Fed's Powell hints at possible rate cuts; CES tech show highlights; China's National Fund increases SMIC stake.

Federal Reserve's Paulson: Possible Rate Cuts Later This Year

Economic Outlook

Philadelphia Fed President Anna Paulson indicated that further modest rate cuts could be appropriate later this year, depending on favorable economic conditions. She noted:

• Inflation is cooling.
• The labor market is stabilizing.
• Economic growth is projected at around 2% this year.

If these conditions hold, a gentle adjustment to the federal funds rate may be warranted later this year.

CES 2026 Preview: Nvidia and Robotics Showcase

The 2026 Consumer Electronics Show (CES) will take place from January 4-9 in Las Vegas, highlighting strategic shifts among chip giants.

• Nvidia (NVDA) is focusing on industrial AI and robotics.
• AMD and Intel (INTC) are upgrading their traditional PC markets.

The event will emphasize humanoid robots, AI-defined vehicles, and innovative hardware, with fierce competition among companies from China, the US, and South Korea.

Trump Threatens Venezuela's Interim President

On January 3, the US conducted an airstrike in Venezuela, capturing Maduro and his wife. President Trump stated he would "manage" Venezuela until a "safe" transition occurs, threatening interim President Rodriguez with severe consequences if she does not comply. Trump also mentioned the US's need for Greenland.

South Korean President's Visit to China

South Korean President Lee Jae-myung arrived in Beijing for a four-day state visit, marking his first visit to China since taking office. An economic delegation of over 200 South Korean entrepreneurs accompanies him. Discussions will focus on:

• Supply chain investments
• Digital economy
• Environmental cooperation
• Cultural exchanges

Commercial Space Industry Set for Growth in 2026

China's commercial space sector is expected to see a surge in rocket launches in 2026, with several companies planning intensive launch schedules. Key developments include:

• Oriental Space launching the "Gravity One" for frequent commercial missions.
• Deep Blue Aerospace planning its "Nebula One" rocket's maiden flight around the Lunar New Year.

The rapid expansion of launch sites is underway to accommodate the anticipated high-density launch period.

Goldman Sachs' 2026 Investment Themes

Goldman Sachs has released its annual investment outlook, highlighting key themes for 2026:

• Investment in AI infrastructure is entering a new phase.
• Traditional leaders like Nvidia (NVDA), Microsoft (MSFT), and Amazon (AMZN) have seen stagnant stock prices.
• The pharmaceutical sector is diversifying, with Eli Lilly (LLY) outperforming while Novo Nordisk (NVO) faces challenges.

Goldman predicts China's economic growth will exceed market expectations, driven by technological advancements and export leadership.

Mixed Performance in US Stock Markets

On the first trading day of 2026, US stock indices showed mixed results:

• S&P 500 rose by 0.19%
• Nasdaq fell by 0.03%
• Dow Jones increased by 0.66%

Notable stock movements included:

• Nvidia up 1.26%
• Tesla (TSLA) down 2.59%
• Chinese stocks surged, with the Nasdaq Golden Dragon Index rising 4.38%.

Tesla's Q4 Delivery Data Falls Short

Tesla reported Q4 2025 delivery figures of 418,227 vehicles, missing expectations and losing its title as the world's top electric vehicle seller. The total deliveries for the year were 1,636,129.

Warren Buffett Retires After 60 Years

Warren Buffett officially retired as CEO of Berkshire Hathaway (BRK.A) after 60 years, leaving behind a remarkable return record of approximately 6,100,000% since 1965.

LeCun's Departure from Meta and AI Concerns

Yann LeCun, known as the "father of AI," left Meta and revealed internal issues regarding aggressive AI strategies and model testing integrity. He criticized the lack of research experience in new leadership.

Semiconductor Developments in China

On January 2, it was reported that the National Integrated Circuit Fund increased its stake in SMIC (00981.HK) to 9.25%, nearly doubling its holdings.

Baidu's Kunlun Chip Valuation Insights

Goldman Sachs noted that Baidu's Kunlun chip could be valued at $22 billion if it receives a similar market valuation as Cambricon, representing 45% of Baidu's current market cap.

Xiaomi's Response to Vehicle Quality Concerns

Xiaomi's Chairman Lei Jun addressed concerns about the quality of their vehicles by live-streaming a disassembly of their second model, the YU7, to demonstrate its build quality.

BYD's 2025 Sales Report

BYD reported a total of 4.602 million electric vehicles sold in 2025, marking a 7.73% increase year-on-year.

Dragon Power Technology's Investment Plans

Dragon Power Technology announced plans to invest 2 billion yuan in a high-performance lithium battery project.

Pop Mart's Stock Decline

Pop Mart's stock has fallen over 40% since reaching a peak in August, attributed to declining interest in its core IP products.

Economic Data to Watch

Investors should pay attention to China's December RatingDog services PMI and the US December ISM manufacturing PMI for economic insights.