Here is the English translation of the provided text:

1. U.S. Treasury Yields Surge, Repo Market Crisis Looms?

Last week, U.S. Treasuries were sold off, with yields across the board rising. The yield on the 10-year U.S. Treasury note increased by about 15 basis points, reaching its highest level since July. However, the U.S. stock market showed resilience last week, with the Nasdaq 100 index rising by 0.1% for the week, approaching the historical high set on July 10th. Analysis suggests that the main drivers of stock market returns are still ample liquidity, policy easing, and good economic and earnings growth. The rise in bond yields does not necessarily have a negative impact on the stock market rebound. Nevertheless, the sharp increase in U.S. Treasury yields has also raised market concerns, with market sentiment becoming tense and the VIX volatility index closing up 6.55% last Friday. In early October, the Fed's repo rate corridor, which is the pillar of the entire U.S. financial system, broke down — the general collateral rate once soared to nearly 40 basis points higher than the reverse repo rate. Last Friday, the Fed's overnight reverse repo agreement (RRP) usage was $227 billion, at least the lowest since 2021. Former Fed trader and current U.S. Bank interest rate strategist Mark Cabana warned that the U.S. may be facing a new repo market crisis. He said that the current financing situation is very similar to the period before the 2019 repo market collapse. At that time, the overnight rate in the U.S. repo market soared, and the money market faced severe short-term liquidity risks. Since early September, due to the increase in Treasury cash (TGA) balances at the end of the quarter, the recent Fed rate cut leading to a decrease in BTFP balances, and the end-of-third-quarter financial window dressing, about $260 billion in reserves have flowed out of the U.S. banking system. Subsequently, as reserves left the system, the repo rate suddenly soared to the highest level since the financial system was paralyzed by the COVID-19 pandemic. However, some analysis points out that the "similar situation" in 2019 does not mean it is exactly the same. Because this time, in addition to $3.09 trillion in reserves, there is also $300 billion in liquidity support, i.e., the reverse repo tool. However, quantitative tightening has not ended, and the upcoming new round of U.S. Treasury issuance will impact the market. Analysis suggests that the exhaustion of reverse repos is just a matter of time, especially if the Treasury injects Treasury bonds into the system again during the next crisis, the total reserves may fall back below $3 trillion, and the market may face another liquidity crisis. This week's focus: five out of the seven major U.S. stocks will release quarterly reports; the U.S., France, Germany, and the eurozone will announce Q3 GDP data on Wednesday; U.S. September PCE data and October non-farm employment report will also be released.

Last week, the U.S. stock market banking sector fell by 1.5%, technology stocks (Google, Amazon, Facebook, Apple, and Microsoft) saw stock rotation and rises, Treasury yields continued to rise, with the 2-year Treasury yield breaking through 4.1%, and the 10-year at 4.24% (2-year and 5-year Treasury auctions). U.S. September durable goods new orders fell less than expected, with the probability of two consecutive 25 basis point rate cuts expected to be 80%. Since the Fed started quantitative tightening in June 2022, it has reduced from $8.9 trillion to the current $7 trillion. When the Fed's overnight reverse repo agreement (RRP) balance drops to zero, quantitative tightening is about to stop. The dollar repo market concerns dollar liquidity, interest rate trends, and even the dollar exchange rate; the rise in repo rates indicates that repo financing demand exceeds cash supply, mortgage-backed securities (MBS) market volatility rises, repo rate pressure increases, which may affect the federal funds rate.

Advertisement

The rise in U.S. Treasury yields may put pressure on China's exchange rate.

2. Deckers Outdoor, Parent Company of UGG and New Balance, Beats Q2 Earnings Expectations and Raises Full-Year Sales Guidance

Deckers Outdoor reported better-than-expected second-quarter results and raised its annual sales forecast due to strong demand. The company's profit for the second fiscal quarter increased by 35% year-over-year to $240 million, or $1.59 per share, with sales increasing by 20% year-over-year to $1.31 billion. The company expects net sales for the fiscal year 2025 to grow by 12% to $4.8 billion (previous guidance was $4.7 billion), with a gross margin between 55% and 55.5%, and earnings per share between $5.15 and $5.25. Deckers Outdoor's fashionable and innovative brands such as Hoka, UGG, New Balance, and Roger Federer-backed On are popular among consumers, especially in running products, where they have taken market share from giants like Nike. Deckers reported that Hoka's sales grew by nearly 35% in the second quarter, and UGG brand sales increased by 13%. Telsey Advisory Group analyst Dana Telsey said, "In an uncertain macro business environment, Deckers continues to deliver strong performance, indicating that its strong market position and healthy brand portfolio can continue to drive long-term growth." As Dick's Sporting Goods (DKS) and Nordstrom (JWN) replenish consumer-favorite products, Hoka occupies an increasing number of spots on the shelves of these two retailers. Deckers' expected price-to-earnings ratio for the next 12 months is 25.95 times, Nike's is 26.59 times, and On's is 43.62 times.

Deckers Outdoor maintains a high growth trend for the full year, with full-year sales expected to exceed $4.8 billion, full-year operating profit margin between 20% and 20.5%, and earnings per share between $5.15 and $5.25. Deckers Outdoor's Hoka's three-dimensional product matrix, satellite brands CLIFTON, BONDI, SKYWARD X, and SKYFLOW, etc., have gained new customers in professional fields such as road marathons and rock climbing. The company's main brands Hoka (annual sales reaching a milestone of $2 billion) and UGG saw sales increase by 32% and 13% year-over-year, respectively. Overseas expansion has been significant, with a year-over-year increase of 28%. Inventory is $777 million, maintained at an 8-week level. Shareholder returns: the company repurchased $104 million at $152 per share in the quarter. Meanwhile, Amer Sports, a major shareholder of China's Anta, saw a 60% year-over-year increase in sales from October 1st to 7th. Deckers Outdoor's stock price has risen nearly 50% this year, up 580% in 5 years, with a market value exceeding $25.6 billion. In contrast, the giant NIKE's stock price has fallen by 26.5% this year, and has fallen by more than 11% over the past 5 years.

Domestic consumer data in September showed a slight rebound, mainly due to the stimulus of the trade-in policy. It remains to be seen whether residents' income will rebound later.

3. U.S. Federal Court Halts $8.5 Billion Mega-Merger of Luxury Industry Tapestry and Capri

U.S. fashion luxury group Capri Holdings saw its stock price plummet nearly 49% to a four-year low of $21.26 last Friday, far below Tapestry's acquisition offer of $57 per share, while Tapestry's stock price soared by more than 13.5% to its highest level since 2018 over the past six years. Although the specific reasons for the judgment were not disclosed, in the court documents obtained by the media, the U.S. judge stated that "antitrust has entered the fashion industry," and the merger of the two major U.S. fashion giants "will greatly reduce competition in the affordable luxury handbag market." Originally, according to the merger proposal last August, Tapestry's Coach, Kate Spade, and Stuart Weitzman, as well as Capri's Michael Kors, Versace, and Jimmy Choo, and six other fashion brands, would be integrated into a large group. UBS believes that the failure of the transaction will mean a market value of $15 per share for Capri, while Citi believes it will fall to $24 without the transaction. Baird analyst Mark Altschwager believes that Capri's independent value will be around $20 without the transaction. In response, Capri plans to jointly submit an appeal notice with Tapestry, appealing the local court's approval of the FTC's motion to block the merger.A federal judge has granted the Federal Trade Commission (FTC) a preliminary injunction motion, halting Tapestry Group's $8.5 billion acquisition plan for Capri Group. The stock prices of the two companies moved in opposite directions, with Tapestry's market value increasing by $1.3 billion, while CPRI's market value shrank by $2.2 billion. The merger was rejected on the grounds that the combined market share of the two companies in the luxury goods sector would reach 59%, leading to a price increase that would result in a consumer loss of $365 million. The renowned hedge fund Greenlight Capital, which holds Capri (with an entry price of $32), is facing a loss close to 30%.

Domestic luxury goods consumption has slowed down this year, which is related to the slowdown in residents' income growth and the resumption of outbound tourism.

④ ResMed's net profit for the first fiscal quarter increased by 41.90% year-on-year

ResMed's revenue for the first quarter of the fiscal year 2025 was $1.225 billion, a year-on-year increase of 11.08%; net profit was $311 million, a year-on-year increase of 41.90%; basic earnings per share were $2.12, compared to $1.49 in the same period last year. ResMed is a global leader in the development, manufacturing, distribution, and marketing of medical devices and cloud-based software applications that diagnose, treat, and manage respiratory diseases, including sleep-disordered breathing, chronic obstructive pulmonary disease, neuromuscular diseases, and other chronic conditions. The company's products and solutions aim to improve patients' quality of life, reduce the impact of chronic diseases, and lower healthcare costs as global healthcare systems continue to shift care from hospitals to homes and low-cost environments. ResMed's stock closed up 7.12% last Friday, at $256.07, the highest in nearly three years. Keybanc maintained its "buy" rating on ResMed, adjusting the target price from $251.00 to $266.00.

ResMed is the leader in respiratory health management. The company's cloud-based digital health applications and devices aim to provide connected care to improve patient outcomes and increase customer efficiency. Currently, the company has a market value of $37.6 billion, with a stock price increase of 49.93% this year. Amid the popularity of weight loss drugs from Novo Nordisk and Eli Lilly, global tech giants (including Samsung, Google, GARMIN, Apple) are also investing in the diagnosis and treatment of sleep apnea, with CPAP technology (the first-line treatment for sleep apnea syndrome, where the device uses continuous positive airway pressure to keep the airway open, allowing patients to breathe naturally) being a trend.

Opportunities for domestic pharmaceutical stocks may be on the horizon, and attention can be paid to the medical insurance negotiations at the end of the month.

⑤ Digital Realty Trust's stock price hit a new high last Friday after the release of its third-quarter results, with several investment banks raising their target prices

Digital Realty Trust's financial report shows that the company achieved revenue of $1.431 billion in the third quarter of 2024, compared to the previous value of $1.402 billion, and the expected value of $1.44 billion; earnings per share were $1.67, compared to the previous value of $1.62, and the expected value of $1.67. The company's stock price rose by 9.62% last Friday, closing at $181.01, a new high; it has risen by 9.45% in the past five trading days; it has risen by 11.85% in October; it has risen by 34.50% year-to-date; and it has risen by 47.94% in the past 52 weeks. The company is a global leader in data centers, colocation, and interconnection solutions, serving customers across multiple industry verticals from cloud information technology services, communications, and social networks to financial services, manufacturing, energy, healthcare, and consumer products. The company is a Maryland limited partnership that operates entities engaged in the ownership, acquisition, development, and operation of data center businesses. The company operates as a real estate investment trust for federal income tax purposes. Several Wall Street banks have updated their ratings for the stock, with target prices ranging from $170 to $190. Jefferies Investment Bank maintained its "buy" rating on Digital Realty Trust, adjusting the target price from $190.00 to $205.00.

Digital Realty Trust's stock price has risen by 35% this year, with the digital center REIT's market value exceeding $55 billion; large data centers have seen a surge in AI applications, accounting for 50% of total bookings; the quarterly report's revenue met expectations, with EBITDA profits rising, and the company has raised its outlook for the full year of 2024. The company set its highest quarterly bookings to date in the third quarter, reaching $52.1 billion, due to a significant increase in demand from the artificial intelligence and traditional idc concept industries. Digital Realty's recent performance has exceeded all rental forecasts, securing new annualized rental operating income of $521 million, more than double the $252 million in the first quarter. In addition, the company has achieved a milestone in lease renewals, creating annualized revenue of $258 million and a cash margin of 15.2%. It is expected that this extraordinary quarter will greatly boost the company's stock performance.

Data centers are an indispensable core component of big data computing and artificial intelligence, and the performance of the A-share computing power sector can continue to be monitored.