Dennis' Dreamfield——面包师的钱袋子®

    The latest released U.S Consumer Confidence Index(CCI) rebound remarkably to 54.9, far from previous 40.8. And it is the third consecutive bounce after the trough in February.

    Likewise, the April’s Michigan Consumer Sentiment Index demonstrates a strong trend of growth from bottom. The reading of April is 65.1, 20% higher than that in November 2008.

    The CCI has become an important weatherglass of U.S macroeconomics because the domestic consumption accounts for about 70% of the economy. Historically, CCI highly correlates with the growth rate of GDP.

    Judging from the bounce of CCI in constant two months, I reckon that U.S economy is better off in Q2 than in Q1. The CCI of Japan also give us a optimistic signal as it climbs from the bottom in Dec 2008 to 32.4 in April with a sharp 24% increase, indicating an improved situation of economy.

    The CCI of Euro-zone performs the least. Yet the trough seems to be behind us as the CCI slightly climbs from 64.7 of March to 67.2 of April, equalizing the reading of January 2009. It could be said that the economy of Euro-zone will recover in Q2 if the CCI of May shows a continuous growth.

    Market experienced a moderate setback on Thursday with SHI ending at 2610.62(1.54% decline) and SZI at 10108.86(2.51% decline). Those previously boasted stocks seemed to have larger declines than those blue-chip stocks do.

    Although the price of blue-chips has slight increase compared with some “theme-stock”, certain stocks(such as stocks on railroad) remain in the high price and these stocks can not lead the primary market to a complete reversal because of their correlation with oversea market.

    It has been six months since the market climbed from the bottom. Yet the risks remain uncertain and therefore a more guarded trade-off might be a better choice.

    The data of macroeconomic released by government last week indicate an robust recover in China’s economic although external condition remains uncertain. The economic is recovering under a series of policy proposed by the central government on various industries, including real estate, infrastructure, home appliances, automobile, retail and so on. Yet although the trough of economic setback resulted from financial crisis in 2008 is thought to be behind us, the degree of the recovery still remains unclear and deserves our further observation. The optimistic market atmosphere caused by plentiful liquidity will not change in the short run.

    I suggest that we focus on the industries that are highly relevant with the previous government’s stimulating plans. The assets should be relocated to less risky industries such as real estate, automobile and other relevant sectors—steel, cement, home appliances, etc. In addition, the continuously easy monetary policy is beneficial to those industries that are sensitive to interest rate and monetary supply (such as bank, insurance company, security firm) and those enterprises that have high debt ratio.

    We could also find from the data of April that the domestic demands for both housing and automobile are still on robust growth which implies an optimistic expectation of market for the future. 

    Overall, I think the trend of growth remains unchanged though there might be some rectification for overrated stocks in short term.