Hope you all had a great weekend. It is cold out there this morning!

Hang Seng gapped higher to end the day at +0.82% on moderate volume and strong breadth (39 advancers versus 10 decliners) buoyed by Jay Powell inspired rally (credit to Bloomberg Radio’s Denise Pellegrini for today’s subject headline) and Friday’s China bank reserve requirement ratio cut which was announced after the close. Chatter that Vice Premier He swung by the US China trade in Beijing was another positive. Tencent gained +2.25% worth 59 of the indice’s 209 point gain followed by HSBC’s +0.85%/22 and China Mobile’s +1.5%/21 index points. Within the MSCI China All Shares’ HK stocks, materials was the leading sector gaining +2.14%, communications +1.95%, energy +1.86%, tech +1.7%, healthcare +1.47% etc. Geely Auto -3.06% dragged discretionary down -0.48% on poor December sales off -39% and 2019 sales target of 1.51mm. The expiration of China’s car tax rebate at YE 2017 continues to weigh on autos. Southbound Connect volumes were moderate with sellers outpacing buyers nearly to 2 to 1. Tencent saw 6 to 1 sellers which is interesting as online gaming restrictions appear to loosening.

Shanghai & Shenzhen +0.72% and +1.17% on moderate volume and strong breadth with only 297 decliners and 3,281 advancers cheered on by trade talks, Powell and RRR cut. Within the MSCI China All Shares’ mainland stocks, tech gained +3.31% followed by industrials +1.99%, communications +1.76%, energy +1.4%, materials +1.32% and staples +1.16%. Financials were off slightly -0.13%. Foreign buyers were in a festive mood as Northbound Connect volumes were skewed to buyers. While Ping An was sold 2 to 1, Kweichow Moutai was bought 5 to 1. I read a headline that Kweichow reported $430mm of revenue was generated outside of China. While the company did $11B of revenue, if you have ever tried the liquor you will know why I am surprised by the amount of sales! Acquired taste I suppose.

December FX Reserves  $3.072 billion versus estimate $3.071B and November’s $3.061B

• Takeaway: Steady number though stepping back it is amazing how stable CNY has been.

New York Times had a god article on Apple’s struggles in Europe due to high quality Chinese smart providers Huawei, Xiami, Vivo and Oppo. Incredible to see Jay Powell reiterating the Apple revenue cut due to China slowdown on Friday.

Elon Musk is in Shanghai to break ground on Tesla’s Gigafactory 3. Like Apple, I am a big fan of Tesla. From an investment perspective, I suspect Tesla may run into the same issue Apple is facing: Local competitors providing a good product at a lower price point. Chinese EV maker Leap Motor plans on making 10,000 S01 coupe this year. The EV will cost a mere CNY 110,000 ($16,000).

Is it me or is CNBC’s Jim Kramer interviewing for a job in the administration? His anti-China rhetoric has reached a level of absurdity.

CNY 6.85

Yields back up giving fuel to the equity rally.

• Yield on 1 Day Chinese Gov’t Bond 1.44%
• Yield on 10 Year Chinese Gov’t Bond 3.1%
• Yield on 10 Year China Development Bank Bond 3.63%

Commodities were higher on both exchanges