Category: US STOCKS

What are the reasons for the recovery of the US stock market? Who is manipulating from behind?

In early August, after falling nearly 10%, the US stock market quickly rebounded! Who is driving this recovery behind the scenes?

Although the global economy is facing uncertainty, the US economy continues to expand, with GDP growth in the second quarter revised up to 3%, indicating strong consumer demand and economic activity in the US providing support for the market;

In the second quarter financial report, 80% of S&P 500 companies exceeded expectations with a profit growth of 11.4%. The data shows that the profits of these companies have steadily increased, injecting momentum into the stock market;

With the Federal Reserve preparing to initiate interest rate cuts and market expectations announcing its first rate cut in September, this policy shift has eased market concerns about liquidity tightening and boosted stock market confidence;

Tech giants used to lead the market for a long time, but now they face a dual challenge:

The pressure of high expectations: Taking Nvidia as an example, despite strong growth, market expectations are too high, and overvaluation becomes a resistance;

The rise of new market favorites: With the recovery of profits in other industries, sectors such as finance, healthcare, and utilities are performing outstandingly, and market leadership is shifting.

The driving force behind the recovery of the US stock market

In addition to the above five points, the Federal Reserve’s policy shift is one of the important driving elements of the current market:

As inflation approaches its target of 2%, the Federal Reserve is shifting from containment to support. Historical data shows that when facing an economy that has not yet fallen into recession, initiating interest rate cuts often has a positive impact on the stock market, which is also being validated in the market;

Although interest rate cuts may benefit the market, it is still necessary to be vigilant about potential risks in policy implementation. The Federal Reserve has repeatedly failed in policy adjustments throughout its history, and whether the current interest rate cuts can proceed as scheduled will have a significant impact on the future market trend;

In addition, despite the strong performance of the stock market in August, the next two months may face the following challenges:

Historically, the market usually experiences significant fluctuations from September to October. With the upcoming November elections, political uncertainty may exacerbate market volatility;

Although the current economy is expanding, any unexpected downturn in economic data (such as weak employment or consumption data) could reignite market concerns and pressure the stock market;

Under the current high valuation background, market sentiment is still relatively fragile. Although the expectation of interest rate cuts supports the market, if future corporate profits fall short of expectations or macroeconomic conditions deteriorate, the market will experience another significant correction.

What are the potential opportunities?

Pay attention to cyclical and value stocks

The market leadership has shifted from a few tech giants to a wider range of sectors, and the following areas are worth paying attention to.

Financial sector: Changes in interest rates may benefit financial institutions such as banks and insurance. If the Federal Reserve starts cutting interest rates, it will boost banks’ net interest margins and increase loan demand.

The industrial and materials sector: With economic expansion, industrial and materials companies typically perform well, especially driven by infrastructure construction and global economic recovery, which may benefit from government spending and the recovery of global supply chains.

Healthcare sector: These companies often perform well during periods of economic uncertainty, especially those providing essential medical services. In the current market volatility, healthcare may become a relatively safe haven.

Taking advantage of short-term market fluctuations

Seasonal market fluctuations and potential policy changes may bring short-term trading opportunities.

Buying on dips: During market downturns, buying high-quality stocks or sectors at low points may bring substantial returns, especially during periods of market volatility. If the stock prices of tech giants or other undervalued high-quality companies fall, it may be a good time to enter these companies.

Volatility trading: If market volatility increases, trading volatility derivatives (such as VIX options) may bring returns. In addition, when volatility is high, consider using option strategies (such as protective put options) to hedge the risk of existing investment portfolios.

Focus on sectors and companies with strong revenue growth

Non giant companies in the technology sector: While technology giants are facing pressure, some small and medium-sized technology companies still have opportunities, especially those with competitive advantages in cloud computing, network security, and AI fields.

New and clean energy: With the global transition to renewable energy, new and clean energy companies may benefit not only from policy support but also from long-term growth trends.

Consumer goods and necessities: In times of increased economic uncertainty, these companies typically exhibit stability, stable cash flow, and strong risk resistance.

Pay attention to Federal Reserve policies and macroeconomic data

The direction of Federal Reserve policy will directly affect market sentiment and asset prices.

Interest rate decisions and statements: Pay attention to the Federal Reserve’s interest rate decisions and policy statements at future meetings, especially the pace and magnitude of interest rate cuts. This will directly affect bond yields, stock valuations, and market sentiment.

Macroeconomic data: Pay special attention to employment data, inflation data, and consumption data, which not only affect the policy path of the Federal Reserve, but may also reflect the true health of the economy, thereby affecting market performance.

Global diversification and hedging strategies

Global diversified investment can help diversify risks and capture growth opportunities in international markets.

International markets: Pay attention to investment opportunities in other developed and emerging markets, especially in the context of loose monetary policy and accelerated economic recovery. The consumption growth and digital transformation in emerging markets also provide long-term investment opportunities.

Hedging strategy: consider adding hedging instruments, such as gold, treasury bond bonds or safe haven currencies, into the portfolio to protect the portfolio in case of market fluctuations or risk events.

Investors should respond flexibly by focusing on cyclical and value stocks, utilizing market volatility to find companies with strong earnings growth, and paying attention to policies and the economy to seek opportunities.

At the same time, global diversification and hedging strategies should also be part of the investment portfolio to address potential market volatility and uncertainty.

Disclaimer: The content of this article is for reference only and does not constitute investment advice. Investment carries risks, and caution is necessary when entering the market.

The Federal Reserve’s hawkish stance on interest rate hikes and the increasingly complex geopolitical situation in the Middle East have triggered a global “risk-off” sentiment in the markets.

A sudden shift to a “risk-off” mode typically means that investors are withdrawing from riskier assets and moving towards safer investments such as gold, the U.S. dollar, and government bonds.

The Nikkei index, which had been hotly performing, has already corrected by 10% since March 22!

As a typical high-beta risk asset, Bitcoin has recently dropped by $14,000!

Asian stock markets have experienced significant volatility due to a series of external shocks.

First, the Federal Reserve’s interest rate hike expectations have once again come to the forefront, heightening concerns over future interest rate paths. Hawkish remarks from the Fed, particularly from New York Fed President John Williams and other officials, have reinforced market expectations of further rate hikes.

The Fed’s recent hawkish stance is driven by several key factors:

• Persistent Inflation Pressure: Although U.S. inflation has eased from its peak, it remains above the Fed’s 2% target. Volatility in food and energy prices, especially the recent rise in crude oil prices, could push inflation expectations higher, forcing the Fed to maintain tightening policies to prevent inflation from spiraling out of control.
• Tight Labor Market: The U.S. labor market remains strong, with robust employment activity and low unemployment rates, indicating that the risk of an overheated economy persists. In this tight labor market, rising wages could continue to push up service-sector inflation, a component the Fed is particularly focused on.
• Stronger-than-Expected Economic Data: Recent economic data, such as GDP growth and consumer spending, indicate that the U.S. economy remains relatively strong, which might encourage the Fed to believe that the economy is resilient enough to withstand higher interest rates.

Global Economic and Geopolitical Factors: Other central banks, like the European Central Bank (ECB) and the Bank of England, are also hiking rates, providing some “cover” for the Fed to maintain its tightening policies. Additionally, geopolitical instability in regions such as the Middle East could further impact global market sentiment and influence Fed policy decisions.

Impact on Risk Assets:

If the Fed continues raising rates in this high-rate environment, the impact on risk assets like stocks and corporate bonds could be significant:

• Rising Cost of Capital: Higher borrowing costs mean increased pressure on corporate profits, particularly for companies relying on debt financing. This could lead to a decline in stock prices as investors reassess future earnings potential.
• Valuation Compression: As interest rates rise, the present value of an asset’s cash flows decreases, leading to lower valuations. This directly impacts the valuation levels of both equity and bond markets.
• Damaged Investor Sentiment: Continued rate hikes may erode investor confidence in the economic outlook, triggering a risk-averse sentiment that increases market volatility and capital outflows.
• Increased Default Risk: For highly leveraged firms or economies, rising debt servicing costs could exacerbate financial strain, potentially leading to higher default rates, especially in more vulnerable emerging markets.

Overall, the Fed’s hawkish policy is a response to current economic conditions, but its continuation requires careful balancing to avoid stifling economic growth and triggering a large-scale financial market adjustment. Investors should remain particularly cautious and carefully allocate assets to mitigate potential market volatility.

Geopolitical Risks Adding to Market Uncertainty:

Geopolitical tensions in the Middle East have also added to the uncertainty in the markets. Explosions in Iran, Iraq, and Syria, coupled with associated geopolitical risks, have further increased investor risk aversion.

These factors have driven rapid increases in gold and oil prices, with gold surpassing $2,400 per ounce, and WTI and Brent crude oil prices rising significantly.

Asian Market Reactions:

Major Asian stock indices have broadly declined, with the Nikkei 225 dropping over 3%, marking its lowest point since February. Other indices, such as South Korea’s Seoul Composite, Australia’s S&P/ASX 200, and Hong Kong’s Hang Seng, also experienced varying degrees of decline. This market drop reflects the market’s reaction to the aforementioned risk factors.

On the forex markets, the U.S. Dollar Index has risen, but the dollar’s performance relative to safer assets like the Japanese Yen and U.S. Treasury Bonds has been weaker. This may reflect the market’s balancing of the Fed’s potential tightening policies and the need for safe-haven assets.

Furthermore, the decline in the MSCI Asia Pacific Index suggests that regional markets, especially technology giants like TSMC and Samsung Electronics, are facing pressure, signaling concerns over the global technology supply chain.

As a whole, the market is currently under multiple pressures, from expectations of further Fed rate hikes to geopolitical instability in the Middle East. These factors could lead to high volatility in global financial markets over the coming months. Investors should focus more closely on macroeconomic indicators and geopolitical events to better adjust their portfolios.

A Quick Introduction to “Risk-Off”:

When global markets suddenly shift to a “risk-off” mode, it typically means that investors are massively pulling out of risk assets in favor of safer investments like gold, the dollar, and government bonds. This shift is typically triggered by several factors:

1. Geopolitical Tensions: Events such as conflicts, political instability, or significant political decisions can rapidly change market sentiment. For example, escalating conflicts in the Middle East or tensions between major powers can drive global investors to seek refuge in safer assets.
2. Weak Economic Data: If major economies (e.g., the U.S., China, Eurozone) report signs of economic slowdown or recession, global markets may panic. Especially in the context of ongoing global recovery from the pandemic, any signs of a significant slowdown can amplify market reactions.
3. Financial Market Turmoil: Financial crises, such as systemic banking crises, credit market freezes, or failures of major financial institutions, can trigger widespread risk-averse behavior. The 2008 global financial crisis is a typical example.
4. Monetary Policy Shifts: Sudden or unexpected changes in monetary policy, particularly from major central banks (like the Fed or ECB), can prompt significant market reactions worldwide.

Specific Impacts:

• Asia-Pacific Stock Markets: Stock markets in the Asia-Pacific region, including China, Japan, and Australia, may experience selling pressure, especially in export-driven economies, due to reduced global demand expectations.
• U.S. and European Stock Markets: The U.S. and European markets may face downward pressure from investor withdrawals. Due to their scale and liquidity, these markets are often primary indicators of international capital flows.
• Japan and South Korea Stock Markets: The markets in Japan and South Korea could be doubly hit—by falling global risk appetite and by region-specific political and economic issues.
• Southeast Asia Stock Markets: Southeast Asian economies like Thailand, Indonesia, and Malaysia, which rely heavily on foreign direct investment and exports, typically underperform during global risk-off phases.

Response Strategies:

In such a market environment, investors and policymakers typically adopt the following strategies:

1. Asset Reallocation: Moving from equities and other high-risk assets to bonds, gold, and other traditional safe-haven assets.
2. Monetary Policy Adjustments: Central banks may act by lowering interest rates or implementing quantitative easing to stabilize financial markets and support the economy.
3. Macroprudential Regulation: Strengthening regulation of banks and financial institutions to prevent the spread of systemic risk.
4. Policy Coordination: Major economies may need to coordinate policies to address the risks of global economic slowdown.

Investors should exercise caution in such conditions, avoiding panic selling, while focusing on long-term investment goals and adapting their asset allocations accordingly.

The cooling job market is increasingly supported by more data! Following the JOLTs job openings report, the U.S. November nonfarm payroll data was also released, falling short of expectations for several consecutive months. After the nonfarm payroll report was published, there was a pre-market rally in U.S. stock futures, but upon opening, the market experienced a day of opening high and closing low. What happened?

Is the slowdown in employment not what the market has been anticipating all along?

According to the U.S. ADP employment data, the number of employed individuals increased by 103,000 in November, lower than the expected 130,000, with a decrease in wage growth and a 5.6% increase in wages for existing employees. Employment in medium-sized enterprises increased while it decreased in small businesses, with growth driven by the service and financial sectors, and declines in the manufacturing and construction industries. Employment in the leisure and hospitality sector decreased, indicating a potential for more moderate hiring and wage growth in the economy. Department of Labor data shows job openings fell to 8.73 million in October, hitting a new low for 2021.

Looking ahead to the non-farm payroll data set to be released on Friday, the market expects non-farm employment to be around 189,000, with the unemployment rate remaining stable at 3.9%. The Federal Reserve will closely monitor employment data, and a rise in the unemployment rate could trigger a rate cut. Expectations for a rate cut have increased in the market, leading to a rise in U.S. stock futures and a decline in the U.S. dollar.

However, after the market opened, U.S. stocks experienced a gap up followed by a decline, with profit-taking evident. Why did the market open high and then trend lower?

According to financial analysts, after a continuous rebound, the weakening employment data and falling oil prices have raised concerns about the economy in 2024. Therefore, some investors are choosing to take profits, causing the U.S. stock market to trade in a more indecisive manner at this juncture.

In the current economic environment, this interesting and complex phenomenon unfolds: the U.S. employment market continues to slow down, with job vacancies and small non-farm payroll data falling short of expectations. Meanwhile, U.S. stocks exhibit a trend of opening high and then declining, with profit-taking evident. All of this is happening against the backdrop of sustained declines in oil prices and rising concerns about the future economy. The market seems to be caught in a dilemma between the end of rate hikes and economic worries, appearing to be in a difficult position.

Signs of a slowdown in the job market are becoming increasingly apparent. The latest ADP employment report and nonfarm payroll data both indicate that the number of new jobs created is below expectations. This may suggest that, despite the gradual recovery of the U.S. economy from the pandemic, the pace of job market recovery is slowing down. Typically, a weak job market is a signal of an economic slowdown, which should raise concerns among investors.

However, at the same time, we see a phenomenon in the U.S. stock market where it opens high but closes lower. This trend indicates that the market may be initially driven by positive factors at the opening, but then investors start to take profits, leading to a decline in stock prices. What is the logic behind this?

Yan Cai believes that the market has already to some extent anticipated the slowdown in the job market. Therefore, when the actual data is released, the market reaction may not be very strong. In addition, a slowdown in the job market may also lead investors to expect the Federal Reserve to be more cautious in monetary policy, possibly not rushing to raise interest rates, which is a positive signal for the stock market. The rise in stock prices at the opening may reflect this expectation.

But why does profit-taking occur afterwards? This may be related to the current market’s uncertainty. Against the backdrop of economic recovery, investors may have doubts about the continued rise in the stock market. Especially when facing potential negative factors such as a slowdown in the job market, some investors may choose to cash in profits promptly after stock prices rise to avoid potential risks in the future.

The continuous decline in oil prices is also an important economic indicator. Typically, oil prices are seen as a barometer of global economic health. The current decline may reflect concerns about a slowdown in global economic growth, especially as major economies such as China and Europe face their respective challenges.

Concerns over oversupply in the United States compounded by uncertainties surrounding OPEC+ production cuts have led to a breach of the $70 mark for WTI crude oil, with Brent crude also experiencing a significant drop below $75.

WTI crude oil fell below the $70 per barrel mark for the first time since July this year, triggered by worries of oversupply due to significant U.S. exports and doubts about OPEC+’s ability to implement production cut plans. Since OPEC+ announced further production cuts last Thursday, oil prices have continued to decline, highlighting the challenges the organization may face in balancing the market in the first quarter. According to estimates from a ship tracking company, U.S. crude oil exports are close to a record-breaking 6 million barrels per day. Additionally, Saudi Arabia made its largest price cut for official selling prices to Asian customers since February on Tuesday.

In such a complex economic environment, the market appears to be at a delicate balance point. On one hand, the end of the rate hike cycle, which is typically seen as a positive for the stock market, may be approaching. On the other hand, uncertainties in economic growth and potential slowdown could dampen market optimism. Investors may exhibit a more cautious attitude in this scenario, reflected in market volatility and profit-taking behavior.

At this juncture, it is advisable to take a broader view. In the current environment filled with uncertainties and short-term fluctuations, it is crucial to focus on the long-term trends and development logic of industries rather than be swayed by short-term market movements. I remain particularly bullish on the field of AIGC (Artificial Intelligence and Global Connectivity) and its role in driving the Fourth Industrial Revolution.

Legendary investor Warren Buffett once said, “The stock market is a short-term voting machine, but a long-term weighing machine.” This implies that short-term market fluctuations are more influenced by investor sentiment and incidental factors, while in the long run, a company’s true value and performance are the key determinants of stock prices. Therefore, paying attention to the fundamentals of companies and the long-term development trends of industries is crucial for achieving long-term investment success.

As a field that integrates the latest technologies, AIGC is at the forefront of the Fourth Industrial Revolution. Artificial Intelligence (AI), as the core of this revolution, is gradually changing the way we live and work. The application of AI technology has spread across various sectors, from smart manufacturing to healthcare, from financial services to transportation and logistics. With the advancement of technology and deepening applications, AI is expected to continue driving global economic growth in the coming decades.

The strengthening of global connectivity, especially through the internet and mobile communication technologies, has provided a powerful impetus for the development of AI. This connectivity not only facilitates the rapid flow of information but also makes big data analysis possible, which is a key driving factor for the development of AI technology. With the deployment of 5G and future 6G networks, global connectivity is expected to reach a new level, further accelerating the innovation and application of AI technology.

As another investment guru Peter Lynch once said, “Stay away from the noise of the market and focus on the fundamentals of the company.”

When considering investments in the AIGC field, it is important to deeply understand the potential of these technologies and how they will impact the future of specific industries and companies. Investors should pay attention to companies that have strong technological capabilities, clear business models, and robust financial conditions in the fields of AI and global connectivity.

In the face of short-term market fluctuations, maintaining a long-term and strategic perspective is crucial. The AI and GC fields, as key components of the Fourth Industrial Revolution, offer long-term investment opportunities. By conducting in-depth analysis and understanding the development trends and potential impacts of these technologies, investors can better grasp future investment opportunities and achieve long-term investment appreciation.

Tesla, Microsoft, and Google (under Alphabet Inc.) not only hold leading positions in their respective core business areas, but also wield significant influence in driving the development of related technologies and markets. Their business models, pace of innovation, and market sensitivity have made these companies the bellwethers in their respective fields:

Tesla

Core Features:

• Innovative Leader: Tesla is not only a frontrunner in the electric vehicle (EV) market, but its innovations in battery technology and autonomous driving software have also driven technological advancements in the entire automotive industry.

• Market Trend Setter: Tesla’s product releases and market strategies, such as direct sales model and Software-Defined Vehicle (SDV), have become benchmarks for industry trends.

Industry Impact:

• Driving Vehicle Electrification: Tesla’s successful business model and high market demand have proven the commercial viability of electric vehicles, prompting traditional automakers to accelerate their shift towards electric vehicle production.

• Infrastructure Advancement: Tesla not only manufactures cars but also invests in building an extensive Supercharger network, driving the development of global charging infrastructure.

Microsoft

Core Features:

• Technological Diversification Leader: Microsoft holds market-leading positions in various fields such as operating systems, office software, cloud computing (Azure), artificial intelligence, and gaming (Xbox).

• Enterprise Service Benchmark: Microsoft’s cloud service solutions and enterprise applications set the standard for enterprise IT architecture.

Industry Impact:

• Driver in Cloud Computing and AI Fields: Azure, Microsoft’s cloud platform, is one of the world’s leading cloud services, and its innovations in cloud services and AI technology have promoted the widespread adoption and application of these technologies.

• Standardized IT Solutions: Microsoft’s products are often considered the default choice for enterprise IT procurement, ranging from operating systems to office software to server solutions.

Google (Alphabet Inc.)

Core Features:

• Search and Advertising Giant: Google’s search engine and online advertising services dominate the global market, serving as the cornerstone of digital marketing.

• Leader in Technological Innovation: With significant research and development investments in AI, machine learning, autonomous driving (Waymo), health technology, and other fields, Google leads the way in innovation.

Industry Influence:

• Defining the Digital Advertising Market: Google sets the operational and pricing standards for digital advertising through its advertising technology platform.

• Pushing Technological Boundaries: Google’s research and development efforts drive the entire tech industry forward, particularly in the fields of AI and data analytics.

Meta (formerly Facebook)

Meta Platforms, Inc. (formerly Facebook) is an absolute leader in the digital advertising and social media industry, with its business achievements and market performance often seen as a barometer for the entire industry:

• Technological Innovation: Meta has been at the forefront of advancing social media, virtual reality (VR), augmented reality (AR), and artificial intelligence technologies. For example, its investment in Oculus has propelled the commercialization of VR technology, while its AI research continues to influence the entire tech industry.

• Product Diversity: From Facebook and Instagram to WhatsApp and Messenger, Meta owns platforms with billions of users, whose advertising solutions and user interaction models continue to evolve, shaping industry trends.

• Market Leadership:
  Meta holds a high market share in the global social media market, attracting numerous global brands and small to medium-sized enterprises through its advertising platform, making it one of the largest sources of online advertising revenue globally.

• Extensive Customer Base:
  Serving a broad user base across almost all regions globally, Meta’s business trends and new strategies have become important indicators of market sentiment and advertising trends.

• Advertising Business Model:
  Meta has redefined the operation of digital advertising through its precise ad targeting technology and big data analytics. Its advertising revenue model is one that other social media platforms seek to emulate.

• Social Media Trends:
  By continuously adjusting its algorithms and introducing new features, Meta influences user habits in consuming content, indirectly impacting global cultural and media consumption trends.

• Data Privacy and Regulation:
  Meta’s practices in data privacy and user information management, along with the legal and policy challenges they pose, often set the tone for global regulatory trends.

• Innovation and Market Expansion:
  The company’s significant investments in the metaverse signal a potential transformation in the future of internet interaction, the success or failure of which will have profound implications for the entire tech industry.

These companies, through their products, services, and technological innovations, not only drive technological progress and market development, but also significantly influence the formulation of relevant policies and the establishment of industry standards. Every major product release, financial report announcement, or market trend from them is closely monitored by global markets and investors, serving as important indicators for assessing the future trends of the entire technology and automotive industries. When considering investments or analyzing the market, these companies are undoubtedly key factors that cannot be ignored.

Today, let’s talk about a globally renowned alcohol production and sales company—Brown-Forman Corporation.

Basic Information and Business Introduction of Brown-Forman

Brown-Forman Corporation is a globally recognized company in the production and sales of alcoholic beverages, established in 1870 and headquartered in Louisville, Kentucky, USA. Known for its high-quality whiskey, vodka, tequila, liqueur, and wine products, it is one of the world’s largest alcohol production companies.

The business of Brown-Forman is divided into the following main parts:

Whiskey: Brown-Forman is famous for producing high-quality whiskey, with the most well-known brand being Jack Daniel’s. In addition, the company also owns well-known brands such as Woodford Reserve and Old Forester.

Vodka: The company’s Finlandia Vodka is its main vodka brand, loved by global consumers for its purity and high quality.

Tequila: Brown-Forman owns the renowned Herradura and El Jimador tequila brands, which enjoy a high reputation in the Mexican and global markets.

Liqueur: The company’s liqueur products include the famous Southern Comfort, a unique liqueur known for its rich flavor and diverse drinking methods.

Wine: The company also produces and sells various high-quality wines, including brands such as Sonoma-Cutrer, which hold a place in the wine market for their excellent quality and unique flavors.

Brown-Forman Corporation is a diversified alcohol production and sales company, covering multiple fields such as whiskey, vodka, tequila, liqueur, and wine. As a leader in the global alcohol industry, Brown-Forman is committed to meeting the needs of global consumers by providing high-quality products and brand experiences, continuously promoting the development and innovation of the alcohol industry.

Where Brown-Forman Holds a Global Leading Position and Key Success Factors

Brown-Forman maintains a leading position in several areas. Here are some examples:

Whiskey and Spirits: Brown-Forman is a global leader in whiskey and spirits manufacturing, with famous brands such as Jack Daniel’s, Woodford Reserve, and Old Forester. Key success factors include high-quality products, unique brewing processes, and strong brand value.

Wine and Vodka: The company also holds an important position in the wine and vodka market, with brands such as Finlandia Vodka and Korbel Champagne. Key success factors are its sophisticated brewing techniques, diversified product lines, and global distribution networks.

Innovative Beverages: Brown-Forman continuously launches new products and innovative beverages to meet the changing tastes and needs of consumers. Key success factors are its market insight, flexible product development capabilities, and strong market promotion.

Key success factors for Brown-Forman include:

Brand Management: The company has multiple world-renowned brands and enhances brand value and market share through careful brand management and promotion strategies.

Product Quality: Brown-Forman always adheres to high standards of brewing processes and quality control, ensuring its products’ leading position in the global market.

Global Distribution Network: The company has established a strong global distribution network, ensuring its products can be supplied quickly and efficiently in markets around the world.

Market Innovation: The company focuses on market innovation, continuously launching new flavors and products to meet consumer diversification needs and maintain market competitiveness.

Here are some other business areas and projects of Brown-Forman:

Sustainability: The company is committed to sustainable development, reducing environmental impact through environmentally friendly brewing processes and packaging materials, and promoting corporate social responsibility.

Cultural and Community Engagement: Brown-Forman actively participates in community activities and cultural projects, supporting arts, education, and social welfare, enhancing brand image and social influence.

Global Market Expansion: The company continues to expand its global market, especially in emerging markets, seeking new growth opportunities and customer groups.

Brown-Forman’s business areas are extensive and in-depth. The company has not only consolidated its leadership position in the global alcohol market but also brought significant product and service advantages to customers and society through continuous innovation and focus on key markets.

Analysis of Major Strategic Transformations, Core Driving Factors, and Key Events Since the Company’s Establishment

Brown-Forman Corporation is a historic American beverage company known for its high-quality alcoholic products. Since its establishment, Brown-Forman has gradually become one of the world’s leading alcohol production and sales companies through a series of strategic transformations and acquisitions. Here is an analysis of some major strategic transformations, core driving factors, and key events since the company’s establishment.

1870: The company was founded by George Garvin Brown in Louisville, Kentucky, initially producing Old Forester whiskey.

1923: During the U.S. Prohibition, the company continued to operate by selling whiskey for medicinal purposes, successfully navigating this difficult period.

1956: Brown-Forman acquired Jack Daniel’s Tennessee Whiskey, further expanding its product line and market share.

1971: The company went public (IPO), strengthening its capital base and providing funding for future expansion and acquisitions.

1994: Acquired the Canadian Mist brand, further extending its influence in the North American market.

2006: Acquired Tequila Herradura and El Jimador brands, entering the rapidly growing tequila market.

2011: The company launched Woodford Reserve, a high-quality small-batch bourbon whiskey, enhancing its market position in high-end products.

2016: Brown-Forman acquired the wine brand Sonoma-Cutrer, further expanding its business in the premium wine market.

2020: The company launched several new cocktail products, responding to market demands for innovation and convenience.

Here is an analysis of some key events and driving factors in Brown-Forman’s strategic transformation:

1933: With the repeal of Prohibition in the United States, Brown-Forman quickly resumed and expanded production to meet the huge market demand, establishing its leadership position in the U.S. alcohol market.

1980: The company began international expansion, setting up offices and distribution networks in Europe and Asia, gradually establishing a global sales network.

2000: Brown-Forman implemented a brand diversification strategy, acquiring and launching a variety of high-end and specialty alcohol brands, enhancing the breadth and depth of its brand portfolio.

2005: The company initiated an environmental and sustainability strategy, committed to reducing carbon emissions and resource consumption in the production process and promoting green supply chain management.

2010: Facing the global financial crisis, Brown-Forman maintained stable financial performance and market position by optimizing costs and improving operational efficiency.

2015: The company increased investment in digital and e-commerce fields, launching several online sales and marketing activities, enhancing the brand’s global visibility and market coverage.

2019: Launched a series of low-alcohol and alcohol-free beverages, responding to the trend of healthy drinking and meeting consumer demands for healthy and diversified beverages.

Brown-Forman’s strategic transformation mainly revolves around brand expansion, market diversification, and sustainable development. Through a series of strategic mergers and acquisitions and technological innovations, the company has established a strong competitive position in the global alcohol market. In the future, Brown-Forman may continue to invest in emerging markets and product innovation to maintain its leading position in the global beverage market and meet the changing consumer demands and market trends.

Analysis of Contributions Made by Successive CEOs and Their Impact on the Company

Brown-Forman Corporation is a leading global beverage and spirits company, known for its high-quality whiskey, vodka, tequila, and other products. Here are the contributions made by successive CEOs since the company’s establishment:

George Garvin Brown: One of the founders of Brown-Forman, he served as CEO in the early days of the company until the early 20th century. Under his leadership, Brown-Forman achieved early development:

• In 1886, he founded the company and launched its iconic brand Old Forester, the first bottled bourbon whiskey.
• During Prohibition, he kept the company operating by producing alcohol for medicinal purposes.
• He established the company’s early brand reputation, making Old Forester a trusted brand of high-quality bourbon whiskey.

Owsley Brown II: Served as Brown-Forman’s CEO from 1993 to 2005. Under his leadership, the company achieved significant market expansion and brand development:

• Promoted the globalization of the company’s products, extending Brown-Forman’s influence in the international market.
• Enriched the company’s product line by acquiring brands such as Herradura Tequila and Chambord Liqueur.
• Emphasized brand building and market promotion, making Jack Daniel’s and other brands globally recognized high-quality spirits brands.

Paul Varga: Served as Brown-Forman’s CEO from 2005 to 2018. Under his leadership, the company achieved the following:

• Promoted the company’s continuous growth and brand diversification, especially in the high-end and ultra-high-end spirits market.
• Strengthened the company’s sustainability strategy, improving its performance in environmental protection and social responsibility.
• Introduced a series of innovative products and packaging designs, maintaining the brand’s market competitiveness and consumer appeal.

Lawson Whiting: Has been Brown-Forman’s CEO since 2018 and continues to lead the company to this day. Under his leadership, the company has made significant strategic progress:

• Strengthened the company’s digital transformation, enhancing online sales and digital marketing capabilities.
• Promoted the company’s sustainability goals, including reducing carbon footprint and promoting a circular economy.
• Continued to expand the company’s global market, especially in the Asia-Pacific region and emerging markets.

Under the leadership of successive CEOs, Brown-Forman has successfully achieved brand building, market expansion, and product diversification. From a bourbon whiskey manufacturer, Brown-Forman has gradually grown into a leading global beverage and spirits company. In the future, Brown-Forman is expected to continue leading in innovation, sustainable development, and globalization, providing consumers worldwide with a greater selection of high-quality beverages and spirits.

Future Development Outlook of Brown-Forman Corporation

Brown-Forman Corporation is a globally recognized producer and marketer of alcoholic beverages, with a portfolio of well-known brands such as Jack Daniel’s whiskey, Finlandia vodka, and Sonoma-Cutrer wines. Below is a detailed analysis of the future development outlook for Brown-Forman Corporation:

Brand Expansion and Diversification: Brown-Forman Corporation will continue to expand its brand portfolio by developing and introducing new brands, as well as optimizing existing ones, to meet the needs of different markets and consumers. The company will focus on the high-end and ultra-high-end alcohol markets to enhance brand value and market share.

Global Market Expansion: To maintain growth, Brown-Forman Corporation will further expand its business in global markets, especially in emerging markets such as Asia-Pacific, Latin America, and Africa. By establishing localized sales and distribution networks, the company can better adapt to regional market demands and enhance brand influence.

Digital Marketing and E-commerce: Brown-Forman Corporation will increase its investment in digital marketing and e-commerce. By leveraging social media, big data, and artificial intelligence technologies, the company can precisely target consumers, enhancing brand recognition and market penetration. Additionally, developing e-commerce channels can provide consumers with a more convenient purchasing experience, driving online sales growth.

Sustainability and Environmental Protection: Brown-Forman Corporation will continue to promote sustainable development, committed to reducing the environmental impact of its production processes. The company will adopt a series of environmental measures, such as reducing carbon emissions, water conservation, and waste recycling. Furthermore, the company will strengthen sustainable procurement to ensure the environmental friendliness and social responsibility of its supply chain.

Innovative Product Development: The company will continue to invest in product research and development, creating innovative alcoholic products and packaging designs to attract new consumer groups and meet diverse consumer needs. By continuously launching new flavors, varieties, and limited edition products, the company can maintain market freshness and competitiveness.

Enhancing Consumer Experience: Brown-Forman Corporation will focus on enhancing consumer experiences through brand experience stores, tasting events, and cultural promotion, establishing closer connections with consumers. The company will also utilize advanced customer relationship management systems to provide personalized services and interactions, strengthening consumer loyalty.

Mergers and Acquisitions and Strategic Cooperation: To expand market share and technological strength, Brown-Forman Corporation will continue to seek merger and acquisition and strategic cooperation opportunities. By acquiring promising alcohol brands or related technology companies, the company can quickly enter new market sectors and enhance its comprehensive competitiveness.

Global Operations and Localization Management: The company will promote global operations while focusing on localized management. With localized market strategies and management teams, the company can more flexibly respond to market changes and consumer preferences in different regions, achieving coordinated global business development.

The future development prospects for Brown-Forman Corporation are bright. Through strategic measures such as brand expansion, global market expansion, digital marketing, and sustainable development, the company is expected to maintain its leading position in the global alcohol market and achieve long-term stable growth.

According to data from the bulk brokerage department of Goldman Sachs Group, fund managers have been net selling U.S. technology stocks for the third consecutive week. Hedge funds have started selling semiconductor stocks benefiting from the boom in artificial intelligence, and have instead been buying software stocks. This is in stark contrast to the trading strategy of the previous week.

Key data and trends

1. Continuous net selling of tech stocks: Fund managers have been net selling U.S. technology stocks for the third consecutive week. In particular, semiconductor and semiconductor equipment stocks saw the highest nominal net selling as of the week ending June 7, while software stocks saw the highest net buying.

2. Hedge fund strategy shift: At the end of May, chip stocks were still the darlings of hedge funds, while software stocks faced the fate of being sold off. However, just one week later, hedge funds began selling semiconductor stocks and started buying software stocks.

3. Market performance: The S&P Software and Services index recorded its best single-week performance since January, but its gain for 2024 is less than 6%, lagging behind the semiconductor sector and the overall market. The S&P 500 Semiconductors and Semiconductor Equipment index continues to hit new all-time highs, rising by about 67% year-to-date.

Expert Opinions

• Richard Ross, Senior Managing Director and Head of Technical Analysis at Evercore ISI: Currently, sentiment and positioning in the software market couldn’t be worse. He believes that any inflow of funds into the sector presents a positive opportunity to buy software stocks, but this does not mean semiconductor stocks should be reduced.

• Vincent Lin, Analyst at Goldman Sachs: The stance within the industry may change. The healthy rebound in the software business is being driven by profit improvements at computer security firm CrowdStrike Holdings Inc. and U.S. software company Guidewire Software Inc., as well as dynamics from oversold positions.

Market Outlook

Market observers are cautious about whether last week’s positioning adjustments represent tactical trading or a fundamental shift. Wil Tamplin, Senior Analyst at Fairlead Strategies, suggests that in the short and long term, semiconductor stocks still show strong upward momentum compared to software stocks, and there is currently not enough evidence to suggest a change in the technology sector’s leadership position.

Conclusion

The current market sentiment and strategies indicate that hedge funds are shifting from semiconductor stocks to software stocks, reflecting a reassessment of different sectors under the AI boom. As the market continues to adjust, investors will closely monitor the impact of these changes on their overall portfolios.

The reasons behind hedge funds and investors transitioning from chip hardware stocks to software stocks may include several factors:

1. Valuation and Profit Taking

• Valuation Pressure: Semiconductor stocks have risen significantly this year, especially driven by the prosperity of artificial intelligence (AI). This has led to relatively high valuations of semiconductor stocks, prompting motivations for profit taking.

• Profit Taking: Investors may wish to lock in some profits at highs, especially when semiconductor stocks have already experienced significant gains.

2. Market Rotation

• Sector Rotation: Market funds often rotate between different sectors. After the semiconductor sector has seen substantial gains, funds may flow towards sectors with relatively lower valuations and yet to fully rebound, such as software stocks.

• Oversold Condition: Software stocks may have been in an oversold condition previously, and investors believe they have bottomed out, presenting a rebound opportunity.

3. Performance and Prospects

• Expected Improvement: Despite some software companies falling short of expectations, the market anticipates that their future performance may improve. For example, signs of profit improvement from companies like CrowdStrike Holdings Inc. and Guidewire Software Inc. indicate a healthy rebound in the software industry.

• AI Applications: With further development of AI technology, the position and potential of software stocks in future AI application scenarios are gradually becoming evident. Companies like Datadog with clear visions and development plans in the AI field may attract investors.

4. Technical Analysis

• Technical Indicators: Technical analysis shows that software stocks have rebounded from oversold territory and show signs of breaking through the 200-day moving average, indicating a bullish outlook from a technical perspective.

• Risk Hedging: In high volatility markets, investors may seek diversified investments to reduce risks associated with single sectors, and shifting towards software stocks can be part of a hedging strategy.

5. Market Psychology

• Sentiment Shift: Changes in market sentiment can also lead investors to reassess their portfolios. With growing concerns about the sustained growth of semiconductor stocks, investors are turning to software stocks, which may be relatively subdued but have significant potential.

In summary, despite the recent underperformance of software stocks, investors may consider shifting towards software stocks as a more reasonable choice from various perspectives such as valuation, market rotation, technical analysis, and future prospects. This strategic adjustment reflects the dynamic changes in the market and investors’ expectations for future trends.

Investment Strategy for the Software Services Sector

• Opportunities in Adjusted Allocation: The recent sharp decline in the software services sector, coupled with doubts about the monetization prospects of AI, has led to a significant increase in the market value of hardware giants like NVIDIA. This indicates that the deployment of AI infrastructure will drive down computing power leasing prices, token and API prices in the second half of the year, thereby boosting growth on the software side.

• Long-term Allocation Opportunities: Recent observations show a decline in token call prices, a result of infrastructure development. After the stabilization of the phase adjustment, there will be a good opportunity for layout on the software services side. It is recommended to realize profits on the hardware side at this stage and lock in gains.

Strategic Recommendations: Seize the moment when others abandon

1. Profit-taking on hardware and AI infrastructure at highs: It is advisable to take profits on investment opportunities in the hardware sector and AI infrastructure, especially for leading companies like NVIDIA.

2. Bottom-fishing in the software services sector: Following the adjustment in the software services sector, it is recommended to bottom-fish for quality companies, especially those with strong R&D capabilities and market competitiveness.

3. Diversified Investment Portfolio: Maintain a diversified investment portfolio to cope with market fluctuations and spread risks.

With the deployment of AI infrastructure and the decrease in computing power costs, the software services sector will see growth opportunities in the second half of the year. We should closely monitor market dynamics, seize post-adjustment layout opportunities, and maximize returns.

Continued focus on IAAS giants and SaaS services on the application side: With the development and widespread application of AI technology, IaaS and SaaS companies are in a unique position to provide necessary computing resources and platform services to support enterprise AI transformation. They can not only derive direct economic benefits from this but also deepen cooperation with customers by promoting their success, achieving sustainable business growth. In the future, we can foresee that AI will become a key force driving further innovation and growth in the cloud computing and SaaS industries.

Are you still losing sleep over stock selection? Are you still glued to monitoring a single stock all day long? Are you still anxiously worrying about market fluctuations, unable to find peace of mind?

Don’t worry, ETFs are here to rescue you! Today, Joe is here to talk about how beginners can choose the right ETFs.

Why are ETFs a lifesaver for beginners?

Let’s start with the advantages of ETFs themselves:

1. Diversification: ETFs typically track different indices, industries, or asset categories, offering natural diversification. This means investors can reduce the risk of individual stocks by purchasing a basket of stocks.
2. Trading flexibility: ETFs can be freely bought and sold on the secondary market like stocks, with real-time price changes, allowing investors to quickly adjust their investment portfolios based on market conditions.
3. Low cost: Passive ETFs have lower trading costs because they do not require frequent adjustments like active ETFs, saving on management fees as they do not require fund managers’ intervention.
4. Low threshold: The price per share of most ETFs ranges from 0.5 to 5 yuan, making it beginner-friendly for those with limited funds to start investing with just a few hundred yuan.
5. Easy to understand and operate: ETFs combine the advantages and features of stocks, open-end index funds, and closed-end funds, making them an efficient index investment tool. They are suitable for both regular investment and lump-sum investment, making them ideal for novice investors.
6. Significant long-term returns: Many experts and successful investors recommend ETFs as a long-term investment tool because they can provide stable returns and are relatively easy to manage.

Joe was initially obsessed with finding specific stocks that could increase by 10 times, only focusing on a few stocks every day. Then I started to think, there are too many uncertainties for me to do it this way…

I want to start by learning about a company, but there are many key indicators that I am not very familiar with, so my own costs are quite high. Don’t put all your eggs in one basket! It’s important to diversify investments!

Speaking of this, I’m sure you and Joe have also thought of the same question, is there a way to put several companies we are interested in together?

ETF, these three letters seem to be an investment tool tailored for beginners! It not only allows you to easily achieve diversification in investments, but also saves you the trouble of selecting individual stocks one by one. Just imagine, by buying one ETF, you effectively own a basket of stocks, isn’t that cool!?

Beginner’s Guide to Choosing ETFs

There are plenty of ETFs on the market, so choosing one is not that simple. The key is to find one that suits you. So, how can beginners choose the right ETF for themselves?

• Clarify investment goals: Joe will first ask you, do you want to make money steadily or are you willing to take risks for high returns? This step is crucial. It determines what type of ETF you should choose.

• Research tracking indices: Each ETF tracks its own index. Understanding the characteristics of these indices is as important as understanding your investment partner.

• Focus on costs: Low costs are an advantage of ETFs. Choosing ETFs with lower fees can maximize your benefits.

• Understand holdings: Take a look at what “treasures” are in the ETF to ensure they align with your investment philosophy.

The performance of ETF tracking an index can be measured by multiple key indicators, mainly including the following two:

Tracking deviation refers to the deviation between the return of an ETF and the return of the underlying index. Daily tracking deviation equals the difference between the daily net asset value growth rate of the ETF and the daily return of the underlying index. This indicator reflects the performance variation of the ETF relative to its underlying index in the short term.

Tracking error is an important indicator to measure the performance of an ETF tracking the underlying index, reflecting the degree of fit between the fund and the underlying index. Tracking error equals the standard deviation of the tracking deviation during the observation period. If the tracking error is small, it indicates that the ETF closely tracks the underlying index in both the long term and short term; conversely, if the tracking error is large, it means that the performance of the ETF deviates significantly from the underlying index.

In addition, although not the main measuring indicators, there are other factors that can also affect the performance of an ETF:

• Liquidity: The liquidity of an ETF also affects the trading convenience and costs for investors. Although larger ETFs usually have better liquidity, it does not mean that all large-scale ETFs have the best liquidity.

• Fees: The management fees and other related expenses of an ETF are also factors to consider when choosing an ETF, as these costs directly impact the final investment return.

How to choose the appropriate ETF fee rate based on individual risk preferences?

• Understanding one’s risk preferences: Firstly, investors need to clarify their risk tolerance. Generally, ETF funds are divided into five categories based on the underlying assets: equity, cross-border, gold, bond, and currency. Different types of ETFs have different risk levels and return characteristics. For example, equity ETFs and cross-border ETFs carry higher risks, while bond and currency ETFs have relatively lower risks.

• Selecting the suitable ETF type: Based on one’s risk preferences, choose the corresponding type of ETF. Investors with a high risk preference can opt for commodity ETFs or ETFs related to the US stock market (such as Nasdaq ETFs, S&P 500 ETFs); investors with a medium risk preference can choose A-share market thematic ETFs, sector ETFs, or broad-based index ETFs; investors with a low risk preference can select bond ETFs or currency ETFs.

• Evaluating the fee rate: After selecting the appropriate type of ETF, the next step is to pay attention to the fee rate of the ETF. Generally, ETF management fees are relatively low, compared to the 1.5% of actively managed funds and 1% of structured index funds, making ETF costs more affordable. Therefore, when choosing an ETF, it is advisable to select funds with lower fees to reduce expenses in long-term investments.

• Considering other factors comprehensively: In addition to fees, other factors such as fund performance history, liquidity, tracking error, etc., need to be taken into account. These factors will all affect the final investment outcome and returns.

Do you know how to build an ETF investment portfolio?

You can start with a balanced investment portfolio recipe:

60% Core ETF + 20% Dividend ETF + 20% Growth ETF

This recipe is like a delicious investment feast: the Core ETF is the main course, providing you with stable energy; the Dividend ETF is the vegetables, offering essential nutrients; the Growth ETF is the tasty dessert, bringing more surprises to your taste buds!

Don’t know where to start? Here are a few ETF types suitable for beginners recommended by Joe:

Broad Market Index ETF: such as SPY (tracking the S&P 500 Index), allowing you to grasp the overall picture of the U.S. stock market at a glance.

Technology Sector ETF: such as QQQ (tracking the Nasdaq 100 Index), putting you on the fast track of technological innovation.

Dividend ETF: suitable for investors who prefer steady returns.

Bond ETF: adding stability to your investment portfolio.

However, investing in ETFs, while simple, also requires doing your homework to understand the characteristics and risks of ETFs in order to truly harness this investment tool!

Disclaimer: The content of this article is for reference only and does not constitute investment advice. Investing involves risks, so caution is advised when entering the market.

Most U.S. stocks rose on Monday, mainly due to investors’ high expectations for tax cuts and deregulation policies that Trump might introduce after taking office, and the recent interest rate cut by the Federal Reserve also further boosted market sentiment.

Bitcoin Sets a New High, with market expectations that the Trump administration and Congress will support cryptocurrencies, this optimistic sentiment has pushed up the performance of cryptocurrency-related stocks. COIN and MSTR rose by more than 20%, and HOOD also surged by more than 10%.

The Dow and the S&P 500 were driven to historical highs, with the Dow leading the market, rising by nearly 0.7%, breaking through 44,000 points for the first time; the S&P 500 index also crossed the 6,000-point threshold. These two indices have just experienced their best week of the year, continuously setting new historical highs. The technology stock-dominated Nasdaq rose slightly by 0.06%, and small-cap stocks also performed well, with the Russell 2000 index climbing to its highest level since November 2021.

However, the performance of Nvidia, Apple, and Meta was slightly weaker, causing some drag on the overall increase.

U.S. Treasury Yields Face Upward Pressure

As of 3:30 PM Eastern Time on Monday, the 10-year U.S. Treasury futures fell by about 11 basis points, with implied yields of about 4.35%. If this level continues when the Asian market opens on Tuesday, it means that the 10-year Treasury yield will rise by about 5 basis points from Friday’s closing.

The U.S. Stock Investment team believes that the continuous improvement of economic data, market expectations for the Fed’s possible dovish stance, and the release of more policy details by the Trump administration could push up Treasury yields. Unless there is unexpected negative economic data, yields will drop sharply.

Last Wednesday, U.S. Treasury bonds experienced a sharp decline, with the market widely betting that tax cuts and trade policies could increase price pressure, prompting investors to focus on the upcoming inflation data. The Federal Reserve is set to cut interest rates by 25 basis points in a few days, and the market’s reaction to inflation data will be key.

At the same time, Minneapolis Fed President Neel Kashkari mentioned in a speech over the weekend that the U.S. economy is still strong, although the Fed has made some progress in curbing inflation, but the task is not yet complete. The U.S. inflation data for October is scheduled to be released on Wednesday. The market generally expects the Fed to cut interest rates by 25 basis points at each of the next two meetings, and the probability of a rate cut in December is 60%.

The futures market suggests that once spot trading resumes, the Treasury yield curve may steepen further. Due to low trading volume on Monday, futures trading volume was about 32% of the average level of the past 20 days.

Tesla Breaks Through Trillion-Dollar Market Value

Tesla’s stock price rose by nearly 9% today, closing at $350, setting a new closing high in more than two years. This price is still about 18% higher than its historical peak of $414. Tesla’s current market value has broken through 1 trillion dollars, surpassing TSMC, and ranking seventh in the U.S. stock market.

Hedge funds that stand against Musk have suffered huge losses! According to data from S3 Partners, during the trading period from November 5th to November 8th, hedge funds shorting Tesla lost at least $5.2 billion on paper. Due to the strong rise in stock prices, many funds that previously held short positions have begun to withdraw. Hazeltree’s data shows that as of November 6th, only 7% of hedge funds were still net short on Tesla, while this proportion was 17% at the beginning of July.

In terms of news, Wedbush analyst Dan Ives raised his target price for Tesla from $300 to $400 and maintained his “outperform” rating. He said, “We estimate that Tesla’s opportunity in the artificial intelligence/autonomous driving field alone is worth 1 trillion dollars.”

【Weekly Market Overview】

1. The release of the October Consumer Price Index (CPI) report last week alleviated concerns about the emergence of a new wave of inflationary pressure. While inflation remains uncomfortably high, the latest data indicates that consumer price pressures are gradually easing.
   
2. Stocks rebounded and interest rates fell last week, driven by better-than-expected inflation (supporting the rationale for the Federal Reserve’s likely rate cut in September) and strong corporate earnings announcements.
   
3. The stock market hit record highs last week. Although we anticipate more turbulence ahead as we progress, we believe this does not signify the market’s ultimate peak. The combination of sustained economic growth, rising profits, and less restrictive Fed policies continues to provide a positive backdrop for the ongoing bull market.

The Consumer Price Index (CPI) report for October, released last week, alleviated concerns about the emergence of a new wave of inflationary pressure. Despite inflation still being high, the latest data indicates that consumer price pressures are gradually easing. Inflation performed better than expected (supporting the possibility of a rate cut by the Federal Reserve at some point this year) and corporate profits remained strong. The stock market hit new highs last week. While we anticipate more volatility ahead, we believe this does not signify the market’s peak, as sustained economic growth, rising profits, and fewer constraints from the Federal Reserve provide a positive backdrop for the continuation of the bull market. We believe that the peak of inflation has passed, while the peak of the stock market lies in the future. Going forward, we need to see further support in areas such as housing prices, as a decline in commodity prices may offer less assistance. Meanwhile, the growth in corporate profits will support further gains in the stock market.

Key points:

1. Inflation data eases market concerns.

• Last week’s release of the April Consumer Price Index (CPI) report alleviated concerns about a new round of inflationary pressure. Despite inflation still being on the high side, the data shows that consumer price pressures are gradually easing.

• Driven by better-than-expected inflation data and strong corporate earnings announcements, the stock market rose, and interest rates fell.

2. Stock market hits new highs:

• The stock market hit new highs last week. Although there may be volatility in the future, we believe this is not the ultimate peak for the stock market. With economic growth, increasing profits, and the Federal Reserve’s policy becoming more accommodative, the bull market is expected to continue.

• Stocks typically expand their gains after surpassing previous peaks.

3. The Relationship between Inflation and the Stock Market:

• The peak of inflation has passed, inflation is declining, and the stock market is rising. The market anticipates a possible interest rate cut by the Federal Reserve this year.

• The April CPI report shows that the overall core CPI has dropped to 3.6% year-on-year, the lowest in three years. While service prices remain high, commodity prices continue to decline, especially in automobiles and household goods.

4. Market Outlook:

• We expect inflation to continue easing. The results of the April CPI report have strengthened the market’s expectation of an interest rate cut by the Federal Reserve this year.

• Pay attention to changes in housing prices. Rental data in the coming months is expected to be helpful, but progress may be slow.

5. Stock Market and Corporate Earnings:

• The new bull market started in October 2022, and despite fluctuations, the S&P 500 index has risen by nearly 52% since then. It has risen by over 10% so far in 2024.

• The stock market’s rise is not only driven by the technology sector but also by more cyclical sectors (such as industrial and financial) and defensive and interest rate-sensitive sectors (such as utilities) showing strong performance recently.

• Corporate earnings growth will be the main driver of future stock market gains, with double-digit earnings growth expected in 2024.

6. Dow Jones Industrial Average Breaks 40,000 Points:

• Last week, the Dow broke through 40,000 points for the first time. The significance of this number itself is not great; more importantly, it reflects the strong rise in stock prices over the past few months and years.

• Breaking through 40,000 points is mainly due to continuously improving financial data.

• Excluding Biogen, Gilead Sciences, and Pfizer, the blended earnings growth rate of the S&P 500 index will increase from 5.4% to 9.7%.

7. Interest Rates and Commodity Prices:

• We believe that the 5% level reached by the 10-year Treasury yield in October last year will be the peak of this Federal Reserve tightening cycle.

• Oil and gold prices are diverging. Oil prices have dropped by over 35% from their peak in 2022, while gold prices recently reached a new high of $2,400 per ounce.

8. Return of Speculative Assets:

• Last week, “meme stocks” like GameStop and AMC once again became hot topics, with their stock prices soaring. This indicates

Weekly market statistics

• Dow Jones Industrial Average: 40,004 (up 1.2%)
  
• S&P 500 Index: 5,303 (up 1.5%)
  
• Nasdaq Index: 16,686 (up 2.1%)
  
• MSCI EAFE Index: 2,381.35 (up 1.5%)
  
• 10-year Treasury yield: 4.42% (down 0.1%)
  
• Oil price: $79.53 (up 1.6%)
  
• Bonds: $96.81 (up 0.6%)

Today, let’s explore a sports product company – On Holding AG (ONON).

Basic Information and Business Introduction of ONON

On Holding AG (ONON) is a sports product company headquartered in Zurich, Switzerland, founded in 2010. The company focuses on developing and distributing high-performance running shoes, apparel, and accessories, covering various fields including running, outdoor, training, all-day activities, and tennis. On Holding AG’s products are sold through independent retailers, global distributors, online sales, and its own high-end stores.

The business of ONON is divided into the following main parts:

• Athletic Shoes: On Holding AG is known for its innovative running shoe designs, especially its iconic CloudTec® technology, which offers excellent cushioning and comfort.
• Sports Apparel: The company offers a variety of high-performance sports apparel suitable for different sports activities, including professional attire for running, training, and outdoor activities.
• Accessories: On Holding AG also sells sports accessories such as socks, hats, and bags to meet the comprehensive needs of sports enthusiasts.

On Holding AG has secured a significant position in the global sports goods market through its innovative designs and high-performance products, and it continues to meet the needs of consumers worldwide through technological innovation and market expansion.

Areas Where ONON Holds a Global Leading Position and Key Success Factors

ONON maintains a leading position in several areas. Here are some examples:

• High-Performance Running Shoes: On Holding AG is a globally recognized brand for high-performance running shoes, famous for its innovative cloud technology (CloudTec®) shoes. Key success factors include unique cushioning technology, lightweight design, and outstanding user experience.
• Sports Apparel and Accessories: In addition to running shoes, On also offers a variety of high-quality sports apparel and accessories. Key success factors are the use of quality materials, stylish design, and exceptional functionality.
• Sustainability: On Holding AG is committed to sustainable development, reducing environmental impact by using eco-friendly materials and sustainable production processes. Key success factors are continuous innovation and commitment to environmental protection.

Key success factors for ONON include:

• Technological Innovation: The company’s continuous investment in running shoe technology, especially its patented cloud technology (CloudTec®), ensures the high performance and market competitiveness of its products.
• Brand Positioning: On has established a strong brand image in the market with its high-quality and fashionable sports equipment, winning a broad user base.
• Global Market Expansion: The company expands its market globally, enhancing brand recognition and market share through multi-channel sales and international cooperation.
• Customer Experience: On focuses on customer experience, providing excellent customer service centered on user needs, from product design to after-sales service.

Other Business Areas and Projects of ONON

• Innovation Collaboration: The company collaborates with renowned athletes, designers, and technology companies to promote product innovation and market promotion.
• Community Engagement: On actively participates in community activities and sports events, giving back to society and enhancing its corporate social responsibility image.
• Education and Training: The company offers a wide range of education and training programs to help employees and partners understand the latest product technologies and market trends, improving overall competitiveness.

On Holding AG has consolidated its market leadership in high-performance running shoes, sports apparel, and accessories through technological innovation, brand positioning, and customer experience. The company’s extensive global market expansion and emphasis on sustainable development maintain its competitive edge in the industry. Additionally, On’s efforts in innovation collaboration, community engagement, and education and training further enhance the company’s market influence and social image.

Main Strategic Transformations, Core Driving Factors, and Key Event Analysis Since the Company’s Establishment

On Holding AG, a shoe and sportswear manufacturer based in Switzerland, focuses on providing high-performance sports equipment through innovative design and technology. Since its establishment, On Holding has achieved rapid growth and consolidated its global market position through product innovation, market expansion, and brand building. Here is an analysis of some of the main strategic transformations, core driving factors, and key events since the company’s establishment.

2010: On Holding AG was established, launching its first running shoe with the innovative CloudTec technology.

2012: The company began international expansion, entering the German and Japanese markets.

2014: On Holding launched the Cloud series of running shoes, which quickly gained market recognition.

2017: The company opened an office in New York, officially entering the US market.

2019: It received investment and strategic cooperation from tennis star Roger Federer, enhancing brand influence.

2020: Introduced the new Cyclon subscription plan, promoting recyclable running shoes.

2021: On Holding AG went public on the New York Stock Exchange (NYSE) under the ticker ONON, raising funds for business expansion.

2022: Launched the first professional running apparel series, further expanding the product line.

Here is an analysis of some key events and driving factors in On Holding’s strategic transformation:

2010: On Holding AG was established, launching its first running shoe with the innovative CloudTec technology, aiming to enhance the running experience through innovative technology.

2012: The company began international expansion, entering the German and Japanese markets. The driving factor was to increase market share and brand visibility through international expansion.

2014: On Holding launched the Cloud series of running shoes, which quickly gained market recognition. The driving factor was to meet the needs of different runners through product innovation, improving market competitiveness.

2017: The company opened an office in New York, officially entering the US market. The driving factor was to expand brand influence and market share by entering one of the world’s largest sports markets.

2019: It received investment and strategic cooperation from tennis star Roger Federer, enhancing brand influence. The driving factor was to enhance brand image and market appeal through cooperation with well-known athletes.

2020: Introduced the new Cyclon subscription plan, promoting recyclable running shoes. The driving factor was to respond to the global trend of sustainable development and meet the needs of environmentally conscious consumers.

2021: On Holding AG went public on the New York Stock Exchange (NYSE) under the ticker ONON, raising funds for business expansion. The driving factor was to use capital market resources to support the company’s long-term growth strategy.

2022: Launched the first professional running apparel series, further expanding the product line. The driving factor was to diversify product lines, increase revenue sources, and meet market diversification needs.

On Holding AG’s strategic transformation has mainly focused on product innovation, market expansion, and brand building. Through a series of strategic investments and technological upgrades, the company has established a strong competitive position in the global sports equipment market. In the future, On Holding may continue to invest in emerging markets and technological innovation to maintain its leading position in the global sports equipment industry and meet the changing customer needs and market trends.

Introduction of Successive CEOs and Their Main Contributions to the Company

Here is a detailed introduction to the successive Chief Executive Officers (CEOs) of On Holding AG since its establishment and their main contributions to the company:

David Allemann, Caspar Coppetti, and Olivier Bernhard: David Allemann, Caspar Coppetti, and Olivier Bernhard are the co-founders of On Holding AG. They have jointly led the company from its inception in 2010 until the IPO in 2021. These three founders played a crucial role in the company’s early development:

• They founded the company and launched the revolutionary CloudTec running shoe technology, transforming the running shoe market.
• They expanded the company from the local Swiss market to the global market, quickly gaining international reputation through innovative design and excellent product quality.
• They attracted investment and cooperation from tennis legend Roger Federer, further enhancing brand visibility and market influence.

Marc Maurer and Martin Hoffmann: Marc Maurer and Martin Hoffmann have served as the co-Chief Executive Officers of On Holding AG since 2021 and continue to lead the company to this day. Under their leadership, the company has achieved the following important progress:

• Successfully led the company’s initial public offering (IPO) in 2021, raising $746 million in funds, providing strong support for future development.
• Promoted further expansion of the company in the global market, especially in the growth of the North American and Asian markets.
• Emphasized sustainable development and corporate social responsibility, launching a series of environmentally friendly products and projects to reduce environmental impact.
• Strengthened technological innovation, launching new lines of athletic shoes and apparel, enhancing product competitiveness and market appeal.

Under the leadership of successive CEOs, On Holding AG has successfully achieved technological innovation, market expansion, and brand building. From a startup running shoe brand, On Holding AG has gradually grown into a global leader in athletic shoes and sportswear, with a wide range of products and outstanding market performance. In the future, the company is expected to continue to lead in technological innovation and market expansion, providing high-quality sports products and experiences for consumers worldwide.

Future Development Outlook of On Holding AG

On Holding AG, a high-performance athletic shoe and sportswear company based in Switzerland, is renowned for its innovative designs and quality products. Here is a detailed analysis of the future development outlook for On Holding AG:

Technological Innovation and Product Development: On Holding AG will continue to make significant investments in technological innovation and product development. The company will focus on developing new materials and technologies to enhance the performance and comfort of athletic shoes and apparel. By continuously launching innovative products, such as shoes with better cushioning and support, On Holding AG will maintain its leading position in the high-performance sports market.

Global Market Expansion: On Holding AG will further expand its global market, particularly in key regions like North America, Europe, and Asia. The company plans to increase its global presence by opening more retail stores, enhancing online sales channels, and strengthening localized marketing efforts. Expanding into international markets will help the company capture more growth opportunities in new regions.

Brand Building and Marketing: On Holding AG will intensify its efforts in brand building and marketing, aiming to elevate brand awareness and reputation through multi-channel promotional activities. The company will leverage digital media and social platforms to broaden the brand’s influence and attract more potential customers. Collaborations with well-known athletes and influential figures will further enhance the brand image of On Holding AG.

Sustainability and Environmental Responsibility: Committed to promoting sustainable development and environmental initiatives, On Holding AG will adopt eco-friendly materials and production processes to reduce carbon emissions and environmental impact. The company will also actively participate in environmental projects and community activities to enhance its corporate social image and influence.

Customer Experience and Service Quality: On Holding AG will focus on enhancing customer experience by optimizing service processes and improving service quality, providing customers with efficient and satisfying shopping experiences. The company will strengthen customer relationship management, using advanced CRM systems to offer personalized services and support, thereby increasing customer loyalty.

Supply Chain Optimization and Cost Control: On Holding AG will improve operational efficiency and profitability by optimizing supply chain management and implementing cost control measures. The company will utilize advanced supply chain management technologies to ensure high-quality products and timely delivery while reducing operational costs.

Employee Training and Team Building: On Holding AG will continue to invest in employee training and team building, enhancing the professional skills and service levels of its staff. The company will establish a comprehensive training system and career development pathways to attract and retain high-quality talent, providing a solid talent guarantee for the company’s continuous development.

Financial Stability and Capital Management: To ensure financial stability and sustainable growth, On Holding AG will optimize its capital structure and management, raising funds through diversified financing channels to support the development of new projects and the upgrading of existing facilities. The company will enhance its profitability and financial health by improving operational efficiency and cost control.

Mergers and Acquisitions and Strategic Cooperation: On Holding AG will seek strategic merger and acquisition opportunities and cooperative ventures to rapidly expand its business scale and market coverage. By acquiring enterprises and assets with market potential and strategic value, the company will be able to integrate resources, achieve business synergies, and enhance market competitiveness.

The future development prospects of On Holding AG are promising. Through continuous strategic measures such as technological innovation, global market expansion, brand building, and sustainable development, On Holding AG is expected to maintain its leading position in the high-performance sports market and achieve long-term stable growth.