Fiscal And Monetary Offensive And Defensive Swap CPI Rebound Is Reasonable.

The National Bureau of Statistics announced today

And PPI data.

Data show that in December 2015, the national consumer price level rose 1.6% year-on-year; in December 2015, the producer price of industrial producers decreased by 0.6% compared to the same period last year, down 5.9% from the same period last year.

First, CPI continues to pick up, and the central bank has relaxed conditions.

CPI picked up for the three consecutive month, though it was small, but it still had an upward trend.

The main reason for the rise of CPI is that fresh vegetables and fruits are rising. However, it is necessary to note that the price of fresh vegetables and fruits will rise sharply in December and February of next year. This is the seasonal law. There is no exception this year. The rise of CPI is reasonable.

Second,

It is believed that PPI has bottomed out in December and the turning point of industrial deflation has come to the bottom.

The PPI decline in December was mainly due to a sharp decline in crude oil prices.

It is noteworthy that in December, the PPI annulus ratio widened, and rebounded with the PMI purchase price index in December, and the CRB index narrowed significantly narrower. The South China industrial index was significantly weaker than the equitable phenomenon, and the PPI ring ratio was lagging behind.

We believe that the January PPI ring down is expected to converge significantly, initially predicting that PPI will rise from -5.9% to less than -5% in January.

With the peaking of US dollar cycles, commodities bottoming out and fiscal and monetary policy offensive and defensive exchanges, PPI will converge dramatically in 2016, and the trend of industrial deflation will be reversed.

Third, the cost of manpower is still high, and the service industry is a sponge for employment.

In December, service prices rose by 2% over the same period, including family services, hairdressing, preschool education, bathing,

Cleaning prices rose more than 5% over the same period last year.

At present, the characteristics of inflation in China are: service prices, consumer prices, industrial prices and raw material prices, which indicates that the price of labor costs is rising while raw material prices continue to fall.

The service industry still has a large space to absorb labor, and the laid-off resulting from the reform of the supply side will be absorbed and there will be no obvious increase in unemployment.

Fourth, for inflation in 2016, we believe that the CPI will be higher than the central level in 2015. PPI will rebound sharply. The main logic is the supply side capacity, the demand side active finance, the depreciation of RMB depreciation import inflation, and the dollar peaked commodity.

Deng Haiqing believes that after the Chinese economy has been in the second half of the "L" inflection point in 2016, equity assets will continue to outperform creditor assets.

For the stock market, from the focus of capital and the concept of switching to focus on fundamentals, the fundamentals driven long-term health cattle can expect that the blue chip market has continuity.

For the bond market, the risk of bubble burst is still high, and the pressure on the sharp adjustment of the bond market persists.

December CPI year-on-year 1.6%, basically in line with market expectations, PPI year-on-year -5.9%, lower than market expectations.

Deng Haiqing believes that fiscal and monetary attack and defense swap, industrial deflation is now bottoming out signals.