Trader Talk

Stocks are rallying around the world on two headlines that support the bull thesis: strong China economic data and J.P. Morgan CEO Jamie Dimon’s supportive comments on the U.S. economy.

U.S. stock futures and European equities gained strongly around midday ET, and bond yields rose as China released data after the close of markets there indicating that its bank lending numbers surged back in March, and that exports rebounded in March.

“We are definitely seeing ‘green shoots’ and the effect of China’s monetary and fiscal stimulus,” Brendan Ahern, who runs the KraneShares China Internet ETF and the KraneShares MSCI China A Share ETF, told me.

U.S. stock futures took another move up at 6:50 a.m. ET when J.P. Morgan reported numbers well above expectations, but more importantly Dimon provided this comment on the macro environment: “Even amid some global geopolitical uncertainty, the U.S. economy continues to grow, employment and wages are going up, inflation is moderate, financial markets are healthy and consumer and business confidence remains strong.”

Some geopolitical uncertainty. U.S. economy growing. Inflation moderate. Strong consumer. This, Nick Raich from Earnings Scout tells me, plays into the bull scenario that China is bottoming and the U.S. economy will remain strong: “The main story for investors this year is the numbers are better than feared,” he said.

Raich notes that including the four banks reporting today, 29 companies have reported earnings for the first quarter so far. Of that, 83% are beating estimates, higher than normal. Most importantly, they are beating by an average of 7.2 percentage points, far higher than the usual 3.5 percentage point beat.

That’s because analysts dramatically cut estimates in December on concerns of an imminent global meltdown, which has not happened.

Bottom line: Dimon’s comment reduces fears of an imminent recession, and there is a good chance we will avoid seeing the S&P 500 earnings go negative for the first quarter.

No earnings recession I guess.

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