The share of actively managed ETFs is rising rapidly, with a CAGR of 46%. In 2024, global net inflows into active ETFs reached a record $349.2 billion, accounting for 28% of total global ETF flows. The main increment comes from JPMorgan's index-enhanced ETFs, namely JEPQ/JEPG. It is believed that the crypto space will also see more non-index products emerging, bringing the convenience of complex strategies to all ordinary users.

The level of Q2 performance in the US stock market this round is one of the highest historically, aside from the pandemic. The reason so many companies exceeded expectations is largely that previous analysts were too pessimistic and set their forecasts too low. As a result, the stock price increases for these companies that exceeded expectations are smaller than usual. Moreover, the penalty for those that missed expectations is the largest in six years. Additionally, the previous market style overly pursued safety, leading to a 57% premium in price-to-earnings ratios for high-quality stocks (which include high profit margins, strong balance sheets, etc.) compared to low-quality stocks. This level is in the 94th percentile historically since 1995, far exceeding the long-term average premium of 15%. This extreme premium indicates that the valuations of high-quality stocks have overly reflected their "safety," while low-quality stocks are significantly undervalued. This has created an asymmetric distribution of "limited downside risk and greater upside potential." If inflation data declines or the Federal Reserve signals a more accommodative monetary policy while economic growth remains resilient, the decrease in real interest rates will lower the financing costs for low-quality stocks and enhance their profit expectations. In this scenario, undervalued low-quality stocks may experience a rapid rebound due to valuation corrections and profit improvements. In fact, cryptocurrencies also have some low-quality characteristics; aside from Bitcoin, the overall trend has been suppressed against the backdrop of the US stock market hitting new highs.

Has China's exports been affected by the United States? Yes, but the net impact is at least not reflected in the data.

The executive order signed by Trump the day before yesterday broadens the investment scope of the U.S. 401(k) retirement accounts, allowing the inclusion of alternative assets such as cryptocurrencies and private equity funds. Although the headlines are largely positive for cryptocurrencies, these alternative assets also include precious metals like gold and silver, which were previously classified as "collectibles." So, this is actually a big deal for the gold industry as well. However, these high-risk assets will not automatically be included in employer plans. Employers and plan administrators need to conduct a selection process. Therefore, it may take at least a few months before we actually see pension funds entering the crypto or gold markets, and the pace of entry may start off quite slow. This is because investment administrators have a "duty of prudence" in reviewing the assets, and if they incur losses for the pension funds, they may face litigation risks. Thus, it is expected that, apart from companies targeting young IT professionals, most companies will take a considerable amount of time to open up to alternative assets. Additionally, the 401(k) plan consists of both employer contributions and employee contributions. The latter has always been able to freely purchase cryptocurrencies and gold ETFs, so this portion of funds has already entered the market. However, over 90% of contributions come from the former, and the strategies available here are generally quite limited. Administrators need to actively add options, as they bear the responsibility for users' retirement, and they will certainly be very cautious with assets that have high volatility.

The executive order signed by Trump the day before yesterday broadens the investment scope of 401(k) retirement accounts in the U.S., allowing the inclusion of alternative assets such as cryptocurrencies and private equity funds. Although the headlines are largely positive for cryptocurrencies, these alternative assets also include precious metals like gold and silver, which were previously classified as "collectibles." So, this is actually a big deal for the gold industry as well. However, these high-risk assets will not automatically be included in employer plans. Employers and plan administrators need to conduct a selection process. Therefore, it may take at least a few months before we actually see pension funds entering the crypto space or gold market, and the pace of entry may start off quite slow. This is because investment administrators have a "duty of prudence" in their asset reviews, and if they incur losses for pension funds, they may face litigation risks. Thus, it is expected that, apart from companies targeting young IT professionals, most companies will take a considerable amount of time to open up to alternative assets.

Figure 1: How GPT-5 views itself Figure 2: GPT-5's ranking in mathematical logic Figure 3: ChatGPT's monthly visits reach 5.7 billion, ranking second to Google's Gemini, which has less than 700 million monthly visits.

The level of speculation in this round of increases is the highest since the pandemic, while everything is slowing down.

Over the past four weeks, cryptocurrency funds have recorded the largest inflows ever ($12.2 billion). Citibank noted that since its launch in 2024, the flow of U.S. spot Bitcoin ETFs alone has accounted for 41% of the change in Bitcoin returns. An estimated weekly inflow of $1 billion in ETFs correlates with Bitcoin's 3.6% return growth. Citigroup Bitcoin Year-End Forecast: - Base scenario: $135,000. Assuming a 20% increase in users, a slight negative impact on macro factors, and an additional $15 billion in ETF inflows. - Bull market scenario: $199,000. Mainly driven by more aggressive ETF inflows ($25 billion). - Bear market scenario: $64,000. This is mainly driven by the deterioration of the macro environment, especially the weakening of US stocks.

BlackRock's Tactical Views on Latest Asset Classes (Next 6-12 Months) stock market U.S. Equities (Overweight): While policy uncertainty and supply chain disruptions weighed on near-term growth, the AI theme provided strong support for corporate earnings. Stronger profitability and margins of U.S. companies than other developed markets support their higher valuations. European Equity (Neutral): Europe's progress on the solidarity and pro-growth agenda could boost economic activity, but BlackRock is cautious until it sees how it responds to structural challenges. Japanese Equities (Overweight): The return of inflation and shareholder-friendly corporate governance reforms have brightened the outlook for Japanese equities. Emerging Market Equities (Neutral): Valuations and domestic policies are supportive, but geopolitical tensions and concerns about global growth keep them on the sidelines for the time being. China Equities (Neutral): Trade policy uncertainty and limited policy stimulus keep it cautious. At the same time, the report also looks at the structural challenges facing China, such as an aging population. Fixed income markets Long-term U.S. Treasuries (underweight): Persistent budget deficits and inflationary pressures are likely to push up term premiums (compensating for the risk of holding long-term bonds) over the long term. Short-term U.S. Treasuries (Overweight): In a tactical view, short-term Treasuries are treated as cash. Eurozone Government Bonds (Neutral): Yields are attractive, especially in favour of marginal countries such as Italy and Spain. Emerging market local currency bonds (Neutral): Local currency bonds are more attractive than hard currency debt because debt levels have improved in many emerging markets and currencies have been resilient in the face of trade uncertainty. Investment-grade (IG) credit: Prefer investment-grade credit in Europe over the US. The report is underweight on long-term investment-grade credit as spreads are tight and prefer to take risk in equities.

The current 41% share of government spending has historically only been achieved during the American Civil War, World War I, World War II, the global financial crisis, and the pandemic. Is the United States in a "quasi-wartime" fiscal state?