Weekly Digest 2020.12.14–12.20

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Investment Notes

3 min readDec 20, 2020

Macro Insights

(1) New Data: CPI & PPI in November 2020

CPI MoM declines 0.6% and the price of pork MoM declines 6.5%. The supply of pork is recovering, so the price of it is decreasing.
CPI YoY declines 0.5% and the price of pork YoY declines 12.5%. The base of the price of pork is too high last year, so the YoY price decreases sharply.
PPI MoM grows 0.5% and many raw materials have simultaneously grow.
PPI YoY declines 1.5%.

(2) M1 — M2 is shrinking

M1 YoY — M2 YoY = -0.7. When M1 YoY is higher than than M2 YoY, the investors are more optimistic than pessimistic.

(3) Inflation is coming

After 11 years, CPI YoY turns to negative again. However, it does not mean a deflation is coming.
With massive easy money policy, inflation will come eventually. Normally the inflation happens after 6–12 months of the easy money policy.
US central bank balance sheet: USD$ 7.13 trillion; China central bank balance sheet: CNY¥ 37.18 trillion

(4) Central Economic Work Conference

Expand domestic demand and increase consumption and investment. Consumption: automotive, sinking market, education, medical care, old-age care, child-care. Investment: Digital economy, new infrastructure, high-end manufacturing, logistics.
Highlight antitrust policy. Share prices of large Internet companies may fall recently. The government continue to promote scientific and technological innovation, such as encouraging investment in science and technology rather than real estate.

(1) Stock Market

Inventory has bounce back from the bottom and the momentum of sales has consistently increased.
The ratio of copper and gold is also a good indicator of economic position. Copper is used as industrial material and gold is used as hedge usage. When economic is getting better, the demand of copper will increase and the demand of gold will decrease.
A share turnover: CNY¥ 3.68 Trillion
Northbound: CNY¥ 8.48 Billion
Dow Jones Index, S&P 500 and Nasdaq Index prepare to remove some Chinese company from their components

(2) Forex Market

Chinese Yuan remains strong. In order to shrink the interest rate between US and China, Chinese government increases MLF with total CNY¥ 350 billion this month.