February of 2018, it ended in a vigorous manner.

This month, the global capital market has been flying, and the black swan has continued: global stock prices have been raging, the dollar has bottomed out and the yen has risen strongly, commodities have generally fallen, soybean prices have bucked the trend, oil prices have fallen, and bitcoin has stopped. Falling back and rising, LNG natural gas plunged 20% from the gas shortage of 1,000 yuan per day, and the benchmark XIVETF of short-selling stock index volatility fell out of epic magnificent tragic.

However, reflecting on the huge earthquake in February, while being taught, it can also bring a good reference for our next investment.

CICC specifically lists a table of global asset volatility performance in February 2018 (in dollar terms, see chart below). Here, Xiaobian will sort out the fluctuations of the most noteworthy types of assets. The reason, I hope to provide some useful reference for your next investment decision.

First, soybean: supply and demand balance breaks, prices remain strong

Since January, Argentina, one of the world's major soybean producing countries, has experienced severe persistent dry weather, and its soybean pre-production has been significantly reduced. At the same time, the soybean acreage in the United States, the leading producer of soybeans, is expected to decline this year. Affected by this, international soybean prices continued to rise this year. Among them, in the environment of global commodity prices generally falling, soybean futures prices still led the global assets by nearly 8%.

According to analysis, the future dry weather in Argentina will continue for some time, and the weather speculation will continue. At the same time, the annual difficulties in exporting and transporting Brazilian soybeans will begin to fertilize, and the domestic aquaculture industry will begin to enter the replenishment cycle, before the soybeans in May. Soybean meal demand will also have strong support, so soybean prices may continue to remain strong.

The continued strength of soybean prices will significantly affect the raw material costs of middle and lower reaches. Therefore, it is necessary to pay attention to the profit fluctuations of the downstream enterprises in the industrial chain. The profit impact of agricultural products and pork concept stocks may be reflected in the first quarter of this year.

Second, the yen: Japan's strong economic recovery stimulated the yen to rise

The rapid appreciation of the yen since 2018 has made it one of the best performing currencies to date. From January 1 to March 1, the dollar fell by 5.73% against the yen.

USD/JPY chart:

According to analysis, there are three reasons for the appreciation of the Japanese yen against the US dollar. First , the recovery of the Japanese economic outlook supports the rise of the yen. Second, the continued weakness of the US dollar has led to a relative appreciation of the Japanese yen. Third, the Bank of Japan cut the scale of long-term bond purchases and triggered a reduction in quantitative easing. Suspicion.

Since 2016, the Japanese economy has achieved significant stabilization. As of 2017, the Japanese economy has risen for eight consecutive quarters. The strong Japanese economic recovery has strongly supported the appreciation of the yen. At the same time, it has also boosted Japan's core inflation, which in turn prompted the Bank of Japan to expand its operations, thereby stimulating the appreciation of the yen.

Earlier, the Bank of Japan Governor Haruhiko Kuroda said that the possibility of Japan's core inflation reaching the 2% target level at some time in FY19, is high, and the timing of exiting the stimulus policy will be considered. However, the Japanese are often good at making sneak attacks and inconsistent. In fact, in the past two months, the Bank of Japan has begun to reduce the scale of long-term debt purchases.

In addition, from the perspective of the changes in the major global currencies in 2017, the yen only appreciated by 3.4% against the US dollar, and the smallest appreciation among the major non-US currencies was not consistent with the depreciation of the US dollar index. Therefore, institutional analysis believes that 2018 There is still a certain "filling up" demand in the yen.

(Source: Industrial Research)

At present, Citibank, BNP Paribas and Farmers Bank, Morgan Stanley and many other institutions have said that 2018 will be the "Year of the Yen".

3. The US dollar index: The factors supporting the US dollar exchange rate are strengthening.

In February, the international market experienced few violent turbulences in recent years. The US dollar index turned to the bottom and fluctuated, showing an N-shaped volatility: first rebounding slightly, then lowering again, and finally rebounding again. Overall, the US dollar index rose 1.7% in February, closing at 90.61, mainly within a narrow range of 88.6 to 90.6.

The analysis shows that the factors supporting the US dollar exchange rate are strengthening. First, the steady economics of the US economic fundamentals have reduced the inherent need for a sharp depreciation of the US dollar exchange rate. Second, the probability of a US Treasury yield this year following the Fed’s rate hike is high, and the rise in risk-free spreads between the US and Europe will also form a US dollar. Growing support. Third, with the overall rise in inflationary pressures in the United States, the Fed’s monetary policy is gradually showing that “hawks” are expected to form more and more obvious support for the US dollar exchange rate.

Earlier, US President Trump had changed from supporting the weak dollar to supporting a strong dollar at this year's Davos forum, which means that the political pressure on the dollar has disappeared, which may be a clear signal.

Fourth, bulk commodities: higher than the fall, the trend is not broken

In early February, the dip in the US stock market triggered a systemic risk, and the risk spread to the global commodity prices represented by the S&P Commodity Index. In addition to the performance of soybeans, other commodities have seen a certain decline, but the price has been divided:

In terms of bulk energy, crude oil prices fell first and then rose, coal prices fell slightly; in terms of base metals, copper prices rebounded slightly, while rebar prices rebounded remarkably; in agricultural products, wheat, corn and soybean prices continued to rebound; in precious metals, gold and silver prices were subject to The dollar index rebounded significantly and fell significantly.

However, from the economic operation of the US, China, Japan and the Eurozone, the global economic recovery continues to rise, and important global commodities have entered a rising cycle. The demand and price increase will continue.

V. Global stock market: sorrow and glory

Affected by the sudden plunge in US stocks, the world's major stock markets have been sorrowful throughout the month of February. Among them, the Dow fell 4.28%, the S&P 500 fell 3.89%, both of which were the biggest monthly decline since January 2016. Although the Nasdaq fell less than 2%, the mid-month amplitude was as high as 10.93%. The pan-European Stoxx 600 index fell 4%, the largest monthly decline since the June 2016 Brexit referendum. The Asian stock market fell even more. The A-share Shanghai Composite Index fell 6.36%, the Shenzhen Composite Index fell 3%, the HSI and Shanghai Composite Index both fell more than 6%, and the Nikkei 225 Index fell 4.46%. The Korea Composite Index fell 5.42%.

According to the analysis, the important background reason for the US stock market adjustment in February is that the market's expectations for the Fed's interest rate hike are higher, and the US stock market's three major indexes for nearly nine years, the ultra-long-term unilateral bull market makes the market's worries about the stock price crash unprecedentedly strong.

6. Gold: The volatility will continue

With the sharp decline in market risk appetite after the peak, the global stock market recorded the biggest monthly decline in February, and the international gold spot price once broke through 1350 US dollars / ounce. However, as the US dollar index stabilized and rebounded, and Fed Chairman Powell’s testimony of hawkishness in Congress triggered a correction in the market for inflation and interest rate hikes, the price of gold fell quickly and eventually fell by nearly 2% month-on-month.

Unfavorable factors for gold prices continued to accumulate in February: In the context of the continued upward trend of the US economy, the upward trend in market inflation prompted the Fed to continue to raise interest rates and shrink the possibility of contraction, and the overall trend of the US bond yield curve showed an upward trend. .

On the other hand, concerns about increased market volatility in the global market, concerns about the Trump administration’s trillion-dollar infrastructure plan that triggered the US government’s fiscal deficit, and the subsequent Italian elections have raised concerns about uncertain political conditions. There will be some support for the international gold price. Therefore, on the whole, it is expected that the gold price in March may show a significant volatility.

Seven, bitcoin: the panic atmosphere dissipated, speculative trading improved

Bitcoin rebounded from $9056 in February to $11026 at the end of the month after a sharp fall in the previous year. It rebounded by 22%. However, compared with the huge volume of transactions before the year, the volume of this rebound has decreased.

In 2017, it was the most savage growth of digital cryptocurrency. Bitcoin rose from $1,000 at the beginning of the year to nearly $20,000 at mid-December, and soared 20 times in a year, attracting continued attention in the global market. The digital cryptocurrency triggered by Bitcoin has become a concept of crazy speculation. The cryptocurrency and blockchain technology became the hottest vents at the time. The influx of investment capital from various sources has forced governments to continuously update their regulatory policies.

In China, it has also triggered a blowout of ICO speculation. Numerous messy ICOs flooded the market overnight, and there were endless streams of bulls and ghosts. Every day, news of extreme wealth and loss of light flooded the media. Fortunately, domestic emergency control, ICO has been all stopped, Bitcoin has also been implicated and refused to enter the Chinese market.

However, throughout the month of February, the discussion on blockchain technology has intensified, and the community of "3 o'clock sleepless blockchain" has become the hottest focus, from multiple capitals in the financial circle to multiple entertainment circles. Well-known reds, brush all media and friends circle.

Eight, crude oil: the decline in the high, the price support factors weakened

In February 2018, under the influence of the global stock market and the US dollar's large fluctuations, the over-the-counter market worried that the US shale oil production exceeded 10 million barrels per year, the international oil price as a whole showed a high fluctuation. At the beginning of February, the oil price unilaterally fell more than 10%. After the market sentiment stabilized and the US Cushing stock continued to decline, the oil price rebounded. ICE oil finally fell 6% month-on-month to US$64.75/barrel, WTI Crude oil closed down 4.93% to $58/barrel.

From the news point of view, the price support factors of international crude oil are weakening. Although the OPEC's production reduction agreement has been over-executed and the economic recovery has led to an increase in demand for crude oil, the rapidly increasing crude oil production in the US has caused the balance of supply and demand to be broken.

According to data released by American oil service company Baker Hughes, as of February 23, the number of active oil drilling in the US was 799, an increase of 40 from the previous month, an increase of 197 from the same period last year.

The US Energy Information Administration (EIA) reported that the average daily output of US crude oil for the week ending February 16 was 10.27 million barrels, an increase of 1.269 million barrels, an increase of 14.1%. US shale oil production is expected to reach a record high of 6.8 million barrels per day in March, accounting for about two-thirds of total US crude oil production, and will rise to a record high of 10.6 million barrels per day by the end of the year, and 2019. It will further increase to 11.2 million barrels per day.

At the same time, the US dollar index, which has a certain negative correlation with oil price fluctuations, has shown signs of rebounding:

According to data released by the US Commodity Futures Trading Commission (CFTC), as of February 20, the commercial long position of NYMEX light crude oil crude oil futures was 666,900 lots, a decrease of 60,159 lots from the previous month, and the commercial short position was 1438.3. 10,000 hands, a decrease of 108,868 hands last month, commercial clearance positions of 716,100 hands, a decrease of 48,709 hands from the end of last month, speculative net longs for three consecutive weeks to significantly reduce the size of the short-selling reduction, the funds profitable signs of leaving.

Overall, in March and a period later, the international oil price situation is difficult to be optimistic, and it is expected that the high range will continue to fluctuate downward.

Nine, natural gas: the price of ups and downs, highlighting industry investment opportunities

In February, China's natural gas prices experienced a wave of ups and downs. At the beginning of February, with the reduction of gas source in Central Asia and the closure of some pipelines of PetroChina, and the surge in demand for natural gas during the Spring Festival, the LNG natural gas market was once a gas shortage and prices rose rapidly. Some areas have raised their prices by more than 2,000 yuan/ton in a week. However, with the peaking of the Spring Festival natural gas peaking and the shutdown of the downstream factories during the Spring Festival, natural gas demand has rapidly declined and prices have begun to fall sharply.

The structural gas shortage of natural gas indicates that the infrastructure of China's natural gas industry is still not perfect, and the upstream investment of natural gas is seriously insufficient. With the outbreak of “coal to gas” and the promotion of the development of natural gas industry, the upstream resources of natural gas and investment opportunities in the middle of the pipeline will be greatly highlighted.

However, companies downstream of the industrial chain, such as urea chemical plants, may also be affected by profits due to rising natural gas prices.

X. XIV ETF: Returning to the night before liberation

On February 5, 2018, the wealth of a small number of people in the world was almost evaporated overnight!

XIV ETF, a transactional note product issued by Credit Suisse that reverses short-selling US S&P index S&P500 volatility - Velocity Shares Daily Inverse VIX Short-term ETN, which is equivalent to a volatility reverse fund) The highest price of the day fell to $99, and the lowest price of $5.5 was recorded in the next day, a drop of 92.58%. The decline was so large that the assets were almost emptied overnight, and some well-known investment institutions were seriously The huge losses, including the overnight spit out of all profits turned into a huge loss of Credit Suisse itself.

It is reported that the transactional product was established in November 2010 with a face value of $10. After its establishment, its price continued to rise. It reached an all-time high of 146.4 on January 11 this year, an increase of nearly 15 times. However, on February 5, it only plunged to 5.5 overnight. It was a night before returning to liberation!

Finally, on February 15, Credit Suisse announced the suspension of the XIV ETN transaction and initiated the process of stopping the listing. The final price was fixed at 6.04 US dollars, and the monthly decline was 95.33%.

Conclusion

In summary, from the background analysis of the global asset fluctuations in February, there are still some places worth noting in the future, but there are also some more certain directions, as follows:

Soybean industry chain : Supply and demand speculation of soybean products will continue until May, and soybean prices may remain strong. It is necessary to pay attention to the profit situation of the enterprises in the downstream of the industrial chain. The listed company's first-quarter profit statement may appear as a black swan.

JPY : Japan's economic recovery is continuing. Core inflation and central bank demand will boost the yen. Investors or foreign exchange investors who want to trade with Japan need to pay close attention to these two factors.

USD : February has already shown signs of bottoming out, the Fed’s hawkish attitude is obvious, and the possibility of raising interest rates is increasing. And Trump has changed from supporting the weak dollar to supporting a strong dollar, meaning that the political pressure on the dollar has turned away and the dollar is expected to strengthen.

Gold : With reference to the negative correlation between the dollar's movements and the rise in global asset volatility, the gold volatility will continue.

Crude oil : The rise of the US dollar, the continuous outbreak of US crude oil production, and the close of the OPEC production-reducing space will have an adverse impact on oil prices. It is expected that the oil price will not be able to rise, and the possibility of shocks will be greater.

Commodities : The global economy is on the rise, demand is on the rise, and commodity prices are expected to enter a rising cycle. There may be some imbalances in supply and demand.

Natural gas : The natural gas shortage during the Spring Festival period has exposed China's natural gas upstream infrastructure is weak, and the upstream investment of the industry and the mid-stream pipeline distribution have a good prospect. However, the profits of downstream companies such as urea chemical companies may be affected.

Blockchain : Although there are many disputes about blockchain technology, the investment in blockchain will continue to develop explosively with unlimited prospects, but the biggest uncertainty will be policy influence.

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