Retail Sales increased 10.6% YoY (smashing expectations of a 10.2% YoY Gain); Industrial Production rose 6.8% (crushing expectations of a 6.0% YoY gain); and the big daddy of goalseeked data, China GDP managed to rise 7.0% (comfortably beating expectations of just 6.8% but still the lowest since Q1 2009). Now it is up to the markets to decide if good data is bad news because it gives the government less excuses to throw more "measures" at the market; or is good data, good news as it "proves" the economic fundamentals underlying massively exponential gains in Chinese stocks (and excessive valuations compared to the rest of the world) are justified. When the data hit Chinese stocks were at the lows of the day, and for now, it appears good data is bad news as stocks are not bouncing at all.
SHANGHAI COMPOSITE FALLS 1.6% AT OPEN BEFORE GDP DATA. GDP better be a hugely goalseeked miss
— zerohedge (@zerohedge) July 15, 2015 [4]
Why would we ever think that?
Everything Is Awesome!!!
One quick question... What exactly are the Chinese suddenly producing so much of? Because its not steel, its not houses, and its not being exported overseas...
Do not question this!!
- *CHINA'S GDP 'NOT OVERESTIMATED', NBS SHENG SAYS
China - we are going to need some worse data than that...
* * *
Finally here is Cornerstone Macro with a less 'optimistic' look ahead...
- PBOC easing hasn’t worked b/c investment and credit are bubbles, lowering demand for credit and slowing investment, Cornerstone Macro economists led by Nancy Lazar write in note.
- Expect China official real GDP by 4Q to have 5% handle
- Inventory destocking likely to be drag on 2H growth; industrial production will probably slow further
- Implications of Chinese hard landing incl. slower global growth; risk of disappointing multinational earnings; inflation and rates, both lower for longer; continued decline in commodity prices; rising USD trend
- Potential ramifications for China incl. PBOC continues to ease, cutting base lending rate to zero from 4.85%, loweringRRR to 6% from 18.5%; weaker outbound investment, which presents problem for other EMs; weaker FDI into China; downturn in employment, retail sales; social unrest and geopolitical turmoil
One last thing - we're going to need a lot more betterer data...
Charts: Bloomberg




