The Japanese leading indicator for March (which is ironically released 40 days after month end) dropped to the lowest level in a year today (first chart). We understand that this is “old” data that was simply predicting a slowdown from the sales tax increase in April. However, what piqued our interest was the fact that the diffusion index of components of the leading indicator registered a 0%, meaning that none of the eleven components that comprise the indicator improved month-over-month. Not only has this never happened in the 24-year history of the indicator, a recession occurred within a year of every instance of the diffusion index posting a reading of 20% or less (second chart). Admittedly, we are dealing with a small sample size, but it is worth noting nonetheless.