Today's Focus: The Federal Reserve Faces its First Loss in a Century

Market Review

Market Focus

Chinese Market

1. September IPO First Order on Minimum amount of futures account openingBSE Temporarily Suspended

Hubei Kangnong Seed Industry Co., Ltd., focusing on corn seeds, saw its IPO on the Beijing Stock Exchange temporarily suspended by the Listing Committee. One of the main reasons for the suspension was related to concerns over the reasonableness of the company’s capacity forecast for its fundraising projects. The Beijing Stock Exchange requested the issuer to explain the reasonableness of the capacity forecast and the sustainability of performance growth when entering more competitive market regions, considering the increase in capacity scale before and after the production of fundraising projects and the forecast of revenue growth in new and old sales regions, based on existing technology reserves and operational capabilities.

2. Hubei Accelerates "World Optics Valley" Construction Action

The People's Government of Hubei Province issued the "Accelerating the Construction of 'World Optics Valley' Action Plan", implementing ten key measures to fully kickstart the construction of "World Optics Valley". By 2035, the goal is to build a "World Optics Valley" with global influence. The plan refers to establishing an internationally leading silicon photonics chip innovation platform and completing the development of 12-inch basic silicon photonics wafer processes by 2025; adopting an "optics-vehicle cooperation" development approach, breaking through development based on automotive wireless communication technology such as millimeter-wave radars, lidar and other sensing systems, and accelerating the launch of L4 and above autonomous driving systems.

3. Japan's Food Exports to China Plunge by 41.2%

According to the preliminary trade statistics for August released by Japan's Ministry of Finance that day, food exports to China, including seafood, amounted to 14.186 billion yen (about 700 million yuan), a decrease of 41.2% over the same period last year, marking the largest decline in nearly 12 years since the East Japan Earthquake. The Jiji Press analyzed that the full-scale suspension of Japanese seafood imports starting from August 24 by the Chinese government, which opposes the discharge of Fukushima contaminated water into the sea, is increasingly showing its effects.

International Market

1. The Federal Reserve Faces Its First Loss in a Century

Data shows that the Federal Reserve suffered an operational net loss of $57.384 billion in the first half of 2023, with the annual operational net loss potentially exceeding $100 billion. The last time the Federal Reserve reported an annual operational net loss was in 1915, 108 years ago. As a result, a spokesperson for the Federal Reserve revealed to the media that the Federal Reserve system will cut about 300 jobs by the end of this year. This is the first reduction in staff by the Federal Reserve since 2010.

2. Escalation of the United States Auto Workers Strike

Shawn Fain, president of the United Auto Workers (UAW), stated that the union’s strike would expand nationwide, with a new batch of striking workers joining the strike at 38 locations across 20 states in the US. This move is expected to add about 5600 auto workers to the UAW's strike against the big three, meaning the strike's scale will expand to nearly 20,000 people.

3. J.P. Morgan Declares "Super Cycle Return"

Wall Street's biggest energy bull, Goldman Sachs, faced setbacks amid this year's oil price plunge, with its star analyst, Chief Commodities Strategist Jeff Currie, leaving in disappointment. However, as oil prices rebound by 30% from their mid-year lows, J.P. Morgan has decided to step up and take over the "bull market flag" from Goldman Sachs. The company's energy analyst, Christyan Malek, expects oil prices could rise to $150/barrel in the short to medium term, 62.6% higher than Brent crude's current price, predicting a global oil shortfall expanding to 7.1 million barrels/day by 2030.

4. The Ongoing Russian Diesel Ban May Disrupt the Global Market

Russia's decision to ban diesel and gasoline exports could disrupt fuel supplies before the onset of winter, but the depth of the impact depends on how long the ban lasts. According to Vortexa data, so far this year, the country has exported over 1 million barrels of diesel fuel daily, narrowly becoming the world's largest sea exporter. This means that the market will lose a significant supply in a short period, enough to meet all of Germany's requirements.

Next Week's Focus

In the coming week, key data to focus on include the German September IFO Business Climate Index, U.S. August Seasonally Adjusted Annual Rate of New Home Sales, U.S. API and EIA crude oil inventory changes for the week ending September 22, U.S. August Durable Goods Orders preliminary month-on-month, U.S. initial jobless claims for the week ending September 23, and CPI for Japan and the Eurozone in September. Major events to watch include speeches by European Central Bank President Christine Lagarde and Minneapolis Federal Reserve President Neel Kashkari, along with the release of the Bank of Japan's July monetary policy meeting minutes.

The market carries risks, and investment should be cautious. This article does not constitute personal investment advice and has not taken into account individual users' specific investment goals, financial situations, or needs. Users should consider whether any opinions, viewpoints, or conclusions in this article are suitable for their particular circumstances. Investing based on this is at one's own responsibility.