Daily Report 141215 2015-12-14
Macro Economy
Last week US stock market set the worst performance since the selling momentum in August; under the circumstance of commodity and credit market was in an emergency, even the optimistic emotion on economy situation cannot overcome investors’ concern on Fed further actions. S&P 500 index sank 39.86 point or 1.94% to 2012.37 point. Friday released main US economy data revealed, November retail sale increased 0.2% month-on-month, set the largest growth in four months but, was lower than expectation. November PPI increased 0.3%, which was higher than expected and set the largest growth in five months. December University of Michigan consumer confidence index initial value increased to 91.8, though lower than expected 92, it set the four-month high level. Overall, US economy was still on track to slowly reviving; inflation condition showed improve tendency under the carryover effect, we estimated this tendency would eventually affect downstream CPI and PCE index; it was a matter of time to reach Fed 2% inflation target. In addition, Fed will hold the monetary policy on this Tuesday and Wednesday; FOMC will announce the interest rate policy at 3 o’clock Thursday morning, Beijing time. Whether interest rate hikes in this meeting will have magnificent influence on financial market in the end of the year and macro economy in next year.
On domestic side, China's National Bureau of Statistics released on Saturday, China November industry added value above designated scale increased 6.2% year-on-year. November social consumable total retail sales increased 11.2% year-on-year, which set the largest growth within this year. January to November fixed investment increased 10.2%. January to November real estate development investment increased 1.3% year-on-year. PBOC Friday report revealed, November social financing scale was RMB 1.02 trillion, higher than expected RMB 970 billion. M2 increased 13.7% year-on-year was higher the expectation. New Yuan loans increased to RMB 708.9 billion. Analyst from National Bureau of Statistics indicated, November consumer market continued steadily increase, contribution from on-line retail was huge but, overall lack of demand condition had no plainly improvement, revive momentum need to enhanced. This rallied data was in line with our expectation on fourth quarter economy condition but, from long-term perspective, China was still at the right side of L bottom, possibility on economy growth sharply increase was small. In addition, CFETS announced on Friday, it would regular release RMB Exchange Rate Index which composed from US dollar, Euro, Japanese yen and Hongkong dollar. Means China is on track to more flexible foreign exchange policy and, the released of RMB Exchange Rate Index indicated the exchange regime affected by US dollar might further loosened; implied RMB against US dollar would continued weaken.

Last week copper price continued fluctuated in low point; started to sharply increase on Friday. Though domestic and overseas spots market was in discount, LME was discount $2, domestic was discount RMB 70 to premium RMB 20, the global copper inventory was decreasing, last week LME inventory decreased 7325 tons, SHFE inventory decreased 2115 tons. The largest bolster in last week was from the reduction of global giant, including Freeport announced another 159,000 tons reduction; Glencore indicated if price further dropped, it would cut more output and, claimed the prior announced copper, lead and zinc output reduction plan was already fully operated. Considering current price led to supply end capacity dropping, which would become copper price revive momentum.
Technically, copper price is in reviving and, if it rises above 4740, next target is $5000. If domestic copper price rises above 36000, next target is RMB 38000. We recommend keeping holding long positions as for operation.
DCE soybean was in fluctuation; oil against meal ratio hovering around 2.4, showed further weakening sign in a short-term. Northeast region new soybean removed moisture grain purchase price maintained at RMB 3700-3800/ton, trading momentum from both supply and demand side was thin. Farmer was reluctant to sell out and, merchant lacked of buying enthusiasm, made purchase and sale was in sluggish. Influence from seasonal supply hammer on market was huge. We regarded if soybean No.1605 contract fail to back RMB 3800/ton, short-term tendency would remain weaken pattern.
Soybean meal spots were stabilized, spots trading were sluggish and, basis pricing was ordinary. Though domestic demand slightly revived, spots supply in most areas were sufficient, oversupply pattern continued which still hammered spots market. Friday oil against meal ratio slipped to 2.39:1, showed weaken tendency in short-term. As for operation, we recommend arbitrages between long oil and short meal to close positions or decrease holdings, arbitrages between soybean oil and palm oil spread to hold if narrows.
Natural Rubber
Last week Shanghai rubber widely fluctuated; spreads in months expanded again. US dollar spots price had no plainly variation, up to Friday: domestic spots price was 1100-1120 (0); domestic cargo price 1110-1130; USD RSS spots price 1190-1220 (+10); USD RSS cargo price 1200-1230. On news side: SHFE natural rubber inventory slightly increased 18,800 lots to 220,300 tons, including futures inventory increased 11,400 tons to 135,900 tons. On Qingdao bonded zone side, rubber inventory continued net inflow condition. According to report, current most warehouses lacked of in stock plan in future market, only few warehouses hold the in stock orders. Overall, market sale continued under hammer, in stock was a forced choice. On macro side, Friday overseas market risk aversion mindset led the investors; oil price continued dropping to eleven years new low $35.14/ barrel; US stock opened low and continued expanding down scope; US Treasury yields all dropped. But China November industry added value above designated scale increased 6.2% year-on-year in the announcement at weekend, which set the five-month high level. Overall: market capital sentiment is weak; rubber fundamental is s weak; though the mid-long-term bearish tendency led by fundamental is hard to change, we recommend paying attention on phased price reviving trend.
                                                                                       Dong LV (Investment Certificate NO. TZ008452)