Yesterday no one cared, today they do

Yesterday, not many cared about the weak economic data in China (retail sales and IP) but today they do and it highlights the daily tug of war between the reality of a challenging economic environment on one hand and the hopes and wishes that central bankers can save the day on the other. Chinese exports in July rose just 1%, well below expectations of a gain of 8% and down from 11.3% growth in June. Exports specifically to the EU, China’s largest trading partner, fell 16.2% y/o/y. Imports, a major feedstock for Chinese exports, were up 4.7% vs the estimate of up 7% (up from 5.3% from the EU). Also, new yuan loans totaled 540.1b, 160b yuan below forecasts and the slowest monthly gain since Sept ’11. The Shanghai index fell modestly after 5 straight days of gains. In Europe, July CPI in Germany slowed to 1.9% y/o/y, the lowest rate of change since Dec ’10. French IP in June was flat m/o/m, a touch below estimates of a gain of .1%.