Daily Report 131115 2015-11-13
Macro Economy
U.S. and European stock market both dropped to record low within six weeks; slumped commodities hammered the energy and raw material sector. Speeches from several Fed officials tended to increase interest rate; investors were ready for the first interest rate hike since 2006. S&P 500 index decreased 29.03 point to 2045.97 point, decreased 1.4%. Yesterday released data revealed, initial jobless claims flat at 276,000 pieces in last week, slightly higher than expected 270,000 pieces but, was still lower than 300,000 pieces. September job vacancy increased to 5.526 million and was higher than expected 5.4 million. New York, St. Louis, Richmond Fed president all made hawkish speech, they regarded the interest rate hike launching condition from FOMC would be reached soon; inflation ratio would not deviated from Fed 2% aim. The prior dovish Chicago Fed president continued regarde the interest rate hike would be “extremely” slow; speech from Fed president Yellen did not mention the policy prospect. Overall, Fed is leading the expectation toward December interest rate hike, current possibility of interest rate hike in December from Fed funds futures closed to 70%. Contrary to US, ECB president Dragic indicated again, the economy downturn risk was “apparently”; ECB would re-evaluate the easing in December. Which made Euro and Euro debt yield further dropping; under the policy analysis in the US and Europe, above asset was still hard to rally.
On domestic side, CCTV News reported, China's Prime Minister Li Keqiang indicated on 9 November, China's fiscal policy still got potential and, need to extend tax cuts. On monetary policy side, continued countercyclical regulation to expedite the access to finance and lower the costs. Meanwhile he indicated, if Chinese economy need balanced development, expanded building of public infrastructure was necessary. Yesterday central bank released data revealed, China October social financing scale was RMB 476.7 billion; new yuan loan was RMB 5.136 billion; M2 increased 13.5% year-on-year. Specifically speaking, new long and short term loan had sharply decreased; entrust, trust loan and off-balance-sheet financing as well slumped. M2 growth and new loan showed deviation which indicated the capital internal idling condition was serious in the financial system; investment demand from enterprise still slowly rallied. From comparable caliber side, though data in this term was sharply lower than in September, it was higher compared the period in last year or even the year before last year. Seasonal factors was the main reason on this data tend weaken, the possibility on continued deteriorating was small and, predicted to rally in November.


Stock Index
Current stock index rose to the middle level of prior resistance line, hammer would increase in higher point; revision was needed on technically side. Yesterday released social financing data and new loan was almost lost roughly half last month data, sharply lower than expectation; economy prospect was not optimistic. Consider on prior released industry added value, fixed investment and import data, current macro situation got further dropping momentum. This reviving was emerged from over expected central reform determination and, might over expected stabilizing growth under the sluggish asset allocation. But along with the less and less optimistic economy data and, price had already rallied from the lowest point, it was hard to further soaring. Prior mentioned ceiling of IF would be 4000 point, judging from the present condition, it was hard to rally. Price might fluctuated in high point or fell at high point, hard to soar.
 
 
Copper
Thursday copper price continue slumping; LME ended decrease $85, domestic January copper ended decrease RMB 750. On fundamental side, LME spots premium were $12.25, inventory turned to increase 4750 tons. Domestic spots were flat to premium RMB 60, market was still thin. On supply side, Zambia's energy minister indicated, up to December, electric power shortage in Zambia would expand to 42%, caused from lower water level of world's biggest dam, which impacted the hydro power production in Southern African countries and, exacerbated the power crisis in Zambia. Zambia last year total copper output was 749,500 tons. In addition, Antofagasta cut copper output in 2015, expected was 5% or 32,000 tons, after cutting the output goal was 600,000 tons.
Technically, copper price would continue dropping; LME target was $4600, domestic copper was RMB 35000. We recommend continue holding short positions as for operation.
 
 
PP
Yesterday PP futures continue weakened fluctuated. On spots side, intraday domestic PP market weakened dropped. Petrifaction continuously reduced EXW; futures volatile; spots in weak trend. Trading at high point was stagnant; merchant shipped initiatively to decrease own inventory; plants in downstream cautiously observe, purchase on demand; firm offer mainly in negotiating.
Current main quoted prices for wires of north, east and south markets are RMB 6500-6600/ton, RMB 6600-6750/ton and RMB 6800-7050/ton, respectively.
As for operation, current moving average system arranged in short, MACD green column extended as weak pattern; recent price was estimated to continue weakening.

 
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