As of the end of January, The average of the "Risk 4," a measure of four of the FRED's risk tracking indexes, has crossed above zero, indicating a high risk of financial crisis in the US economy. The RISK 4 are the St. Louis Fed Financial Stress Index (STLFSI), Kansas City Fed Financial Stress Index (KCFSI), Chicago Fed National Financial Conditions Index (NFCI), and the Cleveland Financial Stress Index (CFSI).
The last three times this crossover occurred were August 2007, May 2010, and August 2011. We know that both 2010 and 2011 featured large corrections in the market, but, ultimately, were in the course of a long term bull market. However, the 2007 event preceded the major US financial crisis.
For more information, visit my US Economic Health page: http://www.maintrimmercapital.com/p/us-economic-health.html
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