According to reports, Wall Street financial giant Jefferies recently stated that the market is underestimating the likelihood of a Sino-U.S. trade agreement being reached by the end of October. This development could temporarily ease tensions between the two major economies and extend the upward trajectory of risk assets for the remainder of the year. Jefferies senior strategist Christopher Wood highlighted in his "Greed & Fear" report, published on October 16, that President Trump's tariff threats are more of a negotiation tactic than a firm policy. Wood proposed an "ultimate agreement" scenario, where the U.S. lifts restrictions on semiconductor exports in exchange for China removing its rare earth limitations—this is based on a logic of reciprocity in bargaining power. China holds a 92% market share of the critical rare earth magnets used in the U.S. defense system, while U.S. controls are accelerating China’s push for chip industry self-sufficiency. Wood analyzed that Trump is not a "national security fanatic" and might privately agree with Nvidia CEO Jensen Huang's view, which is that the chip ban causes U.S. companies to lose their largest customer base. Jefferies data shows that Nvidia's sales to China dropped from 26% in 2022 to June's figures for this year. Despite continuous discussions about tariffs, the stock market remains robust, bolstered by expectations of a deal. Wood's baseline forecast indicates that a "meeting between the U.S. and Chinese presidents" will at least yield a partial agreement, alleviating the "uninvestable" designation of Chinese assets in the eyes of U.S. fund managers. Polls show that 60% of Americans oppose the tariff agenda, with farmers and consumers feeling the pressure.

The frenzy for AI capital expenditure continues to drive U.S. stocks. Wood emphasized that spending on AI infrastructure remains the core driver of the U.S. stock market's rise, a trend exacerbated by expectations of Federal Reserve easing. OpenAI's partnership with Broadcom to develop custom AI chips indicates an upgrade in capital intensity. "The media’s heated discussions about an 'AI bubble' suggest that the stock market has not yet peaked," he noted, explaining that large-scale companies are using cash rather than debt for investments, while private credit and leveraged traders are entering the arena, intensifying the dual surplus.

Gold and the Dollar: A Narrative of Dual Depreciation. After gold prices broke through $4,200 per ounce, Wood reaffirmed a long-term target price of $6,600 for gold, emphasizing that the real value of the dollar has depreciated by 99% since 1971. When measured in gold, the dollar's current value is merely 0.8% of its 1971 level, reflecting the real cost of deviating from the gold standard. Given increasing fiscal pressures (with the Congressional Budget Office predicting a 6.9% annual increase in interest expenses, far exceeding the nominal GDP growth of 3.8%), he maintains a structurally bearish outlook on the dollar.

Australia: A Fragile Recovery. The final chapter of the report indicates that easing inflation, declining interest rates, and a rebound in the housing market suggest the end of a recession, with per capita disposable income up 2.4% from last year's low. Growth in housing credit and an influx of immigrants support consumer spending. However, Wood warned that productivity continues to deteriorate, and the recovery in employment is largely driven by the public sector. Corporate earnings are weak (with the MSCI Australia index's EPS growing at an average rate of only 2.8% since 2017), and valuations depend on enforced pension inflows and tax-free dividends. While gold mining stocks have surged 113% this year, they represent only 2.8% of the MSCI index, which Wood refers to as a strategic miscalculation by mainstream funds.

Portfolio Adjustments. In this thematic report, Jefferies recommends that fund managers and broad investors increase their holdings of technology stocks in Taiwan (such as TSMC and MediaTek) and major Chinese firms (Alibaba, Tencent, and BYD), while reducing exposure to India. Jefferies believes that the unprecedented wave of AI, while led by the United States, suggests that a smart strategy is to position in Asian hardware and leading internet assets instead of chasing U.S. AI concept speculation.