Important week for Chinese data signals prolonged accommodative global monetary conditions

Car sales were up nearly 10 percent in March and 6.8 percent for 1Q, as total vehicle sales rose 8.8 percent on year last month. Steel has also rebounded on back of better profitability and accelerated construction and infrastructure spending. The yuan and stock market have firmed up lately, as well.

Much is now riding on Beijing hitting 6.7 percent GDP growth for 1Q and posting a decelerated decline in trade for March - to be reported later this week - on top of an easing of industrial deflation last month (to PPI -4.3 percent) and the first improvement in corporate profits and forex reserves since 3Q and 4Q 2015, respectively.

While this is doubtless thanks in part to the Fed's dovishness since February, it could also indicate the reaping of some low-hanging fruit in the consolidation of inefficient SOEs in key sectors like coal and steel.

As well, the yuan's continued strength is crucial: it has improved general market and economic sentiment that advocates of large devaluation, while continuing to voice their dissent, have effectively lost the debate in Beijing, at least for the time being.

Probably more important, though, the US is simply not such a compelling growth story right now for Chinese capital to fly to, nor is any part of the global economy looking particularly robust as an alternative to China. Even if the reported 6.5+ percent growth is in fact no more than 4 percent, that's much better than the latest estimate of our own 1Q growth of barely 0.1 percent.

That's the real heart of the matter: it seems not even the US can afford such tight dollar financing conditions that would allow the Fed to raise rates going forward on anything remotely approaching its original timetable.

We may soon learn just how sustainable - i.e. necessary - is the current dollar weakness that some have attributed to a secret "Shanghai accord" at the G-20 back in late February. On one level, it's obvious now that no such accord was needed anyway: our own financial and economic conditions simply dictated a debased greenback no less than the more serious conditions overseas. And since the "Eurodollar" (offshore dollar) remains the de facto standard for international finance, it follows that not just the US, but the entire global economy, badly needed a forestalling of further tightening (i.e. effective further easing) of dollar liquidity. As global monetary authorities scrambled to stabilize their markets and ward off panic in early-to-mid February, they naturally found that what everyone needed was a falling dollar atop rising oil prices coupled with a rising euro and yen - and by extension of course, a stabilizing yuan.

And so, here we are again in the post-crisis "new normal" where bad news is effectively good news: the more bad or even checkered news and data we get, especially from China or the US, the less likely the Fed's normalization timetable won't continue to slide - i.e. the less chance we'll ever get back to "normal" economics or capitalism again.