No. of Recommendations: 19
You know that the market is volatile when a chart that is a week old isn't current enough to help read the situation.
So far the stock and bond markets are falling but that's quite different from a financial crisis where liquidity locks up (as happened in 2008), banks and brokerages fail and the system itself is threatened with collapse.
I watch VIX, the St. Louis Fed Financial Stress Index ( the degree of financial stress in the markets and is constructed from 18 weekly data series: seven interest rate series, six yield spreads and five other indicators), the Chicago Fed’s National Financial Conditions Index (NFCI, which provides a comprehensive weekly update on U.S. financial conditions in money markets, debt and equity markets, and the traditional and “shadow” banking systems) and the CCC-rated junk bond spread.
https://finance.yahoo.com/quote/%5EVIX/?guccounter...https://fred.stlouisfed.org/series/STLFSI4https://www.chicagofed.org/research/data/nfci/curr...https://fred.stlouisfed.org/series/BAMLH0A3HYCAll of these are showing stress but VIX is the only one which is up-to-the-minute.
When VIX rises to 50 and the Financial Stress Index > 5 there is a genuine financial panic happening. Note that this wasn't the case in 2001 when the dot-com bubble burst, the NASDAQ Index lost 80% of its value and a recession ensued that lasted until 2002. There was not a financial crisis during the dot-com stock market collapse.
It's a real concern to me when the situation is changing so fast that data which is 10 days old seems ancient. Crises tend to blow up very quickly.
I will keep an eye on this.
Wendy
