What do the OECD Global Leading Economic Composite Indices show.

What do the OECD Global Leading Economic Composite Indices tell us.

Yesterday the monthly OECD Leading indices got their monthly update. The indicators are designed to be leading in nature and are meant to pinpoint inflection points in

economic activity. The real leading indicators are often the markets themselves but it’s a good idea for asset allocators (market timing in disguiseJ) to watch these indicators closely nonetheless.

At least we like to. On the website you can find much more information split per region and country: http://www.oecd.org/sdd/leading-indicators/

Here is our core interpretation as we see it today:

  • Nafta and Asia is keeping global economic momentum hot.
    • Leading economic momentum in the US is strong
    • Leading economic momentum in Mexico is recovering (buy pulse)
    • Leading economic momentum in Canada is slowing (sell pulse)
  • The rest of the world is either in ‘growth-slowing-mode’
    • Eurozone points to growth slowing (OECD uses a more refined less scary term like growth easing)
    • Japan points to growth slowing
    • UK points to growth turning bad and shows a heightened recession risk.
  • Overall, and solely based on this indicator, global recession risk remains low (but a bit higher than a quarter ago) due to NAFTA & Asia momentum.