By Rohan at Data Diary:
Latest OECD Composite Leading Indicators are out (here) – with the June data slipping into the red indicating according to the OECD “a possible peak in expansion”.
‘Possible peak’? Looks pretty much like it is a near certainty. With Europe yet to feel the effects of the communal belt tightening and the US struggling to come to terms with its deteriorating government balance sheet, the economic momentum is favouring the downside.
But perhaps it is not all gloom. It may be that the recent bounce in Chinese equities is reflecting a turn for the better in growth expectations:
While the leading indicator for China has been heading south for some time, it is still in expansion mode and by the looks of the rate of change in the CLI may be starting to find a base. The ‘rate of change’ in the CLI has proven to be a reasonably useful leading indicator of the stock market over the last couple of years – and over recent months its downward momentum has slowed. Okay – it may be a bit of a stretch to claim the second derivative of a composite leading indicator is looking good. Conclusion – don’t buy the bounce until there is confirmation that the CLI has turned up again – which would probably coincide with a change in tack in Government policy.
Finally, a quick look at the CLI for Australia:
Looks suspiciously like Australia also has “a possible peak in expansion”.