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I’d give the edge to China in the “Whose news is worse?” sweepstakes this morning.

For April China’s retail sales rose 7.2% year over year–good news except that economists were projecting an 8.6% increase and that March showed 8.7% year over year growth. The April year over year retail sales growth was the lowest in 16 years. (16 years ago the SARS outbreak in China had the government essentially telling consumers to stay home.) Industrial production in April was up 5.4% year over hear vs a projected 6.5% growth rate and growth in March of 8.5%. In April Fixed Asset Investment rose 6.1% vs expectations for 6.4% growth and year over year 6.3% growth in March.

Before U.S. investors and economists gloat, however, this morning’s report on U.S. retail sales showed a drop of 0.2% in April after a 1.7% increase in March. Much of the damage came from expected weakness in auto sales (down 1.1%) but even excluding autos, gasoline station, building materials and food services, what is called the core retail sales number was essentially flat.

This picture of a weak economy was supported by today’s report on output at U.S. factories. Output at U.S. manufacturing companies fell by 0.5% in April, according to the Federal Reserve. This is the third decline in four months. The worst part of the slump came in auto and auto parts production, which fell 2.6% in April. (Which itself supports the view that auto sales have peaked for this cycle.) But even if you take the auto decline out of the numbers, they still show that manufacturing output fell by 0.3% in April.

These figures will be included in the calculation for second quarter GDP growth (for the period that ends on June 30) and they suggest that economic growth for that quarter could be relatively slow.

As of 2:20 today the Standard & Poor’s 500 was up 0.82% and the Dow Jones Industrial Average was ahead 0.7%. The NASDAQ Composite Index was higher by 1.35% and the Russell 2000 small cap index was showing a relatively narrow 0.3% gain. The CBOE S&P 500 Volatility Index (VIX) was down 8.64% to 16.50 on the positive market trend. The VIX closed at 20.55 on Monday, May 13. That’s a sharp 19.7% drop in the VIX in two sessions. Once again, this market has put the hurt on traders in VIX options looking for a return of volatility. At least for the moment.