OECD leading indicators better, China index goes wayward

The OECD leading indicators supported the idea that things are getting better, with signs of improvement in EU and stronger indications of better growth in the US.  Somewhat bizarrely  this does not apply to China, despite the numbers its supposed to lead already rising.

While the shift up in the indices are not huge, markets are all about second derivatives, with there more distinct signs of a turning point.  This doesn't seem likely to fade particularly soon and should be a sign that markets should be buoyant for a while yet.

The OECD leading indicators are not really a market moving piece of information, as essentially its a bunch of data already released mashed together to provide a leading indicator for general growth.  In the past they were designed to track industrial production growth, which was nice for analysts with a commodities angle.  More recently they have changed this to GDP, rendering some of the series useable given the lags in estimating trends.

In the OECD, the divergence between the US and EU remains stark, although both are now heading in the same direction.  The composition of the EU data is somewhat odd though, with the Spain and Greece data looking fairly useless.  Growth in the region looks broad based enough for now, but I would still be cautious given German powered growth does nothing to solve the regions problems and the credibility of the ECBs threat to "do whatever it takes" has yet to be tested.

The China data seem to have totally missed the recent uptick in industrial production, with the China indicator the only one still designed to lead IP.

The China indicator is made up of, M2 money supply, crude steel production, export orders in the PMI, chemical fertiliser production, auto production and Shanghai stock exchange turnover.

Most of these indicators have improved in the last few months, so its not immediately clear what the index is missing. But markets and the actual data are certainly picking up something the OECD leading indicators are not in China.

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