The second phase of the Fed's rate cut trade will revolve around fundamentals. In the fourth quarter, focus on whether the data for the US real estate and manufacturing sectors are repaired. The overseas environment will provide a second round of support for A-shares, and the market may interpret the logic of China-US resonance, with both the fundamental and emotional support for the export chain.

The main points are as follows:

1. As a typical interest rate-driven sector, the US real estate often leads the recovery.

Among the factors affecting US real estate sales, mortgage interest rates are the most central. The real estate sector often benefits first from rate cuts and is also a representative sector that leads the recovery in most cases. Unlike domestic real estate, which is the main pro-cyclical and supporting sector, US real estate has a certain counter-cyclical nature due to its high sensitivity to interest rate catalysts.

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2. After this round of Fed rate cuts, the recovery of US real estate sales is expected.

Main benefits: The decline in mortgage interest rates in this round is relatively large. Referring to similar historical cases, real estate sales have performed well.

Constraint 1: The housing purchasing power of American residents is at a relatively low level. However, among the influencing factors of housing prices, interest rates, income, and rent, purchasing power is most sensitive to interest rates in the short term. Although the absolute level is not ideal, marginal improvement can be expected.

Constraint 2: The inversion of existing mortgage interest rates and new mortgage interest rates creates a "lock-in effect," leading to a shortage of supply in the second-hand housing market. However, as the inversion issue improves marginally, the supply of both second-hand and new houses gradually returns to normal.

It is expected that next year, the growth rate of new and second-hand housing sales in the United States will rise to the range of 5-10% and 0-5% respectively, turning positive overall.

3. The first half of the year's breakthrough failed, and the US manufacturing industry may organize a second charge.The U.S. manufacturing industry, after a brief rebound at the beginning of the year, has once again fallen into a slump. The factory construction boom that was highly discussed last year ultimately failed to materialize the "super manufacturing cycle." This may be related to the delayed interest rate cuts (companies are skeptical about the sustainability of liquidity easing), short-term disruptions (companies are cautious in production and recruitment), and poor expectations for China's recovery (the mechanism of China-U.S. and global linkages is blocked).

Looking ahead to the fourth quarter, there is an opportunity for the U.S. manufacturing industry's prosperity to rise again: First, the interest rate cut has been implemented, ensuring the sustainability of liquidity easing, and the manufacturing PMI tends to bottom out and rebound. Second, the short-term suppression of election uncertainty is expected to ease, especially if Harris takes office, the expectation of the global supply chain will be more stable. Third, the duration of this round of manufacturing PMI in the contraction range has approached the historical limit. In the context of not衰退, the upward elasticity may be greater than the downward elasticity. Fourth, the improvement of real estate will also drive downstream durable goods consumption, and the demand for durable goods is an important catalyst for the manufacturing industry. Fifth, the reversal of China's economic expectations also brings a positive impact to overseas.

The market or trading may resonate with China and the export chain. The recovery of U.S. real estate and manufacturing both point to the warming of downstream durable goods consumption and import demand. If combined with the re-election of the Democratic Party and the falsification of tariff suppression, it may form an expectation of a resonance recovery between China and the U.S. The logic of A-shares' export chain sector is relatively smooth in terms of fundamentals and sentiment, and there may be room for speculation. Ideally, the overseas environment in the fourth quarter may provide a second round of assistance to A-shares.