Shinwen: Beware of short-lived quotes under inflation

Shinwen when the Fed's monetary policy has been used to the end, the ECB's monetary policy is increasingly focused on the market, and Beijing time late May 7, 2009, we finally saw the ECB's further loosening of the currency of the big moves. This day, the euro was cut again by 25 basis points, and the ECB decided to inject money into the market by acquiring 60 billion euro-denominated bond assets. It is the first time in the history of the ECB to implement quantitative easing monetary policy in the form of bond purchases.　　Of course, QE is not just about buying bonds, but the ECB has also extended the bank's lending period to commercial banks. The euro zone's strong currency, arguably, is expected to produce a devaluation of the euro, but the actual performance of the market is predictable.　　The euro had a modest fall against the dollar just as the ECB announced its policy, while Trichet explained that the monetary policy press conference had not ended and the euro had picked up again. Why pay attention to the movements of the euro and US exchange rates?　　Because of this, the impact on China's macroeconomic and stock market trends is serious. First, we must know that the direction of change in commodity prices is related to the change in China's inflation, if the international market commodity prices really like I have been worried about the rise, there will be more serious domestic inflation.　　Most troubling of all, such inflation is an import inflation for China, which can only be governed by US monetary tightening, which is largely ineffective in China's monetary policy. Second, the stock market will rise at the same time as international commodity prices soar. The reason is that, such as resources, banks, real estate and other inflation-benefiting stocks, or the value of the stock in any one market in the world has a huge weight, so as long as such stocks rise, the stock index will rise.　　In spite of this, resources and energy-consuming industrial stocks will fall.　　To clarify the relationship between commodity prices and macro-economic and stock markets, the impact of the dollar and euro exchange rates on commodity prices. If the euro zone's monetary policy is to want the euro to depreciate, the dollar will rise relative to the euro, and the dollar's rise is bound to depress international commodity prices denominated in dollars and settled.　　So the stock market inflation will not happen, but if, on the contrary, European monetary policy cannot force the euro to depreciate, the probability of higher commodity prices will be very high. Facts have proved the above judgments. May 7 after the European Central Bank monetary Policy announced, the dollar fell against the failure of the May 9 formation of a broken down trend; Meanwhile, international oil prices began to flush 60 of dollars, from May 1 to May 9 Six trading days, the commodity price Index (CRB) actually received "six Lian Yang",　　Form a very clear upward breakthrough, although it now needs a brief adjustment. Of course, the stock market is ahead of time to anticipate such a market situation, in this round of gains, resource stocks rose the most. Is this "hindsight"?　　No, it's because the market is clear. Must See, the rise in commodity prices today is mainly the result of monetary factors, the price of commodities and the currency of settlement, the depreciation of the dollar. But the positive side of inflation's impact on equities is only short-lived. As a whole, vicious imported inflation will have a very negative impact on China's economy. So if the stock market is going crazy because of rising commodity prices, it must be a short-lived one, and investors should be ready at all times.