Wonering About China GDP

The markets are roughly flat this morning after yesterday's outsized rally.  The prelim Univ of Mich consumer sentiment survey for July came in at 83.9 from 84.1 last month.

Asian markets were mixed ahead of China's GDP report due out Monday.  The country's official target is 7.5% growth, but some have started to question if they can achieve that given the liquidity crunch they are facing and the air coming out of the property bubble.  Finance minister Lou Jiwei said he is confident the country can achieve 7.0% growth, but 6.5% growth would not be a 'big problem'.  I wonder if he is trying to talk down expectations.

In earnings news, both JP Morgan and Wells Fargo reported earnings this morning that beat on the bottom line.  JPM saw a 7.0% decrease in mortgage originations while WFC reported a 2.7% increase.  But both stocks are higher this morning and helping to boost the financial sector.

On the downside, UPS is lower by 5% after cutting guidance for Q2 and the full year.

European markets are mixed.  The ongoing political turmoil in Portugal caused the Troika to push back their aid review by a couple of months.  Elsewhere, Standard & Poors affirmed Germany's 'AAA' rating.

The 10-year yield is hovering near the 2.58% level.  It has eased back after Bernanke's comments soothed investors.

And the VIX is still low at 13.91, increasing the odds that the SPX tests its yearly highs in the near future.

Trading comment: The market has had a sharp rise since its late June lows.  A possible scenario from here would be for the market to experience some sideways consolidation before breaking out to new highs again.  The initial reaction to bank earnings has been positive, but earnings season heats up next week with all sorts of companies reporting.  So we will have to see if management's sound a cautious note about 2H13 or if they remain cautiously optimistic.  The reduced guidance from UPS this morning is a little disconcerting for those looking for economic growth to pickup in the latter half of the year.  Why isn't UPS seeing it?