Daily Report 170914 2014-09-17
Macro economy
Influenced by the increase of energy stocks boosted by crude oil and the news that People’s Bank of China is providing RMB 500 billion to five major state-owned banks, three U.S. major stocks index soared strongly, offsetting their previous decline. Specifically, the Dow Jones industrial stocks average index closed just a step away from its record high. In terms of data, the U.S. PPI in August remains flat with that in July due to decrease of price in food and gas. However, the PPI rose slightly on year-on-year basis, which is in accordance with expectation. It is believed that the U.S. is not facing much pressure from inflation based on the PPI. At the end of the early market on Tuesday, chief economic journalist of the Wall Street Journal Jon Hilsenrath claimed that the Fed may use the phrase ‘quite a long time’ to describe when the rate hike will take place. Previous expectations about the rate hike by the Fed are believed to be excessive. The Fed may remain their attitude, which is slowing down the pace of rate hike expectations and boosting the market. Pay attention to the final resolution being released on early Thursday.
Domestically, the Xinhua News Agency on Tuesday issued heavy comments that decreasing the interest rate is distrusting the revolution and criticizing those people who hold negative views toward China’s economy. Influenced by the downward trend of a series of economic data in the past two months, investors are increasingly expecting the outright easing monetary policy. It is said that the People’s Bank of China is providing RMB 500 billion Standing Lending Facility (SLF) to five major state-owned banks. China is currently during the bottleneck period of revolution. Premier Li Keqiang claimed previously that China will not adopt the outright easing policy to drag up the economy. Providing liquidity to the market by SLF this time shows the People’s Bank of China’s ambition of adopting new control methods.
The domestic gold increases marginally in the night market, with violent fluctuation during the intraday trading. The Fed's news agency said the U.S. interest rate may remain low in quite a long time. The market’s expectation toward the rate hike is cooling down. Besides, the Scotland referendum is around the corner, which results in fluctuation in the short-term market. As for the exchange rate, however, the GBP recently stops dropping and rebounds while the U.S. dollar index may have correction risk. Therefore, the gold is bolstered slightly after the negative new on the USD. Consider the uncertain policies, the downward trend of gold remains, but risk of rebound of gold due to the change of policy should be cautiously noticed. In terms of the China’s market, it is expected that the gold will rebound due to the measure of directional lower the deposit reserve ratio. Besides, the Shanghai gold will be released on September 18. Attentions should be paid closely to the arbitrage opportunities between the gold futures and the Shanghai gold. The gold ETF remains unchanged for five straight days, indicating the funds are cautious toward the gold.
In terms of operations, previous short positions opened at RMB 249.5 could be held. The gold’s performance under the five-day moving average at RMB 246.7 will be tested in the short term. Beware of the risk of rebound.
The domestic silver remained rebounding following the trend of gold in the night market.                             Recently, domestic future price has straight discount compared with the spot. Spot market appears to be really resilient. Moreover, it appears as gold market is weak whereas silver is strong. Still Silver may hardly get out of trend independently. Investors could have a certain level of future and spot spreading or adopt gold and silver index strategy.    
In terms of operations, the downward trend remains. Previous short positions opened at RMB 4130 could be held, but defensive moves should be prepared according to the ten-day moving average at RMB 4090. If the market trading volume is strong, long positions are recommended for short-term investment, with stop-profit setting at RMB 4110. 
                                                                                                                    Dong LV (Investment Certificate NO. TZ008452)