The Fed Raised Expectations Of Higher Interest Rates And Increased Domestic Inflation Pressure.

This round of economic cycle recovery is more than expected in the controversy. The popular view in the 4 quarter of 2016 is to go back to recession and deflation, and to see more debt markets empty the stock market. We put forward "buying stocks to resist inflation, buying anti inflation stocks" and seeing many stock market bearish bond markets. In early 2017, we began to talk about the old market, and we still need to wait for the emergence of new dawn, the rising of the middle reaches, the new normal cycle, the new bull market and the debt. Since March, we have come back to recession and deflation.

Impulse, etc., the actual GDP growth L type, nominal GDP growth U type, maintain the medium term strategy to see more A shares structural bull market judgment, take a clear-cut cycle to the end.

International Economy: US nonfarm anticipation, interest rate increase has no suspense, crude oil production and oil price drop.

In February, the number of new non farm workers in the United States increased by 235 thousand, and 200 thousand were expected to rise over the next two months. There was no suspense in raising interest rates in March. It is estimated that interest rates will rise 3 times throughout the year.

Driven by supplementary inventory, Trump's fiscal stimulus anticipation and the revival of the manufacturing industry plan, the US economic inflation has accelerated since August 2016, from recovery to overheating.

In March 9th, the European Central Bank will maintain interest rates unchanged and maintain the size of monthly asset purchases.

Crude oil plunged and oil fell to $48.4 per barrel, thanks to an increase in oil drilling in the US and an oversupply of worries in the market.

This week, the US dollar strengthened slightly to 101.38, the bulk gold fell, and the US 10 year treasury bond yield rose to 2.58%.

Domestic economy: PPI innovation is still high, CPI is still low, exports continue to recover, and internal and external needs are improved.

In February, CPI was 0.8% year-on-year, with a forecast value of 1.6%, a pre value of 2.5%, and a year-on-year decline in CPI. The main reason is the cardinal effect and the fall in food prices. However, non food prices continue to increase, indicating that PPI is pmitting to CPI.

2 month PPI was 7.8%, 7.7%, 6.9%, PPI, demand and supply. The profits of enterprises will continue to recover. We are stepping into the new era of leftover and winner taking. The leading industry of traditional industries will harvest the market, and the new 5% is better than the old 8%.

In dollar terms, exports in February were -1.3% year-on-year, with a forecast value of 14%, a pre value of 7.9%, an import of 38.1% over the previous year, an expected value of 20%, a pre value of 16.7%, a trade account of -91.5 billion, a forecast of 27 billion, and a pre value of 51 billion 270 million.

Because of the influence of Spring Festival factors, cost increase, trade environment and structural changes, exports declined in February, but increased by 4% in 1-2 months.

The rise and recovery of the middle reaches continued, and the sales volume of excavators increased strongly, and the recovery trend of construction machinery stabilized.

In March, the 6 major power generating groups consumed 24% of coal consumption per day, up from 1-2 in the 17 years.

The price of screw steel was weak, rising 73.3% in March, down 6.7 points compared with last week, and lower than 80% in February.

Cement prices rose this week, but slowed down compared with the same period last year, and prices of chemical products stopped rising.

Money: high demand for credit, strong demand for money, tight money and broad credit.

In February, the new RMB loan reached 11700 billion yuan, which was expected to be 950 billion yuan. The credit exceeded expectations, which has continued to improve since December 2016. This shows that the demand for micro investment and financing is strong. It is mainly driven by lower real loan interest rates, improved investment in manufacturing industry by export recovery, real estate investment rebound, and impulse of infrastructure investment after the change of local government.

The scale of social financing increased by 11500 billion yuan, which is expected to be 14500 billion yuan. Social credit has dropped sharply, and loans have increased significantly. The main reason is the MPA generalized credit assessment and the central bank's window guidance.

In February, China's foreign exchange reserves stood at US $3 trillion and 5 billion 120 million and returned to the US $3 trillion mark, which mainly benefited from domestic economic recovery, export recovery, depreciation of the US dollar in February, and stabilization of the RMB in the near future.

This week, the central bank returned net 110 billion yuan in the open market.

Tight balance.

The R007 interest rate this week was 2.7364%, up 0.98 from BP.10 last week, 3.4156% from the previous week, up 5.83 BP from last week.

The Yuan's interest rate hike is expected to have a slight devaluation. In the second week of March, the US dollar depreciated to RMB 0.33% and the offshore renminbi depreciated by 0.10%.

We need to be vigilant at home and follow the "interest rate increase" in a passive way and tighten money and broad credit.

Policy: in 2017, the capacity to expand the expansion of expansion, the multi city property market regulation and control, a line of three will develop unified management of management.

The actual GDP growth rate is L, the nominal GDP growth rate is about U, the consumer price increase is about 3%, the inflation rate is expected to increase by 3% in the second half of the year, the capacity expansion is expected to increase in the second half of the year, the 50 million capacity of the steel production capacity is reduced in 17 years, the 45 million tons were reduced last year, and the coal production capacity was 1.5 million tons. Last year, it was 45 million million tons, and the capacity to expand to cement, flat glass, electrolytic aluminum, ships and so on. Because of the long-term inventory of real estate and the establishment of a long-term mechanism for real estate, the property tax has no legislative consideration this year. In March 5th, the government's work report for 2017 was released, and GDP grew by about 6.5%. In order to achieve the goal of doubling the target, it is estimated that the average of 6.5% in the 2017-2020 years is the bottom line, and the actual GDP growth in 2017 is 6.7%. The nominal GDP growth rate may be around 10%.

Market: the recovery time and intensity exceed expectations.

Structural bull market.

The US economic cycle is moving from overheating to overheating. China's economic cycle is moving from a 6 year long recession to a small cycle recovery under the L economy (real GDP growth rate L, nominal GDP growth rate U).

Taking into account the 1 quarter credit, new orders and other leading indicators exceeded expectations, the economic cycle recovery time and intensity exceeded expectations, more importantly, the supply of clearing enterprises continued to improve performance, "new 5% is better than the old 8%", the left are king, the strong and strong, looking for China's beautiful 50.

As the earliest and most steadfast recommender of this market (see: rising dawn, middle rise, why we are optimistic about the economy and stock market), we maintain the judgment of the structural bull market in the medium term A shares, which is different from the valuation driven by the denominator in the 2014-2015 years. The 2016-2017 year is mainly driven by molecular performance, which is centered around the rise of the middle reaches, the underestimation of real value growth and the three main lines of reform.

Driven by molecular performance, the main direction of the current market is in cyclical stock value stocks. There is no style switching to risk driven drive. Undervaluation is the diffusion of value investment thinking.

Although the Fed's short-term interest rate hikes and its resistance to spot checks have been disturbed in the short term, the improvement in the medium-term economic fundamentals has exceeded expectations.

The most difficult period of the debt market has passed, and the opportunity still needs to wait.

Risk warning: the Fed's over expected rate hike has led to the narrowing of the interest rate gap between China and the United States, the pressure of RMB depreciation and capital outflow, and the expected increase in domestic rate hikes. Domestic inflation pressure has increased, external import pressure and PPI have been pmitted to CPI; local regional housing prices have not been able to survive, triggering a new round of more stringent regulation; reform is lower than expected; macro-control has tightened up, and the cycle is recovering less than expected.

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