Daily Report 290316 2016-03-29
Macro Economy
US stock market ended flat on Monday, investors assessed the economy data to estimate the interest rate path in the future. S&P 500 index ended edged up 1.11 point or 0.05% to 2037.05 point. From news side, yesterday released data showed US February PCE price index increased 1% year-on-year and, dropped 0.1% month-on-month; core PCE increased 1.7% year-on-year and, raised 0.1% month-on-month. February personal consumption expenditures month-on-month increase range met expectation but, the largest increase at 0.5% over eight months had sharply dropped to 0.1%. This data is the inflation index which Fed paid highly attention on, though core PCE price index year-on-year value failed to meet expectation, it still keep the 1.7% year-on-year increase range and, was leveled off with last month; set the highest inflation level for second straight month since October 2014. Headline PCE growth slowed down maybe because of prior oil price growth slowed down, from this perspective, March overall inflation might continue rallying and, core inflation as well might continue strong. But from mid-term perspective, since last year April, May and June was the high point from annual oil price revive trend, on the occasion cardinal utility might lead to inflation increase range slowed down along with narrowed oil price downward speed but, Fed monetary policy was bound to take this into account, hence, this condition should not impact a lot on policy path; it was only a matter of time on next interest rate hike. Fed funds rate futures calculated the probability on interest rate hike in June was 34.6%, slightly decreased from prior value.
SCE soybean revived at the night session; oil continue rallying and, meal was under hammer, oil again meal ratio was at 2.55:1. Current high moisture soybean price at Longjiang area of Tsitsihar continued dropping, soybean moisture at 14%-15% purchase price after filtered by tower was about RMB 3440/ton; purchase price for after filtered soybean at other areas was among RMB 3540-3640/ton.
From soybean meal side, mainstream oil plants spots price edged up RMB 10-20/ton, spots price at partial areas were stabilized; Guangdong and Guangxi areas had showed zero basis and negative basis. Soybean from South America would concentrated arrive ports and, demand on shipping from oil plants were strong, confidence on raising price was weak; soybean meal spots rally trend would be less than futures. US soybean fluctuation level up revised, short term was still in reviving. As for operation: we recommend holding soybean No.1 contract and soybean meal in light positions and long it in a short term; arbitrage between oil and meal in short paying attention to stop profit.
Yesterday PP futures opened high and went low; opened at 7456 and ended at 7355; trading volume decreased 366,000 lots to 1.59 million lots; holding increased 8372 lots to 400,000 lots. From spots side, yesterday domestic PP market price partially tried to rally. Sinopec east china, south china and mid china increased producer price which bolster the supply costs. In addition, there would be devices maintenance plan in Sinopec-SK, Sinopec Wuhan, Shenhua Baotou in April, which boosted practitioners’ mindset; quotation continued rallying but, market trading momentum was flat; most plants buying as own demand.
Intraday main quoted prices for wires of north, east and south markets are RMB 7200-7350/ton, RMB 7400-7550/ton and RMB 7500-7750/ton, respectively.  
As for operation, current moving average system was mainly arranged in long but, MACD continued forming dead cross; upward momentum weakened; recent volatile on crude oil increased, risk exacerbated and we recommend staying in observation.

Monday copper market slightly revived, US dollar weakened which bolstered copper price. From fundamental side, domestic spots were discount RMB 120-RMB 70; downstream receiving as demand and, merchants were in cautious. Last Friday Shanghai real estate new policy hammered the recently over optimism sentiment. We will focus on variation of LME inventory and spots premium in this week; if inventory increases the spots premium will decrease and, probability on copper price decreasing would increase. Technically, copper price will revive in as short term and, we wait for the opportunity to short in the second half week.

Stock Index
Yesterday stock index dropped after soaring, securities traders, which prior rose in the leadership continued dropping. NDRC: January to February, national fixed asset investment was RMB 3.8008 trillion, increased 10.2% year-on-year; newly operating projects planned overall investment sharply increases 41.1% year-on-year, growth increased 42.9% year-on-year. Yesterday released industrial enterprise profit growth rallied but, this might because of commodity raw material sharply downward trend, prior revived cyclical stocks might already indicated this news. From registration system, ST Bo Yuan delisting might again pave the IPO expansion and registration which mentioned in the thirteenth five year plan and, president Liu just indicated would not one-sided development instead of not to develop it. Overall, this revive trend was weak and, we recommend operating in fluctuation mindset.
                                           Dong LV (Investment Certificate NO. TZ008452)