A brief preventive rate hike by the Federal Reserve is the baseline scenario; focus on global risk-on opportunities in the latter half of the fourth quarter.

A brief preventive rate hike is the baseline scenario. Domestically, the contradiction of "strong supply, weak demand" and "rising prices, falling volumes" is becoming prominent. The weakening of the export chain warrants vigilance, and the repair of domestic demand depends on fiscal physical volumes taking over. Mortgage interest subsidies are a positive signal. Overseas, the combination of "low layoffs, weak hiring" plus sticky inflation in the U.S. has pushed the Federal Reserve into a rate hike cycle, but high rates and high oil prices are suppressing traditional demand. The reflexivity of interest rates will also gradually show its inhibitory effect on AI investment. Under the AI substitution effect, employment is in a weak equilibrium, all of which reduce the necessity for continued rate hikes. High oil prices caused by the Middle East stalemate remain the biggest disturbance. Under the baseline scenario, we judge that this round of Federal Reserve action is a brief preventive rate hike, but we still need to guard against the risks brought by uncertainty in the Middle East situation. Artificial Intelligence Industry Catalysis from large model capabilities still awaits the next round of breakthroughs, but computing power demand has not weakened. The ROI ledger is gradually becoming clearer. Industrial technology and application breakthroughs are not linear. Embrace beta during acceleration, and focus on structural opportunities during transition periods. Major Asset Allocation and Strategy Recommendations Based on macro and industry trend research and historical review, we believe there is no need to be overly pessimistic about risk assets. In the short term, we should still seek directions with more advantages on the numerator side. In the latter half of the fourth quarter, there may be global risk-on opportunities as the Federal Reserve's rate hike path becomes further clarified, but it is still necessary to retain the means to hedge against the tail inflation risks brought by the Middle East stalemate and high oil prices. This article is reprinted from "GF Hong Kong Brokerage". GMTEight editor: Zheng Yuyang.