Pal Market Macro Review - May 15th one ️⃣ Inflation data explosion: The April PPI in the United States increased by 1.4% month on month and 6.0% year-on-year, significantly exceeding expectations (expected+0.5%). Energy and transportation costs are the main drivers. The CPI also slightly exceeded expectations, with energy being the primary contributor. This means that the stickiness of inflation is stronger than imagined, and the "last mile" is exceptionally difficult. two ️⃣ Federal Reserve hawkish leadership change: The Senate confirmed Kevin Warsh as the next chairman of the Federal Reserve by a vote of 54-45. Bond traders now believe that Warsh will not cut interest rates as quickly and significantly as the market had previously optimistically expected, but will instead be "data dependent+hawkish". The bond market has started pricing: the 2024-25 interest rate cut cycle may have ended. The yield on 2-year US Treasury bonds has soared to its highest level since 2022. Everyone should pay attention to the fact that Warsh's first FOMC meeting after taking office (mid June) will become the focus of the market - whether he is a "Trump hawk" or an "independent anti inflation hawk" will determine whether the next move is a soft landing or more intense volatility. Attention should be paid to the stock market: Technology stocks (especially unprofitable ones): valuation killing. Bank stocks: widening net interest margin, positive news. TFC, etc. Energy stocks: beneficiaries of inflation, continue to be optimistic. three ️⃣ Market meaning: The market generally believes that there will be no major issues with A-shares during the meeting, but A-shares will traditionally experience a pullback after the positive news is realized. For US stocks that are linked to the Chinese market (such as BABA), there are issues. The high interest rate environment will suppress valuations, and interest rate sensitive stocks (technology, growth) will face downward pressure. four ⃣ China US Dollar Summit (May 14th): Both sides discussed topics such as expanding market access and increasing Chinese investment in the United States. The market generally believes that there will be no major issues with A-shares during the meeting, but A-shares will traditionally experience a pullback after the positive news is realized. For US stocks linked to the Chinese market (such as BABA, JD), it is necessary to be cautious of short-term fluctuations. five ⃣ Historic breakthrough of the Clear Act This bill on cryptocurrency regulation walked out of the Senate Banking Committee with a bipartisan vote of 15-9, and the next step is a full vote. This is a short-term positive for Bitcoin and also the reason for last night's rise. But the next step is a full Senate vote, and it's still unknown how it will be. The Democratic Party will definitely oppose it.