Easing frenzy

76% of the world economies are in expansion or recovery stages, as shown by their respective leading indicators. And yet, 80% of their central banks are easing in to that recovery. This is shown in the chart below. Interestingly, the easing comes first and then the LEI show recovery. Interestingly as well, is the fact that over the last 25 years, every time we have been at these levels of coordinated dovish monetary policies and good economic readings, these economies have fall into recessions (gray areas). What this chart appears to be telling us is that good times may be coming to an end. Why would central banks be easing if not for the upcoming deterioration of their finances? But what is exactly deteriorating? If LEIs are going up, doesn’t that mean economies are in good shape? The real reason will reveal itself soon, but it may be related to the dollar weakness and tariffs, and the implications to their respective exports not only to the U.S., but to the world, since most goods are still expressed and accounted for, in USD.

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