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Stocks Up on Stronger Prospects for GDP Growth

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Peter Mintz | First Light | Getty Images

Stocks up on stronger prospects for gross domestic product growth in U.S. and China.

It's a simple story, folks, one I have emphasized for more than a month. What side of global GDP growth are you on for 2012?

1) U.S.: above or below 2 percent

2) China: above or below 8 percent

3) Europe: a mild recession that ends by the fourth quarter, or a more protracted recession that stretches into 2013.

Today, better U.S. trade data have caused several companies to raise U.S. first-quarter GDP estimates. Barclays raised its first-quarter estimates to 2.7 percent from 2.2 percent, and JPMorgan also reportedly raised its first-quarter estimates to 2.5 percent from 2 percent.

But the key is China. This morning, China reported that bank lending hit a 14-month high. Deposits are also expanding. Chinese authorities have loosened credit controls in recent months, and this approach seems to be working.

This data support the "soft landing" hypothesis on China, i.e., that 2012 GDP growth will come in above 8 percent, and that the Chinese economy may have bottomed out.

China's first-quarter GDP will be out overnight. Consensus is for a gain of 8.3 percent.

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