Stock markets are growing on Thursday morning on strong foreign trade data published by China and Australia. Rising surpluses in these export-oriented countries are often a positive signal of global growth. But things can be different now.

In Australia, the growth of the foreign trade surplus is due to a simultaneous decline in imports and an increase in exports. In March, Australians significantly (-15%) reduced their purchases of foreign goods.

China published data for April, and the picture is similar. Exports rose by 3.5% YOY (vs -16% expected), but imports fell by 14.2%. The decline in imports for China is not only a sign of weak domestic demand but also of a decline in business activity, as a significant part of imports are re-exported in the following months.

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Separately, it is worth mentioning that the recovery of business activity indices is also very delusive. The Chinese estimates published this morning showed an increase in the PMI from 43 to 44.4 but still below 50, i.e. in the area of decline. The same indicator for the Eurozone was revised with an increase from 11.7 to 12.0. But this is still a picture of a disaster in the economy.

The same can be said about the labour market estimates in the United States. ADP estimated the decline in U.S. private-sector employment at 20.2m last month, which is better than expected, but not much.

U.S. private crude oil reserves are approaching record levels of 2017, although not as fast as expected.

All this makes us pay attention not so much to the rebound in stocks but the continuing USDJPY decline. And this is a clear divergence, which is often not in favour of stocks. This gap may shrink as stock markets begin to get confirmations that temporary lay-offs are turning into long-term job losses, which leads to spending cuts and further layoffs.

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