User: Brian Ripley: CAD Economy: Picture

Picture

What, me worry? Messieurs Poloz, Flaherty, Carney, Bernanke and Madame Yellen et al are all on the record warning about leverage and the cost of it as a major risk going forward. Chris Kimble makes an interesting observation that the St Louis Fed Stress Chart is at the lowest historical levels just as it was in 2007 and 2000 when the S&P 500 was at its highest.... Wait a minute; the "risk" of rising interest rates is not really the BIG risk that central banks of countries, who are autonomous issuers of their own non convertible currency, lose a lot of sleep over lately. It's the "D" word that provokes insomnia in government and the private sector. As Chris Kimble points out the stress at the Fed could not be much lower than it is today and sleep should be effortless. But what if asset valuations decline? Is that not the greater risk over time? Full comments at www.chpc.biz

Comments

Mr. WizardMr. Wizard
http://research.stlouisfed.org/fred2/series/STLFSI 
The SLFSI is at -0.927, which is pretty damn low, the lowest I've seen since I first heard about it a couple of years ago. Right now it shows that the indicators compromising it are showing no signs of financial stress. But it's a terrible timing tool because it's pretty much coincident or lagging. 1/8/14
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