The Chinese numbers were simply horrendous: a 1 percent increase in exports, the weakest in 6 months (most expected an 8 percent increase).
The regional numbers were equally bad: a 16 percent drop (year over year) in exports to Europe, Brazil down 3.3 percent, India down 19.9 percent, Japan down 1 percent (their largest regional trading partner), and an 0.6 increase to the U.S.
And then there is this: new bank loans were at a 10-month low. So overseas demand is weak, AND domestic demand is weak? Yikes!
So why did our market do...nothing? We were near the lightest volume day of the year. (See: Stocks Higher for Week, S&P Logs 6-Day Rally)
Because traders are anticipating more stimulus out of China. Just like they are anticipating more stimulus from the ECB. And the Fed.
And it's unlikely that a cut in the Reserve Requirement Ratio (RRR) will be enough. China lowered the RRR in May to 20 percent from 20.5 percent. The RRR sets the minimum reserves a bank must hold; cutting it allows more money to be lent.
But just like the U.S. and Europe, the problem isn't money. There just isn't any demand.
So how to stimulate demand? More infrastructure? That's what will happen. More ghost cities. More bridges to nowhere.
We need a global revival of the old animal spirits. Seems like the world is turning into vegetarians.
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