Global economy cool, except in China

The Conference Board announced yesterday that the US leading index decreased 0.2 percent to 114.5 in April, the fourth consecutive month of decline after February's small increase was revised down to a small decrease.

"The recent weakness of the leading index is consistent with the economy continuing to expand in the near term, but at a slower pace," the Conference Board said.

Barry Ritholtz at The Big Picture points to Michael Panzer who reveals other signs that the US economy is slowing, namely the Empire (New York) Federal Reserve Survey, which came in at -11.1, and the Philadelphia Fed Factory Index, which fell to 7.3.

Yet another ominous sign: Calculated Risk highlights the fact that real estate is on the front cover of Fortune. The end for real estate may be near, and that bodes ill for the rest of the economy.

And for potential financial shocks, watch out for the hedge funds and GSEs.

Meanwhile, the eurozone's inflation is showing a pattern similar to that of the US. While the overall inflation rate was 2.1 percent in April, core prices rose at an annual rate of just 1.4 percent, according to Eurostat.

However, in China, things look a little less cool, at least as far as investment is concerned.

Fast China investment shows tough rebalancing task
China's efforts to slow down investment growth are faltering, official figures released on Thursday showed, underlining the battle facing the authorities to prevent the world's seventh-largest economy from overheating.

Urban fixed-asset investment, which includes everything from property to power plants, was 26.5 percent higher in April than a year earlier, a little faster than the 25 percent that economists had expected and maintaining a trend of similarly rapid growth seen since last year.

[...]

Investment in property in the first four months of the year was 25.9 percent higher than in the same period of 2004, compared with a 26.7 percent increase in the first quarter.

Which again reminds me of Andy Xie's words: "The party doesn't end until property prices fall". So there may still be life left in the economic expansion.

Having said that, though, the Chinese government did recently take fresh measures to cool the investment boom. And if the Chinese renminbi is revalued soon as many believe -- and despite the acknowledgement by the US Government Accountability Office that some groups could be "negatively affected" and that financial markets could face "short-run disruptions" -- the effects of the recent move by Hong Kong to loosen its own currency peg possibly provides a small foretaste of what is to come.