, wages unexpectedly rising but expected to slow down; there is "no preference" for the next president candidate, and ECB Executive Board member Schnabel is one of the excellent candidates, urging experts to reassess whether the current executive board member is qualified to run for president; AI may influence neutral rates by increasing productivity, but it is currently uncertain, and it is too early to judge the economic impact of AI
• Based on the latest assessment of economic growth and inflation prospects, European Central Bank officials expect that the current interest rate cut cycle is likely over. Unless there is another significant external shock, after cutting rates eight times from a peak of 4%, the deposit rate should be able to maintain at 2%. However, officials believe it is still too early to talk about interest rate hikes.

Bank of England's "hawkish" 25 basis point rate cut narrowly passes 5 to 4, stating that further easing will be more difficult to judge. Notably, the 5 to 4 voting result highlights policymakers' uncertainty about the future path. The bank's forward guidance is also more cautious. The central bank stated that the extent of further easing will depend on the evolution of inflation prospects and emphasized that "judgments around further easing will become more challenging." Currently, traders are reducing bets on Bank of England rate cuts, expecting a 39 basis point cut next year.

Germany's unprecedented move, raising next year's bond issuance to €512 billion, to fund infrastructure and defense. Germany plans to implement the largest borrowing in history, with federal debt issuance increasing to a record €512 billion next year to support infrastructure and defense spending and revive the sluggish economy. The government is also adjusting the maturity structure and issuing 20-year bonds for the first time. Despite a steepening yield curve and pressure on long-term demand, the low debt ratio still provides space for Germany to expand its fiscal policy.

Strengthening AI programming capabilities to compete with Google! OpenAI releases GPT-5.2-Codex, excelling in software engineering and cybersecurity. GPT-5.2-Codex-Max is touted as the most advanced intelligent coding model, launched on Thursday for paid ChatGPT users. According to OpenAI, the new model achieved a SWE-Bench Pro test accuracy of 56.4%, higher than GPT-5.2's 55.6%, with significant improvements in cybersecurity capabilities, although it has not yet reached the "high" level. The company is preparing to cross this threshold. Altman stated that the model will have a net benefit for cybersecurity, and we are in the "real impact phase," beginning to explore credible access programs for defensive cybersecurity work. OpenAI is piloting a credible access program inviting professionals.

AI's new bullet is coming! Reports say OpenAI is exploring "tens of billions or even $100 billion in financing". According to The Information, OpenAI is seeking up to $100 billion in new financing and is approaching investors with a valuation of about $750 billion, which is approximately 50% higher than its valuation during financing last October. In addition to raising over $60 billion from investors such as Thrive Capital and SoftBank, the company has begun to raise more funds Amazon is in talks to invest $10 billion or more in the company.

Code name "TorchTPU"! Google collaborates with Meta to replicate CUDA, further threatening Nvidia. Google is working closely with Meta to advance this plan, with Meta, as the creator and manager of PyTorch, hoping to enhance its negotiating leverage against Nvidia by reducing inference costs and diversifying AI infrastructure. Google is also considering open-sourcing some software to accelerate customer adoption. If the TorchTPU plan succeeds, it will significantly lower the switching costs for companies looking for alternatives to Nvidia GPUs.

Meta is reported to release new image and video AI models in the first half of next year, researching and developing world models. Media reports indicate that Meta is developing a next-generation image and video AI model codenamed Mango, as well as a large language model codenamed Avocado, which focuses on enhancing programming capabilities. Last week, it was reported that Meta is developing Avocado, which may adopt a proprietary rather than open-source model, symbolizing a shift from open-source models to profit models.

Trump Media Group surges over 40%, company plans to acquire fusion company TAE, aiming to start construction of a fusion power plant next year. Trump Media Technology Group will acquire fusion energy company TAE Technologies in an all-stock transaction, with a deal valuation exceeding $6 billion, and shareholders of both parties will hold about 50% of the new company. After the merger, the company aims for utility-scale fusion power generation, planning to begin site selection and construction of fusion power plants in 2026, directly addressing the energy demand brought by AI computing power.

Research Report Highlights

Data center capital expenditures are expected to grow over 50% next year! JP Morgan: AI-related stock earnings expectations are underestimated. JP Morgan expects that the growth rate of data center capital expenditures will exceed 50% in 2026, significantly up from the previous expectation of 30%, which means that more than $150 billion in incremental spending will be added next year, while Wall Street's forecasts have not accounted for the upward potential of AI revenues from capital expenditures.

BofA's 2026 semiconductor outlook: AI infrastructure upgrades are a key midpoint, chip sales are expected to break the $1 trillion mark for the first time. BofA believes that although AI investment returns and cash flows from hyperscale cloud service providers are under stricter scrutiny, which may lead to stock price volatility, faster-updating large language model builders and AI factories serving enterprise and government clients will offset this impact. Semiconductor equipment is the "unsung hero" of AI and reshoring trends, with the report predicting that wafer fabrication equipment (WFE) sales will achieve nearly double-digit year-on-year growth by 2026 After experiencing a record rise in silver, analysts suggest: It's time to take profits. Analysts believe that the current rise in silver shows "impulsive" characteristics, deviating from economic fundamentals, with the U.S. deficit unchanged and other hedging assets losing direction, making silver's performance isolated. Historical data shows that assets that double in a single year usually have poor returns the following year. Technically, the relative strength index has reached 68, close to the overbought zone, and moving averages indicate an overbought state. Investors are advised to take profits and wait for a pullback before re-entering, while hedging demanders can turn to gold.

Domestic Macro

Ministry of Commerce responds: After 16 years, China again implements export license management for steel. He Yadong, spokesperson for the Ministry of Commerce, stated that recently, the Ministry of Commerce and the General Administration of Customs jointly issued a notice to implement export license management for steel products, mainly involving 300 customs codes related to steel. The relevant management follows the requirements of World Trade Organization rules and does not involve restrictions on export quantities or business qualifications.

Ministry of Industry and Information Technology: Will further strengthen capacity regulation in the photovoltaic industry. The Ministry of Industry and Information Technology stated that by 2026, governance in the photovoltaic industry will enter a critical period, further strengthening capacity regulation and enhancing management of photovoltaic manufacturing projects, promoting the orderly exit of backward capacity through market-oriented and legal means, and accelerating the dynamic balance of capacity.

Starting Thursday, Hainan Island will close its borders! What changes for tourism and shopping? On December 18, Hainan Island will implement a border closure operation, adopting a policy of "open on the first line, controlled on the second line, and free within the island." The tax items for "zero tariff" goods will increase from 21% to 74%, covering 6,600 tax items. The closure does not mean the island is closed; personnel can enter and exit without additional documents, and 86 countries are visa-free for entry. The scope of duty-free shopping for departing the island has expanded to include pet supplies, small appliances, etc., with the shopping age adjusted to 18 years old.

Domestic Companies/Industries

Doubao Large Model 1.8 officially released, with stronger multimodal agent capabilities, Doubao's daily usage exceeds 50 trillion, and the cost-saving plan launched has a reduction of 47%. Doubao Large Model 1.8 has stronger multimodal agent capabilities, with a 256K ultra-long context allowing it to handle more complex information and excel at managing complex multi-step tasks. The "AI Saving Plan" officially launched by Volcano Engine covers Doubao Large Model, Doubao video, and image creation models, as well as third-party open-source large models, comprehensively optimizing user invocation costs, with a maximum saving of 47%.

Apple announces: significantly reduces the "Apple tax" in Japan, experts say: China is treated differently, with a higher commission rate than the U.S., Europe, Japan, and South Korea On December 17, Apple announced that it has opened third-party app stores and external payment channels for the iPhone in the Japanese market. This means Japan has become the first country in Asia to break Apple's dual monopoly on in-app purchases (IAP) and app distribution. As of now, among Apple's top four global markets (the United States, the European Union, China, and Japan), only China is still experiencing Apple's dual monopoly.

Overseas Macro

The mystery of "liquidity tightening" in the U.S. market revealed? JP Morgan withdraws nearly $350 billion from the Federal Reserve account to invest in U.S. Treasuries. JP Morgan is reallocating $350 billion in reserves from its Federal Reserve account to U.S. Treasuries, aiming to lock in yields before interest rate cuts. The scale of this move is large enough to offset changes in other banks across the U.S., leading to a significant tightening of system liquidity. Some market analysts compare this move to the triggers of the 2019 repo crisis, believing it could again become a catalyst for instability in the financial system and force the Federal Reserve to adopt more accommodative policies.

Understanding the "Trump Account": If you give newborns $1,000 to buy stocks, how much can it grow in 18 years? The "Trump Account" plan aims to provide newborns with $1,000 to invest in U.S. stocks to accumulate wealth. Based on an average annual growth rate of 10.5% for the S&P index, this amount could grow to about $5,800 by the time the child turns 18, potentially reaching around $600,000 at retirement; if families add annual investments, the account value could exceed $300,000 by age 18. The plan faces fairness concerns due to insufficient tax incentives and the potential exclusion of low-income families.

Venezuela's oil exports face "physical cutoff" by U.S. military: land storage capacity only lasts 5 days, million-barrel daily production at risk of shutdown. Trump has ordered a de facto maritime blockade against Venezuela, with the U.S. military deploying extensively in the Caribbean, intercepting tankers and nearly halting oil exports. Land storage capacity is down to about 5 days, and the lack of diluents poses a risk of shutting down million-barrel daily production. Analysts believe this "physical cutoff" exhibits characteristics of an act of war, significantly intensifying the financial and survival pressures on Maduro's regime.

Overseas Companies

Micron conference call: Good days are still ahead! CEO states that HBM is sold out for 2026, signing "unprecedented" long-term contracts. Contrary to market concerns about "slowing AI demand," Micron's CEO stated that HBM capacity for 2026 is not only sold out but has also been locked in. More importantly, Micron warned that the entire industry is facing a "structural shortage," currently only able to meet about half to two-thirds of core customer order demands. Meanwhile, the company is negotiating a "historic," more binding, and specifically committed multi-year supply contract with customers

• Wall Street comments on Micron's financial report: Performance guidance is too "explosive," but the market is concerned about next year's HBM price pullback. Micron's financial report and guidance are "explosive," with revenue and gross margin significantly exceeding expectations. Morgan Stanley stated that, aside from NVIDIA, this could be the largest revenue and net profit guidance upgrade in the history of the U.S. semiconductor industry. Although AI demand is expected to keep supply and demand tight until 2026, Wall Street is worried that competitors' capacity releases next year may trigger a pullback in HBM prices.

ChatGPT's App Store moment has truly arrived! ChatGPT has officially opened its application ecosystem, allowing developers to submit apps to the official app directory, where users can directly search and use them in chats. OpenAI provides a complete Apps SDK toolchain to lower development barriers, requiring applications to focus on specific needs and provide immediate value. The platform offers a one-stop submission and review management system and explores monetization methods for developers.

Controversial yet approved: Michigan grants power supply for Oracle and OpenAI's super data center. Regulatory authorities in Michigan have approved DTE's request to provide power support for the large data center development project planned by Oracle and OpenAI. DTE had previously requested expedited approval for its power supply plan to support the facility in Saline, which costs billions of dollars and has a capacity of 1.4 gigawatts. Before the vote, the chairman of the Michigan Public Service Commission was repeatedly interrupted by opponents of the data center project.

Trump's executive order lowers marijuana's regulatory classification, investors "sell the news," leading to a sharp decline in cannabis stocks. According to the executive order, marijuana will be downgraded from a Schedule I controlled substance to Schedule III, on par with ketamine. Additionally, the order authorizes the initiation of a pilot program allowing U.S. federal health insurance to reimburse CBD (cannabidiol, a non-psychoactive cannabis compound) products for patients with cancer and other conditions. This health insurance plan is expected to launch next year. Cannabis stocks generally fell sharply, with the ETF CNBS dropping nearly 16%.

EU relaxes fuel vehicle regulations, but can automakers go back? Hundreds of billions of euros already invested, the endgame of electrification is hard to change. The EU has proposed to abandon the hard deadline of a complete ban on the sale of fuel vehicles by 2035, providing traditional automakers with more time to sell hybrid vehicles. This policy shift is seen as a compromise to the industry's current situation. However, analysts point out that considering the hundreds of billions of euros automakers have already invested in electrification, this policy adjustment may provide short-term breathing space but does not change the long-term capital logic and inevitable trend of the automotive industry's transition to electrification Eli Lilly's groundbreaking oral weight loss drug trial makes new progress: Effective maintenance of weight loss results after switching from injection to oral, application submitted to FDA for market approval. Eli Lilly's late-stage trial of the oral GLP-1 weight loss drug orforglipron confirmed that patients can effectively maintain weight loss after switching from Eli Lilly's Zepbound or Novo Nordisk's Wegovy injection to the oral drug orforglipron, alleviating the core issue of rebound after stopping injections. The company has submitted a market approval application to the FDA and received priority review. With the advantage of "needle-free" administration, Eli Lilly is expected to capture a share of the existing market for oral weight loss drugs from Novo Nordisk.

Today's News Preview

The 8th "Alpha Summit."

Japan's November CPI.

Germany and France's November PPI.

U.S. December University of Michigan consumer confidence and inflation expectations.

U.S. November existing home sales.

The Bank of Japan announces its interest rate decision, and Governor Ueda Kazuo holds a press conference.

Russian President Putin holds an annual press conference.

Moore Threads' first developer conference will unveil the next-generation GPU architecture.