ChartBrief 103 – Global Economic Leading Indicators

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ChartBrief 103 – Global Economic Leading Indicators

The latest round of OECD Composite Leading Indicators showed some interesting results country-by-country, but one view we use when looking at these indicators is to take a breadth and diffusion (as well as level) perspective to gauge changes in the global economic pulse.  This provides useful context when thinking about global economic cycles, but it is also informative when thinking about global equity market cycles, as the charts show.

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The first chart shows that the breadth indicator has topped out (% of CLIs above the 100 point mark).  In the past this has often happened when a major top is forming in the MSCI ACWI (global equity benchmark). There are a couple of false signals, but it is something worth highlighting, particularly is the signal accentuates.  The second chart shows a monthly diffusion index view, and you can see there appears to be a slowing of momentum in the global economic rebound, and it’s quite possible that the OECD +6NME CLI tops out in the coming months.  This is something we will be looking at more closely in a note for clients later this week.

The global OECD CLI breadth indicator has stalled out after an impressive recovery.

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The monthly diffusion index has likewise lost momentum and points to a leveling out of the OECD +6NME (Brazil, China, India, Indonesia, Russia, South Africa) - which is basically the global index.

Global Economic Leading Indicators

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Article by Callum Thomas, Top Down Charts

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Topdown Charts: "chart driven macro insights" Based in Queenstown, New Zealand, Topdown Charts brings you independent research and analysis on global macro themes and trends. Topdown Charts covers multiple economies, markets, and asset classes with a distinct chart-driven focus. We are not bound by technical or fundamental dogma, and instead look to leverage any relevant factor to capture the theme. As such, here you will find some posts that are purely technical strategy, some that just cover economics and data, and some posts that use multiple inputs to tell the story and identify the opportunities. Callum Thomas Head of Research Callum is the founder of Topdown Charts. He previously worked in investment strategy and asset allocation at AMP Capital in the Multi-Asset division. Callum has a passion for global macro investing and has developed strong research and analytical expertise across economies and asset classes. Callum's approach is to utilise a blend of factors to inform the macro view.
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