To The Moon

I. Performance and Valuation of Global Equity Indices

Data Source: Bloomberg, Complied by Tiger Brokers

II. Key Market Themes

i. Biden Administration Proposes Stricter Chip Export Ban: Could the Tech Industry Face Deep Impacts?

• Last week, Bloomberg reported, citing insiders, that the Biden administration plans to introduce further AI chip export restrictions before leaving office on January 20. According to rumors, the new regulations would categorize countries and regions into three tiers:

• Tier 1: Includes major U.S. allies such as Germany, Japan, and the Netherlands. These countries would face almost no restrictions on acquiring U.S.-exported AI chips.

• Tier 2: Covers most countries and regions worldwide. These would face aggregate computational power limits at a country or regional level, and raising these limits would require U.S. government approval after meeting security standards.

• Tier 3: Includes mainland China, Russia, and others, which might face a complete ban on importing U.S. AI chips.

• Following the announcement, companies such as Nvidia $英伟达(NVDA)$ , Amazon $亚马逊(AMZN)$, Microsoft $微软(MSFT)$, and Meta $Meta Platforms, Inc.(META)$ expressed opposition and skepticism. They argued that such measures might fail to mitigate misuse risks while threatening economic growth and the U.S.'s technological leadership. Nvidia’s latest financial report showed that the U.S. and Taiwan contribute approximately 60% of its revenue, with the remaining 40% directly or indirectly tied to mainland China. We believe that implementing this ban in full will be challenging. However, if strictly enforced, it could significantly impact U.S. chipmakers, including Nvidia.

Data Source: Wind, Complied by Tiger Brokers

ii. U.S. Economic Data Strengthens, Rate Cut Hopes Fade—Is a Market Correction Imminent?

• Recently, core economic data for December in the U.S. has been released, and its stronger-than-expected performance has shocked markets once again. The services PMI recorded 54.1, exceeding both prior readings and expectations. Non-farm payrolls increased by 256,000 in December, matching 2023’s highs and significantly surpassing forecasts. Meanwhile, the latest unemployment rate dropped to 4.1%, also below prior readings and expectations.

• As a result, market expectations for Federal Reserve rate cuts have been significantly reduced. Current pricing suggests only one rate cut in the second half of 2025, while some institutions even speculate that the Fed’s next move might be a rate hike rather than a cut. Simultaneously, U.S. Treasury yields have surged, with 30-year yields briefly exceeding the 5% threshold. Conversely, disappointment over rate cuts has led to a sharp sell-off in U.S. equities, especially in the tech sector.

Data Source: CME Group, Complied by Tiger Brokers

Data Source: CME Group, Complied by Tiger Brokers

• Current market sentiment resembles that of September 2024 but represents the opposite extreme. Back then, even minor downturns sparked recession fears, whereas now strong economic data raises concerns about further rate hikes. While recent economic data has been robust overall, some vulnerabilities remain. For instance, wage growth has slowed, and the University of Michigan Consumer Sentiment Index broke its six-month streak of gains.

• Additionally, Federal Reserve minutes revealed that many officials noted “consumers are increasingly price-sensitive and prefer discounted goods, making companies more cautious about raising prices.” We believe that absent significant external changes, the Fed is unlikely to resume rate hikes, opting instead for a “wait and see” approach to balance risks. In the medium term, the market seems overvalued. The last time 30-year Treasury yields exceeded 5% was in Q4 2023, coinciding with peak rate hikes, whereas current inflation levels are significantly lower. However, in the short term, further upward pressure cannot be ruled out, particularly with the major uncertainty of Trump taking office next week.

Data Source: Bloomberg, Complied by Tiger Brokers

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