On Thursday, Hong Kong time, we woke up to the news that the S&P 500 rose to its highest level of the year in overnight trade in New York. Interesting.
Why? Naturally, many market watchers -- Jim Cramer included -- are looking out for earnings, and JPMorgan Chase (JPM) surprised with remarkable revenue growth. The banking sector rose, Lazarus-like, from the dead.
Out here in Asia, we're also watching data out of China. The Financial Times attributed the S&P's highest close since Dec. 4 to better-than-expected trade data out of China. And we're waiting for first-quarter gross domestic product figures from the Middle Kingdom on Friday.
I can see why people read positive signals from the green-tea leaves in the Chinese trade data. They serve as a reasonable proxy for the health of the global economy, a sign the "world's factory" is churning out more stuff.
I wouldn't read too much into Friday's GDP figure, expected to see the economy slow to 6.7% year on year, down a notch from 6.8% in Q4, and falling to a seven-year low.
There's no doubt China's economy is slowing. But does anybody believe the GDP figures, which show "little to no volatility," as Commerzbank noted in a report last November, "How fast is China really growing?"
It would fit nicely within the forecast of 6.5% to 7% growth for 2016 made in March by Chinese Premier Li Keqiang at the National People's Congress, China's version of parliament. But does anybody really believe the figures are accurate? Li Keqiang certainly doesn't appear to, having famously -- according to a WikiLeaks document from the U.S. state department -- told the U.S. ambassador in 2007 that the GDP figures were "man-made" and unreliable.
Under an excellent headline, "Keqiang ker-ching," The Economist immediately carved out a "Li Keqiang index" that tracks electricity consumption (now a popular proxy for who exactly is keeping the lights on well into the night), cargo volumes on railways, and loans by banks.
Many observers now view that 2007 model as outdated, since it essentially tracks much the same data as might show up in the trade figures. Only the bank loans map much in the way of the services industry, clearly growing rapidly in China, and part of its express reform push to rebalance the economy.
So everyone now has to come up with their own set of factors to watch to figure out how well things are going.
I like to use what my friends and sources tell me. And my good friend Kenji Cheung, CEO of Tesco Dental (Hong Kong), tells me business was as bad as he's seen in the first quarter. His business, which posts revenues of HK$100 million (US$12.9 million) supplying dentistry machinery, equipment and consumable supplies to dental clinics, had basically its first down quarter in its 40-year history.
Another buddy, who works for the Dutch electronics, health-care and lighting manufacturer Philips (PHG), also says his segment of the business, supplying lightbulbs and other electrical fixtures, is pretty dire at the moment during his frequent trips to Shanghai.
The International Monetary Fund, in its April global forecast, just upgraded its forecast for China's 2016 GDP to 6.5%, up two basis points from the previous prediction, made in January. So it expects China's full-year figure to hit Li's forecast -- but only just.
Commerbank's report came up with a figure of 5.5% back in November, when full-year growth was officially 6.9%. I think the point is that, even from the government data, it was the weakest growth in 25 years.
That seems very pessimistic, but fits with what my contacts on the ground seem to be telling me.
The point isn't the number itself, which Commerzbank concludes is "smoothed," rather than plain made up. It's the direction. And while China's growth may be the envy of many a nation in these slow times, it's clear China, too, is slowing down.