Last week, the international spot gold price opened at $1,874.10, with a high of $1,877.89 and a low of $1,760.70, closing at $1,764.16, down $112.57, a drop of 6%. Weekly K showed a sharp decline in the long negative line, the largest weekly decline since late March 2020.

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Gold price Plunge, the chef Ding Jie Niu

Inflation logic will continue

3 June 22, 2021 Weierxin Investment Consulting Research Center

(text) Chief analyst Yang Yijun

Source: Yang Yijun Gold and Financial Investment

Preface

Last week, the international spot gold price opened at $1874.10, with a high of $1877.89, and a low of $1760.70, closing at $1764.16, down $112.57, a drop of 6%. Weekly K showed a sharp decline in the long negative line, setting the largest weekly decline since late March 2020.

There are few cases of gold price plummeting by 6% in one week. In the more than 37 years since March 1983, there have been 16 cases of gold price dropping by more than 6% on weekly basis, that is, it is difficult to have once in two years on average. Such fluctuations in gold prices are usually affected by unexpected policies and news. From mid-July 2013 to the present, gold prices fell by more than 6% in a single week only twice, once last week, and earlier in the week of March 13, when the spread of the epidemic hit the global financial market last year.

In the past 37 years, simply looking at the pattern of the gold price K-line combination, how many times did the gold price fall sharply last week's K-line combination (the medium-term adjustment after the long-term peak - another strong rebound - may be due to a sudden news attack - a plunge)? Similar to the week of December 16, 2011, December 5, 2008, July 21, 2006, and July 26, 2002, only these four times.

If these four similar times were used as the late reference for the stage, there is no need to worry about the gold market in the next 2-3 weeks: if the correction of gold prices compared with the plunge last week is strong, then the medium-term gold price is likely to continue to hit a new high. Even if the correction is not strong, and there will be an inertia decline next week, the range will bottom out. That is, we expect that the final trading of gold prices in June will be significantly higher than the bottom of last week or the next week. This is just a sorting out the pattern of gold prices similar to last week's plunge in the past 37 years, and there is no other meaning.

Review last week's news and the corresponding market volatility rhythm, it seems that the Federal Reserve's currency interest rate meeting and post-meeting statement constitute a selling pressure point in the gold market. Last Wednesday overnight, after the Fed's interest rate meeting, gold prices plummeted and the US dollar jumped, thus opening the prelude to accelerate sharp downward trend.

However, according to the author's observation and understanding, the fundamental reason for the sharp decline in gold prices last week was mainly due to the news impact of China's suppression of speculation in the commodity market. Even if we carefully sorted out the recent trading session, we can find that some large gold merchants or institutions learned about the policy news to be announced earlier on June 1, and sold them decisively on Shanghai Gold Exchange . We will sort out and deduce the extremely rare trading logic of the Shanghai Gold Exchange later.

This issue of comments, we will use the abnormal movement of China's gold price (even the trend of education-based Chinese stocks listed in ), combined with the pace of China's policy news release, revealing that we have not done a good job in keeping confidentiality on some policy news, and there is obviously a problem of institutions using insider information to make private use in advance. Secondly, we will analyze the technical aspects of the gold market under pressure in the stage. Finally, based on the latest economic data, a brief interpretation of the current economic fundamentals and economic cycles of China and the United States.

1 Gold The abnormal movement from the Shanghai Gold Exchange

Usually, Chinese gold market does not have a strong leading function internationally, and is mostly reflected in following, especially following the US gold market. Of course, the world focuses on volatility in the US gold market. However, the Chinese gold market from late May to the present seems to have led to a sharp decline in gold prices this stage.

June 1, from the quotation of the Shanghai Gold Exchange compared with the international gold price , we can see the active implicit selling pressure from the Shanghai Gold Exchange. At this time, the futures futures prices of on Shanghai Futures Exchange did not show such a "singular" signal relative to the international gold market.

Since the closing time of the gold daily K-line of the two major domestic exchanges is more than ten hours apart from the international gold market, it is not accurate if the daily line is overlapped and compared.However, the daily line comparison can still roughly see the long-term relationship between the domestic gold market compared with the international gold market, such as the daily K-line of the international spot gold price, the daily K-line of the RMB theoretical gold price, and the Shanghai AUT+D daily K-line diagram from 2015 to the present (this figure comes from the internal weekly report of the gold market to customers by Weierxin on June 5, and has not been further updated. The following interpretation of the market analysis is also mostly from the internal weekly report of the gold market to customers by June 5):

In the figure, we can see that in most of the time, the price of Shanghai AUT+D (China's actual spot gold price) is higher than the theoretical RMB gold price derived from the international spot gold price and the RMB exchange rate (highly consistent with the paper gold price of commercial banks). The blue and green line in the figure is mostly above the yellow line. That is, Shanghai AUT+D gold price is usually about 2 yuan/gram higher than the theoretical gold price of RMB, but sometimes it is as high as more than 4 yuan/gram. When gold prices bottomed out in December 2016, the domestic gold market was reluctant to sell, which made Shanghai AUTD significantly higher than the theoretical RMB gold price.

However, from March to December 2020, the theoretical gold price of RMB was higher than that of Shanghai AUTD, which is now a cautious attitude of Chinese gold merchants and investors towards gold. However, how valuable is this cautious attitude to reference? It seems not. From March to early August 2020, the prudence of the domestic gold market did not hinder the huge rise in gold prices.

In early January 2021, after the gold price rebounded to around US$1,959, the AUT+D price operation system returned to the normal logic higher than the theoretical gold price of RMB. But it will not hinder the significant adjustment of gold prices from January to February 2021.

Therefore, the "vision" of the domestic gold market compared to the international gold market may not necessarily bring about fundamental changes in the gold market.

At first we thought:

How do visions in the domestic gold market usually occur? At the current market stage, we believe that it should not be purely "investing or speculative" behavior. Because the market is subject to abnormal changes, the energy demand is relatively large. Compared with active abnormalities in the international market, if it is an investment or speculative position , it will face great risks. As commercial banks are calming the prices of domestic and foreign gold markets, the domestic market will eventually fluctuate towards the international market. Therefore, this abnormal movement is almost certainly due to the heavy efforts of mineral manufacturers to destock . They may be very satisfied with the current price selling accumulated spot inventory and have good "operating" results.

If this reasoning is true, then the selling pressure should first come from the Shanghai Gold Exchange, because the Shanghai Gold Exchange is the main market for spot merchants to sell gold and the market for spot merchants. Of course, the Shanghai Futures Exchange can also sell futures and use spot inventory to to deliver . However, futures exchanges are mainly a market for investors and speculators, and are a hedging market for spot traders. Gold merchants delayed delivery after selling goods through the Shanghai Gold Exchange. Most of the time, there will be additional holdings income, while futures do not. Therefore, mineral manufacturers generally enjoy selling inventory on the Shanghai Gold Exchange. Therefore, the timely selling of spot gold merchants should mainly come from the Shanghai Gold Exchange.

We now believe that:

may be a large gold dealer who has learned about China's policy news in advance that it has cracked down on speculation in the commodity market, and then decisively destocked in advance regardless of the strong international gold market. Let us further combine the market observation and thinking, such as Shanghai Gold AUT+D, Shanghai Futures Exchange futures main contract, and international spot gold price 1-hour K-line chart (This picture comes from the internal weekly report of the gold market to customers by Weierxin on June 5, and has not been further updated):

0 domestic and foreign gold market 1-hour K-line chart comparison is accurate and is not affected by the inconsistent daily closing point. From the 1-hour K-line comparison chart, it can be seen that in the red line frame in the figure, that is, point A corresponds to the previous trading days. The AUT+D price in the Shanghai gold market has already appeared relative to the international gold market, and even compared with the " stagflation " in the Shanghai gold futures market. There is no doubt that only when the selling pressure increases can stagnate the rise. The corresponding range of the yellow line in the figure, that is, the range in the red box before point A, the high point of Shanghai AUT+D gold price is against the main contract of Shanghai futures and the international spot gold price gradually declines. It can be seen that at that time, the futures gold futures exchange was closely synchronized with the international gold price.

AB range, Shanghai AUT+D adjusted significantly, breaking through the previous two pattern lows of 387.24 and 387.41 yuan/gram, while Shanghai gold futures main contract is close to the pattern low, while international spot gold prices are significantly higher than the corresponding pattern low. It demonstrates the stronger active selling pressure of the Shanghai spot gold market compared with Shanghai gold futures and the international gold market.

Through the market comparison before point B, the selling pressure of the gold market first came from the Shanghai Gold Exchange. As time went on to the AB range, the selling pressure of the Shanghai Gold Exchange spread to the Shanghai Futures Exchange through the market arbitrage trading, and gradually formed increasingly stress on the international gold market. Almost all gold merchants with seats in Shanghai Gold Exchange have more convenient hedging accounts on the Shanghai Futures Exchange, so even two completely independent markets are easy to link.

html The sharp decline in the international gold market on June 3 may be largely guided by related gold trading on the two major exchanges in Shanghai. Through the comparison of several major markets, it can be seen that the gold selling orders on the Shanghai Gold Exchange can be said to be "excluding costs", far exceeding the decline in international gold prices. Before June, the price of AU (T+D) was still higher than the theoretical RMB gold price of about 2 yuan/gram. During the selling pressure regardless of cost on June 3, the price of AU (T+D) was actually lower than the theoretical RMB gold price of more than 7 yuan/gram. It also maintained around 7 yuan/gram in the next one or two days, relative to the discount of international gold price guidance. The author issued a timely article on the morning of June 4, referring to arbitrage transactions in which long domestic gold and short the international gold market in equal amounts. Simple arbitrage trading in China can be achieved by longing on the two major exchanges and shorting bank paper gold in equal amounts.

From the closing price of 2:30 am on Friday quarantine, the AU (T+D) price closed at 368.79 yuan/gram, and the corresponding theoretical RMB gold price was 367.80 yuan/gram (the final trading was 366.49 yuan/gram). It can be seen that the "active selling pressure" from the Shanghai Gold Exchange leading the international market has basically ended, and the AU (T+D) price has returned to above the theoretical RMB gold price, about 1 yuan/gram higher. If the price ends "cross-market arbitrage trading" at 2:30 am on Friday quarantine, that is, closes the domestic gold market bulls and the international gold market shorts, then it can bring about a risk-free arbitrage return of about 8 yuan/gram. In half a month, there are very considerable risk-free arbitrage returns.

Of course, the author no longer continues to devote himself to the research on cross-market arbitrage in this section, but is "curious" about the huge selling pressure "at all costs" from the Shanghai Gold Exchange before June 4 (it was actually sold at 7 yuan per gram relative to the international gold market)! Which one (or which one) gold merchants can know in advance about two weeks later:

China Banking and Insurance Regulatory Commission Chairman Guo Shuqing will discuss at the 13th Lujiazui Forum : In the financial derivative cases where risks occur in the early stage, a large number of individual investors participated in the investment. From the perspective of mature financial markets, institutional investors are mainly involved in financial derivative investment, which are very unsuitable for personal investment and financial management. The reason is that due to various factors that are uncontrollable or even unpredictable, the price fluctuations of financial derivatives are very large, which has high requirements for investors' professional level and risk tolerance. It is tantamount to gambling in disguise, and the result of losses has long been doomed. Those who speculate on foreign exchange, gold and other commodity futures have a hard time getting rich, just as those who bet on house prices will never fall will eventually pay a heavy price.

Last week, the National Development and Reform Commission and the State Administration for Market Regulation both stated that they would promote the stability of commodity prices. The meeting proposed that the price trends of commodities such as coal will be closely monitored, price prediction and early warning work will be done seriously, and the operation of relevant market entities will be promptly understood, abnormal transactions and malicious speculation will be investigated, illegal and irregular behaviors such as hoarding and price gouging will be cracked down on, and normal market order will be maintained. At the same time, in accordance with the newly issued "Regulations on the Management of Price Index Behavior of Important Commodities and Services (Trial)", standardize the compilation and release of commodity price indexes.

In addition, Chinese education stocks represented by Good Future and Gaotu have fallen by 80-90% in recent months. It seems that some prescient people still learned about the cold wind of the policy issued by the Ministry of Education two weeks ago on the rectification of off-campus education institutions.

Similar to the above analysis, the active selling pressure of the Chinese gold market compared with the international market is extremely rare! At present, whether it is the spot gold price of the Shanghai Gold Exchange or the futures gold price of the Shanghai Futures Exchange, the "huge" discount relative to the international market has not only been completely eliminated, but has begun to enter the "premium" rhythm again. This should be one of the important reference signals that the subsequent gold market should not continue to be pessimistic.

2 Public Opinion Inflation is still the main theme

We believe that the recent intervention arguments or measures of China will only have a stage or short-term impact on the commodity and gold markets. In the medium and long term, the core influence tone of the gold market is still real inflation and inflation expectations. Regarding the current inflation data, the Fed argues that the pace of the global economy is running, and combined with the overall pace and degree of US dollar liquidity observation, inflation still has the possibility of deterioration. Last week's Fed Tone and Fed Chairman Powell's speech still emphasized the possibility of long-term inflation rising.

Federal Chairman Powell said: Inflation drivers are related to recovery, higher inflation comes from higher prices in the industry affected by the reopening, which will reverse over time. Inflation may continue to remain high in the coming months before it will ease. Inflation may be higher and longer than we expected.

Carefully ponder Powell's speech, whether the gold market rises or falls, you can edit content from its speech that can interpret different market fluctuations. Because he said, "Our expectations are that the high inflation data we are seeing now will begin to weaken." He also said, "Inflation may continue to remain high in the coming months before it will ease." He also said, "The possibility that inflation will last longer than expected and will fuel expectations." By 2023, the Federal Reserve believes that inflation will be higher, which is related to high employment rates."

What do Powell wants to express in the above speech? Is inflation rising or falling in the medium term? What about the long term? It’s right if you don’t understand

! The current Fed chairman's speech is usually incomprehensible. For commentators, everyone can get what they want. After these officials step down, they no longer have the responsibility to appease public opinion, so they can express their feelings directly. This was especially true during the period when Greenspan was appointed as the Federal Reserve. After leaving office, he often talked loudly.

more "listen" or "clear"!

World Bank Group Vice President and Chief Economist Carmen Reinhart said in an interview that it is worrying that inflation is not just a temporary phenomenon. The risks of the financial sector are "currently covered by very low interest rates and highly loose policies during the epidemic", and we do face the risk of a significant tightening of policies. Many balance sheet issues that have not received attention before will jump into the eyes again. Rising inflation could lead to higher interest rates and make the situation difficult for policy makers to control. Tudor Jones, manager of the

billionaire hedge fund , said last Monday that hedge fund , is paying close attention to the Fed's policy meeting this week, given the recent economic data showing rising consumer prices. Jones said in an interview: "These numbers are very important. If the Fed is indifferent to these numbers, I think it will give the green light to inflation trading. If they say, 'We are on track and the situation is good,' then I will bet on all in inflation trading." Jones added, "I may buy commodities, buy cryptocurrencies, or buy gold."

3 Gold Related market and technical pressure for the pullback of the pullback of gold 6

in the past three weeks, i.e., related market pressure from the strengthening of the dollar index , and technical reasons from the gold market itself.Regarding the macro-technical support of the US dollar index near 90 points, we directly quoted the content on January 24, 2021, without any modifications. The focus is on understanding the pure technical significance of the US dollar near 90 points.

Regarding the US dollar, the macro trend is worrying, but the macro-technical support around 90 points is very strong. For example, the US dollar index html March K-line diagram

reference the basic definition of the US dollar macro trend. If the US dollar has really ushered in a macro bear market, it is only in the early stage of the bear market. But there are still variables whether it really turns into a bear. Of course, variables do not represent fixed numbers.

First look at the effectiveness of macro-technical analysis on the US dollar index. Observe the entire macro bear market band after the US dollar index peaked at 121.01 points in 2001 and the bottomed at 70.68 points in 2008.

The 23.6% golden section of the rebound of this macro band is the core force position of the US dollar index in the bottoming of the macro range from 2008 to 2014, which is mainly reflected in the rebound resistance.

The 38.2% golden section of the rebound of this macro band constitutes the absolute counter-pressure of the two rounds of strong medium-term rebounds of the US dollar index in 2009/2010. At the same time, it also constitutes absolute support for the two rounds of medium-term adjustments of the US dollar index since 2018. At present, the US dollar is once again facing macro support on this line.

The 61.8% golden section of the rebound of this macro band has become the absolute macro top counterpress of the US dollar index since 2016.

In addition, the resistance line is formed at the top of 121.01 points in 2001 and the low point before the bull and bear conversion of the US dollar index in 2014. The 2/3 line of this resistance line accurately constitutes the absolute effective reverse pressure at the top of the US dollar index since then. In the

chart, H1H2 is the bear market channel where the US dollar index fluctuated and bottomed out between 2007 and 2014. The track width is determined by the width of the starting band (80.39-92.60 points), and the slope is determined by the high and low points of the wave rebound or downward. After the

H1H2 channel is determined, the corresponding H3, H4 track lines or trend lines formed have also had a very obvious medium-term impact on the US dollar index. The H3 line has become the support for the US dollar index several times since 2015, while the H4 line resonates with the 2/3 resistance line, accurately measuring the macro top of the US dollar index.

If the US dollar index breaks through the H4 line upward, then the next pressure point will be formed near the H5 line. If the US dollar index falls, the H3 line should again form support.

observes the entire bull market band after the US dollar index bottomed out at 70.68 points in 2008 and reached its peak of 103.82 points. The 1/3 of the resistance line of this band was quite magical and effective in 2018. The 2/3 line resonates around 87 points, and if the US dollar index goes down, there may be support here.

L1, L2, and L3 are the top and bottom of the box after the US dollar index reached its peak in 2016. Pay attention to the backpressure of the box top H1 when it goes up, and pay attention to the line support of the box bottom H2 and H3 when it goes down. Near the R line in

, the corresponding top support of the US dollar index in 2009/2010, and another 38.2% golden ratio formed a resonant support.

Of course, we have also emphasized that the annual moving averages of 10 and 20 also form glue resonance support around 90 points.

Gold price fell sharply last week, corresponding to the strong rebound of the US dollar. If the US dollar continues to rebound, gold prices may continue to be under pressure to a certain extent overall. But the US dollar continues to strengthen, and there may be unexpected financial turmoil in under the premise that the current epidemic has not been completely controlled. If so, it is not ruled out that it stimulates gold safe-haven demand, and hedges against the strong negative for USD.

In my opinion, if the US dollar index turns upward with a double bottom, it will theoretically have an impact on the commodity market. Not only the commodity market, but even the US stock market, will also face a significant impact. That is, the current US dollar's upward trend may lead to instability in the financial market. For US officials, instability in the financial market alone may not be a big deal, and the official cannot always be committed to maintaining the stability of the financial market. However, at this stage, they must be very concerned about the stability of the recovery of the real economy. The Federal Reserve and the US government do not allow the injection of more than $10 trillion in liquidity in the end, the real economy will not be stable. Therefore, in the past two or three months, although the US mid-cycle economic data and price index show that the economy is a bit overheated and the financial industry is filled with inflation concerns, the US official situation is indifferent. They have always emphasized the importance of a stable economic recovery and the importance of full employment, and believe that inflation is only a short-term issue.

Since the US dollar index has turned stronger, it is likely to threaten the US stock market where the bubble is already obvious, threaten the commodity market, threaten financial stability, and thus threaten economic stability. Then it may not be much more likely that the US dollar will turn systematically.

If the US dollar breaks down, it will help the US economy recover, but at the same time, it may also be more vigilant about risk market bubbles.

or the weak range of the US dollar may be consolidated until the epidemic is completely controlled and the economy is running stably, a systemic rise may occur. Because the economy is stable, removing risk bubbles to a certain extent is necessary and can be endured by the US official.

The author's opinion, overall, the current US dollar index does not seem to be systematically strengthened. At present, the fluctuation is more likely to be greater in the range of 90 points, which also gives the market a full observation period. If the US economy runs steadily in the later period when the peak of stimulus has passed, it can urge the US dollar to downward to stimulate the economy; if liquidity spreads and spills makes the real economy run steadily and systematically overheat, then the upward trend of the US dollar will help digest the bubble and cool down speculation.

Gold technology, gold prices have been under obvious weekly pressure recently. For example, the gold price -week K-line diagram:

Recently, the gold price high is facing a downward trend in the weekly line Bollinger upper rail counterpressure.

weekly KD indicator also showed the strongest overbought feature after gold prices peaked at US$2074.87 in August 2020.

However, from the technical perspective of gold price daily line, there may not be much downward space:

Theoretical, the ma60, ma120, and ma360 moving averages have strong pullback resonance support in the 1800/1820 US dollar area. We previously technically expected that the theoretical support of the gold price pullback was US$1830/1850, but the scale and strength of the gold price pullback last week significantly exceeded our expectations.

is based on the upward band of US$1451.10-2074.87 (the bottom significance of the US$1451.10 band is more obvious in other risk markets, corresponding to the bottom of several years or even decades). On Friday, gold prices are testing the diquartile support of this band. At the same time, it corresponds to the track line H2.

analyzed from the medium-term adjustment band (2074.87-1676.71) after the gold price peaked in August 2020. The 2/3 line of this band constitutes the top pressure at the stage. At present, gold prices are falling back to the 23.6% gold segment of the rebound in this band, further resonating with the two points in the middle chart (H2 and diquartiles).

In addition, looking at the medium-term rebound band after the gold price bottomed out at $1,676.71, gold prices were also backing the 61.8% gold segment of the rebound band pullback last week. We did not make further compositions.

Overall, whether based on the "power source" of this round of gold price decline (China's policy intervention and market factors) analysis or the technical analysis of the gold market itself, we believe that there is limited room for further adjustment of gold prices. At least the next 2-3 weeks will be safe.

4 Macroeconomics continue to recover but inflation is related to

Last month, all important economies in China and the United States were released. While the economy continues to recover, the pace of inflation has accelerated significantly. For example, the Shanghai Composite Index html April K-line, and the corresponding China CPI and PPI price index, China's currency growth rate and three-horse (export, consumption, investment), the total national power generation TTM annualized growth rate diagram:

According to the specific data, although due to the comprehensive impact of the decline in the pig cycle and the fact that China has not fully followed the large easing of Europe and the United States in recent years, China's CPI index is not high, and is even at a low level in the past decade. However, based on the input inflation caused by the upward trend of the commodity market, it performed very clearly on the raw materials side. In September, China's producer price index (PPI) was as high as 9%, the second highest in 25 years, second only to 10.06% in August 2008.

The bizarre data phenomenon of the price index also includes the huge difference between PPI and CPI. This shows that China's price index has been rising rapidly at the raw materials end, but has not yet been fully transmitted to the consumer terminal. That is, the "adverse" impact of the current price index on the macro economy has not been systematically transmitted to the entire real economy field. At this time, cracking down on speculation in the commodity market at the raw materials side will help curb the excessive inflation effect of PPI to transmit to the CPI side, and will not have a significant adverse impact on the entire real economy and financial markets.The CPI side shows that China's inflation is not universal. Therefore, there may be a recent joint action by the National Development and Reform Commission and the State Administration for Market Regulation to curb speculation in the commodity market.

Looking at the US CPI and PPI, although the bull market in the international commodity market seems to originate from the massive release of US liquidity, the US PPI price index is significantly lower than that of China's PPI. What is different is that the US CPI price index follows the PPI, which shows that US inflation is systematic and comprehensive.

The following information can be seen through the comparison of China-US CPI and PPI price indexes:

The United States imports inflation to the world through the flood of liquidity, which is easy to bring serious economic disasters to non-US countries, and even accompanying financial disasters. This is a typical means for the United States to use the dominant position of the US dollar to shear global wool. In the past two years, China has not followed the pace of liquidity regulation in Europe and the United States, but chose the pace of liquidity regulation that suits its economic operation. It is very wise and is an important reason why China's CPI has not deteriorated so far.

Regarding the thinking of the political and economic system, China has the institutional advantage of rapid penetration in market regulation and price control. In view of the fact that we have not kept up with the level and pace of liquidity regulation in Europe and the United States in recent years, I think China should do better than the United States in the regulation of CPI price index (i.e., in terms of comprehensive inflation regulation).

In the long run, the inflation outlook for Europe and the United States is not optimistic. At present, China's biggest response to inflation is only the import crisis of commodity prices on the raw materials side. The real biggest crisis in the later stage should be the comprehensive input pressure from the end and the consumer end, which will slowly penetrate through international trade, transnational consumption, etc. After the epidemic is fully under control, international interaction will be strengthened and inflation penetration may be more obvious. Our previous article analyzed the fluctuation characteristics of PPI and CPI, and the impact of the commodity market on PPI can be immediately effective. But as the terminal's CPI price index, the pace should be slower. In addition, regarding the impact of commodity market prices on the CPI index, crude oil price trend has the greatest impact and the impact on CPI penetration is the most direct.

Observe the growth rate of China's M2 currency stock, the growth rate of M2 in May fell. We have always held this view in recent years. Combined with the observation of China's economic operation cycle, the growth rate of China's M2 currency stock will continue to be in a long-term downward track. China has gone through a stage where the focus is on real estate and comprehensive infrastructure investment drives the economic development stage. In the long run, committed to a carbon neutral green economy does not need to rely on excessive growth rate of monetary stock. The long-term M2 target growth rate should be generally consistent with the "nominal GDP growth rate".

html The total national retail sales in May was 359.45 billion yuan, an increase of 12.4% year-on-year (the data is very jumpy and has little reference significance). The growth rates of the four phases this year were 33.8%, 34.2%, 17.7% and 12.4% respectively, and the data was obviously too jumpy. The total retail sales of

in the first five months totaled 17431.9 billion yuan, and the official growth rate of was 25.7% year-on-year (the data compiled by the author is 25.65%). The data in the first few issues of the year were 33.78%, 33.90% and 29.61% respectively. If you observe the consumption growth rate from this perspective, you will find that the consumption growth rate this year is declining month by month, and it seems that the outlook for the consumption economy is not good. However, the author believes that the "cumulative year-on-year growth rate within the year" officially announced is not very scientific for thinking about the economic operation of the consumer field. The higher the month this year, the lower the proportion of consumption volume in the total volume this year, and the greater the jump in the corresponding growth rate. The closer the year is, the greater the proportion of the "cumulative" consumption volume in the year ends, the smaller the data jump, and the greater the reference value. How to make the data compare and think under roughly equal weights? Then I’m the data processing method in the figure. The latest data for 12 consecutive months is rolled and compared according to the same period of the month, such data processing can better reflect the trend of the consumer economy. From the consumption growth rate in the author's chart, it can be seen that China's consumer economy is continuing to strengthen. The year-on-year growth rate after the latest annualized TTM treatment is 9.64% (more stable than the year-on-year growth rate of 12.4% accumulated this year), the highest since February 2018. The author's growth rate in the four phases of the year was 2.73%, 6.42%, 8.35% and 9.64% respectively. It is completely different from the interpretation angle and results of the data released by the Bureau of Statistics.

5, fixed asset investment in May 45011.3 billion yuan, and the cumulative fixed asset investment this year was US$19391.7 billion, a year-on-year decrease of 2.65%. The total annualized investment in TTMs handled by the author was RMB 51363 billion, a decrease of 3.66% compared with the same period last year. That is, the investment growth rate is still the weakest among the three troikas.

is aware of the growth rate of fixed asset investment, and the macro trend is consistent with the growth rate of M2 currency stock. If we believe that China's M2 growth rate will decline for a long time, then fixed asset investment will no longer be able to provide GDP engine functions.

May export economic data is still beautiful. Exports in May were US$263.9 billion, with cumulative exports of US$123.76 billion this year, an increase of 40.2% year-on-year (the data compiled by the author is 39.84%). The total annualized export volume of TTM was US$2951.222 billion, an increase of 21.74% year-on-year, hitting a new high since December 2011, and the situation is gratifying. China's good export economic situation may largely be due to the fact that the epidemic has caused the economies of many countries to be fully restarted like China.

html The total national power generation in May was 647.8 billion kWh, and TTM's annualized power generation was 7816.35 billion kWh, an increase of 11.01% year-on-year, and the data hit a new high since April 2011. It continues to show that China's economic recovery is in good momentum.

Why are the growth rate of power generation and the growth rate of exports so highly consistent? We interpreted it in early economic reviews. It mainly reflects the operating elastic characteristics of private economy . The elasticity of export growth rate and electricity use are mainly reflected in the elasticity of the operation of the private economy. As for central enterprises, state-owned and collective enterprises, whether making money or losing money, ensuring employment is the key, so the electricity use and export business is generally relatively stable and is not the main influencing factor of export and electricity use peaks and valleys. Private enterprises, when they do not make money, produce less and export less, lay off employees, reduce costs, and even close doors and doors and do not produce. Without policy or government support, private enterprises have no obligation to ensure employment.

So although the China Purchasing Managers Index does not seem to be better than the United States, our actual economic operation is much better than that of the United States. Although the US Purchasing Managers Index seems to have strong momentum for economic recovery, it is even reflected in overheating. That is because the fall was too fierce last year, which caused the reference comparison starting point to be too low. Therefore, through the manager index observation, the US economy seems to be overheated, but in fact it faces the embarrassment of not completely restarting:

According to the historical observation of the past 30 years, the current US manager index (ISM Manufacturing and Non-Manufacturing Index) is at the highest level in more than 30 years, and it seems that the economy is very hot. However, combined with the US price index, especially the US capacity utilization rate after hitting a decades low, the US capacity recovery has not been in place and has not stabilized, which shows that the overall recovery of the US economy has not stabilized, which is also an important reason why the Federal Reserve is not in a hurry to withdraw liquidity and ignores inflation strengthening.

In the medium term, it is an inevitable trend for the US manufacturing and non-manufacturing industries to return below 60, but this does not mean that the momentum of the US economic recovery is weakening, but may be a signal of further health. It is impossible for the pace of economic recovery to always run long-distance running at the speed of sprinting. In the long run, the manufacturing industry remains above 52 to 53, and the non-manufacturing industry remains around 55 or above, which means a very good economic operation pattern. Moreover, this good pattern may eventually accumulate "inflation" that the real economy cannot bear and ultimately harm the real economy. This was the case from 2003 to 2006: the manager's index gradually declined from the 60 high, but it was not a signal of economic decline or recession, and production capacity continued to fluctuate and rebound until saturation. In the end, the huge accumulation of inflation has brought substantial damage to the real economy and dragged down the economy and finance across the board. Judging from the large cycle of production capacity in the United States, the time period when inflation deteriorates and comprehensively damages the real economy seems to be still far away.

Based on such a general logical judgment, although the US stock bubble has become obvious, there is no systemic crisis. Medium-term structural and technical volatile adjustments are difficult to predict, but they will not constitute a systemic risk of turning bears. The same is true for China's capital market, without systemic risks. Even in the medium term, A-shares, which are ahead of the US stock adjustment for several months, may be more stable compared to US stocks in the later period.In addition, although A-shares performed poorly in recent weeks, based on the market operation structure, the author believes that A-shares do not have the momentum of deep adjustment (even if the US stock market ushers in obvious structural adjustments), the risk preferences of A-market market seem to be constantly strengthening, and both the overall valuation and the market valuation of core assets A-50s are significantly lower than those of US stocks. Currently, the average P/E ratio of A shares is 20.95 times. Excluding A-shares after A50s, the average P/E ratio is 25.8 times, far lower than the current S&P 500 Schiller P/E ratio of 36.95 times. The probability of A-shares rising in the medium term is high, but the structural valuation imbalance of A-shares is also very obvious. Be cautious in participating in the overvalued public funds grouping sectors.

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