Cui Yan: The global PMI continued to decline in July.

Zhongxin Jingwei August 3rd Question: July Global PMI continues to decline, and European economic recession may be nearly in front of them.

Author Cui Yan CITIC Securities Overseas Macro Chief Analyst

In July, the overseas market manufacturing PMI (purchasing manager index) continued to decline as a whole, and showed the situation of "weak Europe and Latin America, Asian differentiation, and strong North America". Among them, the US manufacturing PMI index announced by the ISM (American Supply Management Association) settled from 53 to 52.8 in June. The main countries of the euro zone have declined below 50, showing that the risk of European economic recession has been nearly now. Combined with the guidance of the indicators, we judge that the price of commodities such as copper may continue to fall in the third quarter, and the US stock profit forecast may restrict its phased rebound space.

From the perspective of the area: (1) Asia, most of the PMI readings of major Asian countries have declined, and India's Markit manufacturing PMI rose to 56.4 against the trend, which performed the best. Vietnam and Japan down significantly, while South Korea fell below the Rongku Line. The Chinese manufacturing index dropped from 50.2%in June to 49%, showing the phased fluctuation characteristics of the early stages of economic recovery. (2) In Europe, most European countries PMI index lasted for many months and entered the contraction range. (3) In the Americas, the Canadian manufacturing PMI index declined at a high decline, and the degree of prosperity in the United States declined slightly. The manufacturing industry in Latin American countries such as Mexico was obviously cold, and some representative countries read significantly.

The overall PMI index of manufacturing in the United States is higher than expected. Decreased demand is the prominent feature of the current economy. Although it has not yet entered the "substantial decline" stage, the prospect of economic growth may have begun to affect the Fed's radical position. In terms of sub -items, the significant decline in prices shows that the pressure of American inflation may be slightly eased; the new order index continues to shrink, and the decline in demand is still a prominent problem in the US economy. The tension of the employment market may affect the growth of manufacturing. At the same time, the shortage of basic raw materials for overseas markets has been superimposed to the re -production of China Reinstallation. In addition, the continuous decrease in new orders may be the main reason for the significant decline in the unprepared order. The low customer inventory still shows that the US supply chain is completely stabilized and it takes time. In terms of supply chain blockage, in addition to a small number of industries such as cars, there is a large alleviation overall. Combined with the recent BEA (US Department of Commerce Economic Analysis Bureau) data, the negative value of GDP (GDP in China) for two consecutive quarters is not evidence that the US economy has entered a "substantial recession", but the prospect of economic growth may have begun to affect the Fed's radical position Essence Affected by the Fed's marginal turning pigeons, the possibility of narrowing the rate hike to 50 base points in September still depends on inflation data.

On the whole, the number of PMI reading in the United States continues to be located in the downward range, which may indicate that U.S. stock profit forecasts will be repaired by the project's rebound space, and the price of industrial commodities such as copper will continue to decline. The US PMI index is often guided by US stock EPS (earnings per share) and international copper prices. Since July, U.S. stock valuation has been slightly repaired, and a phased rebound has occurred. We believe that as the Fed's release of marginal pigeon signals and the slowdown of US economic growth, the dominant logic of U.S. stocks will turn to fundamental profitability. U.S. stocks will show a phased rebound before September, but the profit expectations will be restricted to the rebound space. Copper and other non -ferrous metal sectors fell significantly in July. Affected by factors such as gradually relaxing the fundamentals of supply and demand and expected to decline in demand, it may continue to go out of the trembling downward market in the third quarter. (Zhongxin Jingwei APP)

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