China's widely being blamed for U.S. markets being down this morning, with Dow Jones
Yeah... that doesn't make sense
So we have a pair of contrasting storylines. Inside China, people today spoke of the country's 8.1% GDP growth, which fell short of expectations of around 8.3%, being a catalyst for more government stimulus. Inside the U.S., the headline figure that growth was at a three-year low gained the most attention.
Which makes one wonder: Is the glass half-empty or half-full? The "bulls" in China do have a point. Notably that lending bounced 25% in March, a move that signals the country is already pulling on the growth levers. That's just one of many economy-boosting "bullets" China has to fire. Then again, if you've set your expectations for the country's economic growth too high, you could be disappointed.
Old conventional wisdom was that China would take significant action if GDP growth fell below 8%. However, with the country setting its 2012 growth target at "just" 7.5%, that wisdom could turn out false. To be sure, the government would take necessary actions to keep its growth above that level, but that lowered growth target also allows China to accept lessened growth to restructure its economy. A key area in those restructuring plans is taking steps to move GDP growth away from investment areas like infrastructure and real estate and toward more consumer spending.
Under that scenario, if you're a U.S. investor, these lower growth rates could actually be better for you! The reason is simple. While U.S. firms like Caterpillar
Wrapping it up
So there you have it, headline figures might have scared U.S. investors today, but the complete picture might be more nuanced. As far as the market moves, part of the disconnect between Asia and the U.S. today is just noise. Markets in America have been gyrating all week and it's not surprising to see volatility continue. However, also keep in mind that the Dow is up 7.9% across the past year while the Hang Seng is down 11.4% during that time frame. Sometimes a "could have been worse" figure like today's China GDP can sink a rallying market like the Dow while markets that had already been beaten down will rise on the same figure.
One more idea for the road
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Eric Bleeker owns shares of no companies mentioned above. The Motley Fool owns shares of Apple and Coca-Cola. Motley Fool newsletter services have recommended buying shares of Nike, Coca-Cola, and Apple. Motley Fool newsletter services have recommended creating a bull call spread position in Apple. Motley Fool newsletter services have recommended creating a diagonal call position in Nike. The Motley Fool has a disclosure policy.