Guosen: Mid-term asset volatility may intensify. Equities are still the best solution.

Guosen's research report stated that Vibe coding is likely to be the first application in the field of AI that can relatively clearly calculate the business cost and return. Storage space is expected to rise in value in the long term; followed by computing power and communication bandwidth, which are expected to continue to rise in the medium term; and finally electricity and data. The firm believes that with the Federal Reserve's monetary policy leaning towards hawkishness and transparency decreasing, the federal fiscal deficit is within a sustainable framework but partisan games may intensify. With the backdrop of the U.S. macroeconomic fundamentals shifting towards investment as the main growth engine, we believe that the valuation of U.S. bonds, gold, and equities will be under pressure, with increased volatility. However, equities are still the best solution. Guosen's main points are as follows: Every technological revolution is like "putting old wine in a new bottle", but the quality of the "old wine" differs. Reviewing the history of technological revolutions over the past 300 years, we find that the essence of technological revolution is to input old resources into new production functions to solve the scarcity of other old resources. We refer to the new production function as the "new bottle" and the input resources as the "old wine". Some "old wines" can perform consistently well in the new era, generally having three core characteristics: 1) The demand side is disrupted, with the new production function significantly altering the demand structure; 2) The supply side remains stable, with good "old wines" being able to expand production stably in the long term without disruptive changes in the supply pattern; 3) They are consumable, with good "old wines" being consumables that disappear after use (consumptive), rather than being part of capital where they slowly depreciate and can be recycled (lease type). Successful examples of "old wines" include coal from the steam engine revolution, oil from the internal combustion engine revolution, and cognitive abilities from the information technology revolution. Failed cases of "old wines" include silicon from the information technology revolution (lack of disruptive demand), rubber from the internal combustion engine revolution (supply pattern completely broken), and iron from the steam engine revolution (not a consumable). Vibe coding is the "new bottle" of the AI era, and the "old wine" has already set sail Vibe coding is likely to be the first application in the AI field that can relatively clearly calculate the business cost and return. It mainly comprises five types of "old wine": 1) Computing power: Demand side disrupted, with some supply side risks, consuming resources in a hybrid consumptive and lease type manner; 2) Storage space (HBM): Demand disrupted, with low supply side risks, leaning towards consumable resources; 3) Data: Demand disrupted, low supply-side risk, lease-type resources; 4) Communication bandwidth (optical communication): Demand disrupted, medium supply-side risk, leaning towards lease-type resources; 5) Electricity: Partially affected on the demand side, low to medium supply risk, electricity itself is a consumable resource, but when factoring in equipment falls between consumptive and lease type. Among the aforementioned "old wine", storage space best fits the characteristics of high-quality "old wine" and is expected to rise in value in the long term; followed by computing power and communication bandwidth, which are expected to continue to rise in the medium term; and finally, electricity and data. Mid-term asset prediction: Global volatility intensifies, equities remain the best choice After Washoe takes office as the chairman of the Federal Reserve, the overall policy is expected to lean towards hawkishness, with reduced guidance to the market. It is projected that an interest rate hike of 25-75 basis points may occur in 2026, leading to increased market volatility; the federal fiscal policy is expected to be stable and sustainable in 2027, but there are still uncertainties; the main feature of the macroeconomic fundamentals is that investment becomes an important engine for U.S. economic growth, increasing the sensitivity of economic activity to interest rates. Given the above background, we believe that the valuation of U.S. bonds, gold, and equities will be under pressure to a certain extent, leading to greater volatility. U.S. bonds may return to a sideways pattern after a short-term bear flattening; gold prices have room to fall further (the gold-bond ratio falls to 3/4); on one hand, equities naturally possess attributes that resist inflation, and on the other hand, they are in the rare opportunity of an industrial wave, making them our top choice for the second half of the year. However, volatility is expected to increase significantly, and we recommend buying on dips or maintaining holdings. Industry-wise, top picks for high-quality "old wine" are storage (semiconductors) > computing power (semiconductors) and optical communication (hardware) > power equipment (capital goods) and data (media). Risk warning: Uncertainty in the technological innovation and commercial implementation process of the AI industry; uncertainty in the monetary policy of the Federal Reserve; uncertainty in the global military, diplomatic, and trade environment.