Goldilocks Chinese GDP a little too perfect for some

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After days of putting markets on tenterhooks, China's gross domestic product was a "perfect" number. Almost makes you suspicious, doesn't it? Second-quarter GDP came in at 7.5 percent, exactly in line with the "official" forecast. In response, the Shenzen stock exchange rose almost one percent.

Hmmm...that was an interesting result given the timeline of events. On Friday, traders were concerned when China's Minister of Finance, Lou Jiwei, said that reaching this year's GDP target of 7.5 percent "shouldn't be too big a problem" but then went on to say that "we also don't think there is any big problem with [a growth rate of] 7 percent, or 6.5."

Lou also went on to indicate that the expected GDP growth rate was 7 percent, not 7.5 percent, which caused even more confusion. His remarks made it appear unclear if there had been a reduction in the "official" rate of 7.5 percent, and that Lou had been sent out to lower expectations. Chinese stocks declined both in China and the U.S. on Friday, as did other emerging market stocks.

Then over the weekend, China's official Xinhua News Agency corrected that report and indicated that Lou had in fact said the growth rate would be 7.5 percent.

Hmmm again. Get the point? Everyone in line: No change to growth!

Elsewhere:

1) June U.S. retail sales were a disappointment, putting a cap on a tame quarter of economic data. Retail sales were half expectations of a gain of 0.8 percent; the prior month was revised downward. Ex-autos and gas, sales declined in June!

That's bad news for Q2 GDP: The hope among bulls was that after a slow start to April and May, June economic data would show improvement. That storyline, however, didn't play out in retail sales.

This speaks to a tired consumer. Barclays wasted no time in lowering their Q2 GDP estimate to 0.5 percent from 0.6 percent. GDP may be below one percent for the second time in the last three quarters, as Dan Greenhaus and others point out.

2) Weak data present a major problem for investors. The question is this: Should investors use the recent strength in the markets to move more aggressively into cyclical stocks? Buying materials, for example, seems like an insane strategy given the poor prospects for global growth, but I hear traders arguing that valuations have dropped so much this year (Materials are the worst performing sector of the S&P 500, up 6 percent vs. a 17.8 percent gain for the S&P 500) that on a relative basis they may be a bargain. There is certainly a chance of significant appreciation, if there is even a modest pickup in the global economy.

This is a tough call, but in my opinion, you have to play for global growth. You heard it from Alcoa, for example, who was surprisingly bullish on demand for aluminum in the second half of the year. But between here and the fourth quarter, there may be a lot of stinky data.

—By CNBC's Bob Pisani