Chinese FinMin Lowers the Bar, and Raises the Jitters

Brendan Smialowski | AFP | Getty Images

Chinese Minister of Finance Lou Jiwei.

Watch out for disappointing China GDP numbers over the weekend. China's Shenzen stock index was down 1.6 percent overnight on the headline that Finance Minister Lou Jiwei sees reaching this year's GDP price target of 7.5 percent "shouldn't be too big a problem." Until he added on that "we also don't think there is any big problem with [a growth rate of] 7% or 6.5."

Nice set up for Sunday night, when the Chinese government will release Q2 GDP figures. Now — three days before that data — the Minister of Finance suggests he is comfortable with growth of 6.5 percent, when the "official" target is 7.5 percent?

Coincidence? I doubt it. If this is not an effort to bring expectations down, I don't know what is. That has big implications for global growth.

Elsewhere:

1) UPS pre-announced second quarter earnings of $1.13, below estimates of $1.20. They cited a "slowing U.S. industrial economy"' and customer preference for "lower yielding shipping solutions," i.e. customers are looking for cheaper ways to ship things. Full year guidance was lowered to $4.65-$4.85, from $4.80-$5.06, and below analyst estimates of $4.98.

2) Banks are off to a great start for earnings, and home lending still strong. Wells Fargo reported great numbers. They are the largest mortgage originator in the country, with about 25 percent of all originations. Mortgage banking revenue was basically unchanged. Here is Chief Risk Office Mike Loughlin: "The consumer loss levels have improved rapidly due primarily to the positive momentum in the residential real estate market, with home prices improving faster and in more markets than expected."

For Wells, mortgage originations were UP slightly compared to the prior quarter.

JP Morgan posted excellent earnings, $1.60 vs. consensus of $1.44. There was a larger release of reserves because credit quality has improved, but there was also a lower tax rate that helped. Trading was strong: investment banking up 40 percent, fixed income, commodities and currency (FICC) up 17 percent, equity trading up 24 percent.

As for mortgages, overall originations were down, but only because refinancing are such a large part of the business. Applications to purchase homes were up.

There is only 1 month of rate rises....rising rates are a modest negative for housing, but as these rates I don't think it will derail the recovery.

On the broad economy, CEO Jamie Dimon had this to say: "Loan growth across the industry continued to be soft, reflecting a cautious stance by consumers, many small businesses and corporations. However, we continue to see broad-based signs that the U.S. economy is improving and we are hopeful that, as jobs are added and confidence builds, the U.S. economy will strengthen over time."

3) Great week for global markets, with a particular rebound in Emerging Markets:

Global indices this week:

S&P 500 2.6%

Germany 5.4%

China 1.6%

Japan 1.4%

Spain 0.5%

Emerging markets rebound this week

Brazil 3.1%

India 2.4%

Philippines 1.1%

Peru 1.0%

Thailand 0.9%

—By CNBC's Bob Pisani