No Financial Stress

As we head into 2018, the St. Loius Fed reports there is no financial stress.

The STLFSI measures 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. Each of these variables captures some aspect of financial stress. Accordingly, as the level of financial stress in the economy changes, the data series are likely to move together.

The average value of the index, which begins in late 1993, is designed to be zero. Thus, zero is viewed as representing normal financial market conditions. Values below zero suggest below-average financial market stress, while values above zero suggest above-average financial market stress.

Financial Stress 1994-Present

Financial stress has been negative since June 18, 2010. I expect 2018 will not be so complacent.

MIke "Mish" Shedlock

Comments (8)
No. 1-8
thimk
thimk

2018 will be a "golden" year

Matson
Matson

There can be no doubt that all these big foreheads at the Fed are in Alice's Wonderland.

Stuki
Stuki

According to the Greatness of Banks, Governments and Lawyers index, derived from 23 series of data measuring odorous compounds emitted from my toe fungus; Governments, Banks and Lawyers are all very useful entities right now, benefiting many others besides themselves.

Sechel
Sechel

by the time the fed recognizes financial distress its too late. asset prices are too high, the time to address these imbalances are when there's no crisis. top on the list should be making sure gov't insured mortgages have a minimum 20% down without the use of a 2nd mortgage and an increase in margin requirements for equities should be seriously considered.

clovisdad
clovisdad

The index is valuable as camouflage. That these folks are "in charge" of the price of capital should make us all terrified. The reality is that this part of the deep state is funding the carry trade for its friends while keeping Treasury from having to pay higher debt service on its gargantuan debt. The real consequence of all this "policy" is that private savings are being transmuted into cheap financing for investment banks and the bloated federal government, rather than the commencement of new businesses and the avoidance of poverty. One more massive tax on the serfs.