Yesterday, when the China economic data came out, the market took the slight declines in the export rate and other indicators in stride because the reported inflation rate came in so low (1.8%). In fact, the numbers indicated two positive things, a decrease in the rate of slowing and a sense the Chinese government would step up its stimulus. Yet, some see that data quite differently. Check out this quote, the centerpiece of an article that came out this morning.
The data was not bad; it was horrendous, said Paul Mendelsohn, chief investment strategist at Windham Financial Services.
It is amazing to me how different perceptions can be, and it makes me wonder about motivation. I wonder if some people responsible for investing other people’s money (lots of it), when given the opportunity to speak to lots of other investors, try to influence toward their particular investment perspective. Simply, I wonder if Mr. Mendelsohn is invested bearishly or bullishly.
I wonder this because the facts clearly do not support the idea that the Chinese data was “horrendous.” In fact, the larger picture suggests something else – the Chinese government is successfully transitioning its economy from an export driven one to a domestic consumption one, which means more imports, less exports, and, eventually, a stronger, more stable economy.
China has been one of the fastest-growing markets for U.S. goods, and exports to that country were up 6.7 percent for the first six months of 2012.
Interestingly, the US has the opposite goal, as it has been dependent on imports for quite some time, and the current administration, as well as the former one, recognized this and both have tried to change that. It would appear that the US is meeting the goal to export more and import less, and in this, again, is market opportunity. Forget the naysayers. Go make some money.
US exports in June increased 0.9 percent to a record $185.0 billion, while overall imports of goods and services declined 1.5 percent to $227.9 billion.
Of further interest is where we are exporting to, other than China, and that would be the economic basket case of the western world – Europe. My question? Is Europe as bad as portrayed in the breathless media? As an investor/trader, should you ignore the continent? I think not.
U.S. exports to the 27-nation European Union, in the grip of a continuing debt crisis that has slowed growth on the continent, increased 1.7 percent in June to $23.3 billion.
Oops! How did that happen? Europe is falling apart, right? When all around you are losing their heads, it wise to keep yours screwed on tight, or something like that. Here is more reality.
Despite all the craziness in Europe and the slowdowns in Asia, our exports managed to increase. We shipped more of just about everything except food.
As to the market … I don’t agree with assessment of the US below, but I do agree with the beautifully expressed sentiment about the perma-bears flitting about the market. In fact, I love it.
Yes, the U.S. is a mess but “stocks have actually in the post-war period returned an average of 8.1% in periods of 0 to 2.5% GDP growth. You folks in the camp claiming there’s a recession happening right now need to wait for at least one negative GDP print prior to opening your gob.
Trade in the day; Invest in your life …
