① The Federal Reserve's September interest rate cut may not prevent the risk of the US economy entering a recession
The official website of the Federal Reserve released the latest minutes of its discount rate meeting on Tuesday, which showed that board members of the Chicago Fed and the New York Fed had voted in July to lower the discount rate by 25 basis points. According to the FedWatch tool data from the Chicago Mercantile Exchange, the probability of a 25 basis point rate cut in September is 65.5%, and the probability of a 50 basis point rate cut is 34.5%. But the Federal Reserve's long-term maintenance of interest rates at historic highs has put enormous pressure on the US economy. UBS raised the probability of economic recession in the United States from 20% to 25%. The survey results of the Federal Reserve of Dallas, Richmond and Philadelphia in the United States showed that Americans began to worry that the economic recession would hit the United States, and the relevant indicators of the economic outlook were declining, even falling into the shrinking range. At present, various data indicate that consumption is gradually falling into a slump, with US consumer credit increasing by $8.934 billion in June, lower than the expected $10 billion and far below the revised May data of $13.9 billion. It is worth mentioning that US revolving credit (credit card debt) unexpectedly fell by $1.7 billion in June, marking the largest decline since the collapse of the pandemic. In addition, the average interest rate of credit card accounts holding interest in the second quarter reached a new high of 22.76%. The personal savings rate in the United States has plummeted from over 5% to 3.4%, the lowest level since 2022, as consumers increasingly lack real cash. At the same time, the US treasury bond began to be issued at an accelerated pace. According to the June plan of the Congressional Budget Office, the deficit in fiscal year 2024 will be increased by 408 billion US dollars, and the annual deficit will reach 1.9 trillion US dollars. The accelerated issuance of US treasury bond will further extract market liquidity and deepen US financial risks.
Chartered Financial Analyst Zhou Chunzhe: Even if the Federal Reserve starts cutting interest rates in September, there will still be a process of transmission from the rate cuts to the real economy. It takes at least 3-6 months for companies to see interest rate cuts, expand production, and recruit new positions until employees actually receive their wages for consumption. The impact of high interest rates on consumption has entered a vicious cycle, and reversing this cycle will take time. In addition, interest rate cuts cannot immediately alleviate the liquidity crisis in the US financial market. At the same time, balance sheet expansion must be added to temporarily alleviate the liquidity crisis in US bonds and delay the occurrence of the US financial crisis.
② Nvidia's performance is excellent, but its revenue outlook falls short of the most optimistic expectations. The production of the new Blackwell chip is facing obstacles
Nvidia's second quarter financial report for the fiscal year 2025 ending on July 30 showed revenue of $30.04 billion, a year-on-year increase of 122% and a month on month increase of 15%, setting a historical record; Net profit of 16.599 billion US dollars, a year-on-year increase of 168% and a month on month increase of 12%; Non GAAP adjusted net profit was $16.952 billion, a year-on-year increase of 152% and a month on month increase of 11%. The company expects its third quarter revenue to reach approximately 32.5 billion US dollars. Although analysts have an average expectation of $31.9 billion, the high-end range is expected to reach $37.9 billion. The company also stated that its highly anticipated new Blackwell chip encountered difficulties in the production process, causing the stock to fall after hours. After rising 239% in 2023, the stock has more than doubled as of Wednesday's close this year. Nvidia is the best performing stock in the S&P 500 index this year, with an increase exceeding all other semiconductor stocks. The company's market value exceeds $3 trillion, almost equivalent to the total market value of the top 10 chip manufacturers ranked behind it.
Chartered Financial Analyst Zhou Chunzhe: The decline in Nvidia's stock price after the announcement of its performance is mainly due to the fact that its performance guidance for the next fiscal quarter did not meet the most optimistic analyst expectations. About 40% of Nvidia's revenue comes from large data center operators, such as Google and Meta Platforms under Alphabet, which are investing billions of dollars in artificial intelligence infrastructure. Although Meta and other companies increased their capital expenditure budget in this fiscal quarter, people are worried that the number of infrastructure being laid out exceeds the current demand, which will cause large data operators to adjust their capital expenditure later. In addition, although Nvidia has already sent Blackwell samples to partners and customers and plans to start mass production in the fourth quarter, with expected sales of billions of dollars, various problems may arise during the actual production process, and whether they can be delivered on time will also greatly affect performance and stock price.
Guodu Securities Investment Advisor Chen Zhaoling: Nvidia's latest financial report may affect the overall expectations of the chip industry, and the AI computing power sector of A-shares has recently undergone adjustments.
③ IDC raises full year global smartphone shipment forecast, Apple enters Indian streaming market
International Data Corporation (IDC) announced on Tuesday that as consumer electronics demand recovers, generative artificial intelligence features are attracting more buyers, resulting in strong growth in smartphone shipments in the first half of the year. They have raised their forecast for global shipments this year from a year-on-year increase of 4% to a year-on-year increase of 5.8%, reaching 1.23 billion units. Global smartphone shipments increased by 12% year-on-year in the first quarter of this year and 9% year-on-year in the second quarter, which makes people more optimistic about the prospects for the second half of this year. In addition, Apple will hold a new product launch event in the early morning of September 10th Beijing time, and is expected to launch a new iPhone. The generative artificial intelligence function is expected to become a major highlight. IDC predicts that thanks to Apple Intelligence, the growth trajectory of Apple phone sales will improve by 2025, with an annual growth rate of 4%. In addition, Apple is partnering with India's second-largest telecommunications operator, Bharti Telecom, to enter the Indian streaming market. Apple TV+primarily offers English content and holds a place in India's media and entertainment market, which amounts to a total of $28 billion. Its main competitors include Netflix, Prime Video under Amazon, Disney+Hotstar tailored for the Indian market, and JioCinema under Indian billionaire Mukesh Ambani.
Chartered Financial Analyst Zhou Chunzhe: Whether Apple's performance and stock price can reach new highs depends on whether the highly anticipated sales expectations can be met. In the situation where imaging and other functions have been "internalized" to the extreme, mobile phone manufacturers do indeed need some new features to attract users, which makes AI functions the next focus of competition for mobile phone manufacturers both domestically and internationally. The previously released Google Pixel 9 AI features are all super practical, and Google may be the mobile phone company that has gone the farthest in the AI field. From the cloud to the end, Google has provided a variety of different AI functions. Therefore, the sales of Apple's AI phones will also be challenged by domestic and foreign mobile phone manufacturers. The cooperation between Apple and Battier Telecom enables this American tech giant's streaming services to reach numerous online entertainment consumers in the world's most populous country, which will also become one of the new growth points for Apple's performance.
Guodu Securities Investment Advisor Chen Zhaoling: Terminal and other products are entering an iteration period, and AI empowerment is the main logic. You can continue to pay attention to opportunities in the A-share consumer electronics sector.
④ Berkshire Hathaway's market value exceeds $1 trillion, continuing to reduce holdings in Bank of America
Berkshire Hathaway's market value surpassed $1 trillion overnight for the first time, making it the seventh publicly traded company in the US stock market with a total market value exceeding $1 trillion, and the only non tech company. It presented a gift in advance for Chairman Buffett's birthday on Friday. Since the beginning of this year, Berkshire Hathaway's stock price has risen by 28%, and its total market value has increased by about $218 billion, which is more than the total market value of iconic companies in various industries in the United States such as American Express, McDonald's, Cisco Systems, and Wells Fargo. Buffett holds approximately 15% of the company's shares, worth $145 billion. Berkshire Hathaway recently disclosed in a document submitted to the U.S. Securities and Exchange Commission that after reducing its shareholding in Apple and Bank of America, the company significantly increased its holdings of U.S. short-term treasury bond bonds. At present, the company has more bonds than the Federal Reserve. Buffett sold approximately 24.66 million shares of Bank of America again between August 23rd and 27th, cashing out $982 million. Since mid July this year, its cumulative reduction in holdings of Bank of America stocks has reached around 5.4 billion US dollars. So far, Berkshire Hathaway's holdings of Bank of America stocks have dropped to 904 million shares; Based on the overnight closing price of $39.96 per share, the holding market value is approximately $36.124 billion. Some analysts believe that according to previous habits, Buffett's current round of reducing holdings may not have ended yet, and he will continue to sell in the future. But some analysts also suggest that this reduction in holdings should be a normal operation for them to adjust their positions, similar to the previous reduction in holdings of Apple, by cashing out their holdings and making subsequent investments or repurchases.
Chartered Financial Analyst Zhou Chunzhe: Although several investment banks have raised their target prices after Bank of America's performance announcement, Buffett's continued reduction of holdings in Bank of America demonstrates his cautious attitude. This operation, contrary to the generally optimistic sentiment, once again reflects Buffett's consistent investment strategy of taking partial profit at the high point of positive news to avoid possible future risks. Buffett's investment style is to "buy excellent companies at a reasonable price". Even if the company's growth prospects are still promising, if the valuation exceeds his reasonable range, he will not hesitate to choose profit taking and will not pursue high prices, even if he loses the investment returns contributed by the stock price hitting a new high. Therefore, Buffett's steady investment style highlights his outstanding investment management ability when the economy is facing the risk of recession, and Berkshire Hathaway's stock price has also surpassed the trillion mark for the first time.
⑤ Will Costco split its stock? On Tuesday, the stock price exceeded $900 and the market value exceeded $400 billion
Although Costco's stock price fell 2.29% overnight to $888.05, it closed at $908.9 on Tuesday. This year, several consumer companies have carried out stock splits, including Wal Mart and Williams Sonoma. Costco may become the next company to undergo a stock split due to its rising stock price and affordability for retail investors. Institutions claim that Costco may join the wave of stock splits to provide investors with new opportunities. Oppenheimer analyst Parikh believes that Costco has not undergone a stock split since 2000, and now may be the time, especially considering its stock price exceeds $900. In addition, Costco's new management team may be more willing to undergo changes. Parikh also pointed out that Costco benefits from consumers' mentality of seeking cost-effective products in an environment of inflation and high interest rates, which helps to improve the company's performance. Although analysts are generally optimistic about Costco, its stock price is close to its target price, and a stock split may become an additional factor attracting investors.
Chartered Financial Analyst Zhou Chunzhe: Costco's cost-effective products have gained popularity among consumers during a period of economic weakness in the United States, leading to a historic high in stock prices. The rise in stock prices may be an important reason for the split, as it makes the stock more affordable for individual investors, and the split stock price is more easily accepted by potential shareholders.