Hot news of the week

• Us quarterly CPI recorded an annual rate of 8.3% in April, higher than market expectations of 8.1%.

Excluding volatile food and energy prices, the US unseasonally adjusted core CPI rose at an annualised rate of 6.2 per cent in April, higher than expected. Us bond yields rose sharply after the CPI report, with 10-year yields above 3 per cent. The report shows that soaring inflation has pushed American consumers to the brink of collapse and threatened economic expansion.

• Us Senate approves Powell's re-election as Federal Reserve Chairman

On May 12th, the U.S. Senate voted on Thursday local time to approve Jerome Powell as chairman of the Federal Reserve. Mr. Powell said his main task was to control inflation, but acknowledged that the process could be painful. Powell joined the Fed board for the first time in 2012. In March 2020, at the beginning of the COVID-19 outbreak, he led the Fed to cut its benchmark interest rate to zero and injected money into the financial system to prevent a deep recession in the world's largest economy.

• The dollar index hit a 20-year high

At 2 p.m. eastern time on May 12, the dollar index (USDX) broke through 104.9, the highest level since November 2002. The primary factors supporting a strong dollar in the face of high inflation are still the Fed's interest rate hikes and expectations of rate hikes. The consumer price index in the United States has been rising since 4.9% in May 2021 and hit a nearly 40-year high of 8.5% in March. Although the consumer price index of 8.3% fell slightly in April, it still exceeded market expectations.

• The death toll of COVID-19 in the United States exceeded 1 million, and Biden ordered flags to be flown at half-mast across the country.

On May 12, Biden announced that the death toll of COVID-19 in the United States had reached 1 million. Recently, because of the new subtype of O'Micron mutant, the epidemic in the United States is heating up again, with an average of nearly 100000 new cases in seven days.

• Euro area CPI may accelerate in April minutes of ECB meeting will be released

As core pressures intensified, eurozone inflation rose to 7.5 per cent in April from 7.4 per cent in march, with hawkish members of the ECB's governing council winning the new debate and central bank president Christine Lagarde hinting that interest rates would be raised in July.

• International oil prices close at $110a barrel, OPEC and IEA downgrade oil demand forecasts

The Organization of Petroleum Exporting countries (OPEC) cut its forecast for oil demand growth in 2022 by 320000 b / d to 3.47 million b / d on May 13, the second time in two months. The move comes a day after the International Energy Agency (IEA) cut its forecast for global oil demand growth in the second quarter of this year in its monthly oil report, which is expected to slow from 4.4 million b / d in the first quarter to 1.9 million b / d in the second quarter.

The OPEC warned that the damage to global energy supplies caused by the crisis in Ukraine and the resulting surge in oil prices would hurt economic growth and thus dampen oil demand.

Although demand expectations continue to decline, supply-side risks are still a more worrying factor for the market. IEA Director Birol stressed that "the oil market may face challenges this summer," adding that IEA may release more oil in the future if necessary.

Blackrock World Energy Fund (LU0788109394.HK) $

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• The people's Bank of China issues monetary policy implementation report for the first quarter of 2022

On May 9, the central bank released the report on the implementation of China's Monetary Policy in the first quarter of 2022. In the first quarter, the central bank persisted in making progress in the midst of stability, a prudent monetary policy was flexible and moderate, and policy efforts were appropriately advanced to promote the stability of the macro-economic market.

Review of the market

Big line point of view

The three major indexes of US stocks all hit new lows in more than a year.

After the collapse, the market has different voices.

• Look at DuoPai:

JPMorgan Chase & Co (JPM), a strategist in the liquidity research department, thinksLong-term capital outflows are unlikely to occur.From the point of view of the position, it means that in the short termUs stocks are getting closer to bottoming out。

Another strategist believes that in terms of U. S. stock valuations. Based on 2023 forecasts, the S & P 500 trades at 15.8 times earnings and earnings per share (EPS) of $249, while based on this year's forecasts, the index trades at 17.3 times earnings and an EPS of $228. The average market expects the index to trade at 16.9 times earnings, according to Bloomberg data. In other words, stocks are not cheap for investors.It takes a deeper callback to buy.。

Goldman Sachs Group strategist Peter Oppenheimer believes that investors have digested a lot of negative emotions.Imply that a buying opportunity will be created after a sharp fall.。

• Bears:

Michael Wilson, chief equity strategist who has been bearish on US stocks for a long time, Morgan Stanley reiterated in his latest reportThe stock market slump is not over yet.As fears of a slowdown in economic growth intensify, it is believed that there is still room for further correction in US stocks.

According to Dow Jones Market Data, a close below 3837.25 marks a 20 per cent drop in the s & p, in line with the widely used technical definition of entering a bear market. Based on data since 1929, the average bear market has fallen by 33.5% from high to low, with a median decline of 33.2%. The data also showed that it took an average of 80 trading days for the S & P 500 to hit bottom after entering a bear market, with a median of 52.

Bet on raising interest rates and flooding into the dollar to avoid risk

Can gold turn the tide when it falls under pressure?

As a safe-haven currency, the dollar climbed to a 20-year high and gold became less attractive to holders of other currencies because of fears that tightening monetary policy to curb surging inflation would hurt the global economy. While gold is seen as a hedge against inflation and a safe bet during economic and political turmoil, it is highly sensitive to rising US interest rates, which increases the opportunity cost of holding unyielding gold and silver.

In response, the head of commodities research at Kotak Securities said: market concerns about inflation and tensions between Russia and Ukraine continue to "support the bottom" of gold prices, so the trend of gold prices is weak but the overall downside is limited.

MKS PAMP: the speed at which the Fed tightens money affects the future trend of gold prices

According to an analysis provided by MKS PAMP, gold has two options: fall to $1300 an ounce or soar to $4000 an ounce. But it all depends on the speed with which the Fed tightens monetary policy:

According to the slow cycle of raising interest rates, that is, gradually raising interest rates, the price of gold could reach $4000 an ounce within five years.

On the other hand, a rapid upward cycle could trigger a sharp sell-off in gold, which will fall to $1300 an ounce within five years.

MKS PAMP suggests that the decline in gold prices is decreasing, and if it is really a bear market, the international gold price should be well below 1850 US dollars per ounce.

Trillion-dollar asset management giants increase their positions in Chinese stocks

Systematic opportunities for Hong Kong stocks

Recently, a number of "value school" fund managers said they are optimistic about Hong Kong stocks, especially the Internet sector. Yau Tung-wing wrote in his latest quarterly report, "Hong Kong stocks have undergone substantial adjustments in terms of valuation, fundamentals and liquidity."We believe that the opportunities for Hong Kong stocks have changed from structural opportunities to systematic opportunities, which is worthy of strategic allocation.He believes that the growth stocks represented by the Internet, science and technology, and pharmaceuticals have fallen back to a very attractive level, and many of the constituent stocks in the Hang Seng Technology Index have withdrawn more than 80%. The cheap valuation can well meet the stock selection criteria of its undervalued investment strategy.

CICC: moderately over-allotted A shares and overseas assets of Hong Kong stocks are upgraded from low allocation to standard allocation.

China International Capital Corporation believes that apart from the policy, there may also be some positive changes in domestic and overseas fundamentals in May. It is suggested that we should be cautiously optimistic about risky assets, moderately overallocate A shares and Hong Kong stocks, and upgrade overseas assets from low allocation to standard allocation. The domestic stock index has benefited from the marginal improvement of the epidemic and policy support, while the valuation is relatively low, and the risk premium suggests that the stock index is expected to outperform the debt index by more than 15% in the coming year. From the liquidity point of view, the credit pulse also suggests that the domestic stock index will have a good performance in the next 1-2 quarters.

Morgan Stanley Huaxin Fund: overseas market adjustment does not change the operating trend of A shares

Morgan Stanley Huaxin Fund said that fluctuations in overseas markets will trigger the trend of the A-share market the next day, but most of the time it does not change the operating trend of A-shares themselves. At present, under the tone of "resolutely winning the defense war in Greater Shanghai", the epidemic prevention and control policy is expected to be further implemented, and with the trend of the epidemic in Shanghai improving, the supply chain of related industries is expected to be repaired. Superimposed May interest rate hike and contraction plan landed, U. S. debt interest rates into a wide range of shocks, the growth sector is expected to usher in a rebound.