{"id":18923,"date":"2012-05-22T10:23:55","date_gmt":"2012-05-22T14:23:55","guid":{"rendered":"http:\/\/www.thedisciplinedinvestor.com\/blog\/?p=18923"},"modified":"2016-09-20T20:57:40","modified_gmt":"2016-09-21T00:57:40","slug":"financial-conditions-drooping","status":"publish","type":"post","link":"https:\/\/thedisciplinedinvestor.com\/blog\/2012\/05\/22\/financial-conditions-drooping\/","title":{"rendered":"Financial Conditions &#8211; Drooping"},"content":{"rendered":"<p><a href=\"https:\/\/podcasts.apple.com\/us\/podcast\/the-disciplined-investor\/id217999782\" target=\"_blank\"><img decoding=\"async\" class=\"size-medium wp-image-257 alignright\" title=\"iTunes Subscribe\" src=\"https:\/\/thedisciplinedinvestor.com\/blog\/wp-content\/uploads\/2012\/05\/itunes_subscribe3-4.png\" alt=\"\" \/><\/a> The sudden shift of market sentiment over the past several weeks is not just due to the re-emerging concerns over Greece. There are some very strong indications that financial conditions are starting to show additional strain as economic reports and earnings outlooks are disappointing.<\/p>\n<p>A great tool to use to gauge the actual &#8220;conditions&#8221; is a calculation of several<!--more--> components that make up sentiment. In addition to the <a title=\"This Could Be A Reason Markets Are Getting Cranky\" href=\"http:\/\/www.thedisciplinedinvestor.com\/blog\/2012\/03\/30\/this-could-be-a-reason-markets-are-getting-cranky\/\"><strong>economic surprise index<\/strong><\/a>, the Bloomberg U.S. Financial Conditions Index is very effective.<\/p>\n<blockquote><p>This group of indices combines yield spreads and indices from U.S. Money Markets, Equity Markets, and Bond Markets into a normalized index. The values of this index are Z-scores, which represent the number of standard deviations that current financial conditions lie above or below the average of the January 1994-June 2008 period. (<a href=\"http:\/\/www.bloomberg.com\"><strong>Bloomberg<\/strong><\/a>)<\/p><\/blockquote>\n<p>&nbsp;<\/p>\n<p style=\"text-align: center;\"><a href=\"https:\/\/thedisciplinedinvestor.com\/blog\/wp-content\/uploads\/2012\/05\/bfc_score-1.jpg\"><img loading=\"lazy\" decoding=\"async\" class=\"aligncenter size-full wp-image-18927\" title=\"bfc_score\" src=\"https:\/\/thedisciplinedinvestor.com\/blog\/wp-content\/uploads\/2012\/05\/bfc_score-1.jpg\" alt=\"\" width=\"493\" height=\"623\" \/><\/a><\/p>\n<p>Note that the U.S. FCI is below 1 and has not really risen with conviction since the drop last summer.<\/p>\n<p><a href=\"https:\/\/thedisciplinedinvestor.com\/blog\/wp-content\/uploads\/2012\/05\/usfci-1.jpg\"><img loading=\"lazy\" decoding=\"async\" class=\"aligncenter size-full wp-image-18924\" title=\"usfci\" src=\"https:\/\/thedisciplinedinvestor.com\/blog\/wp-content\/uploads\/2012\/05\/usfci-1.jpg\" alt=\"\" width=\"569\" height=\"387\" \/><\/a><\/p>\n<p><a href=\"https:\/\/thedisciplinedinvestor.com\/blog\/wp-content\/uploads\/2012\/05\/usfci-2.jpg\"><img loading=\"lazy\" decoding=\"async\" class=\"aligncenter size-full wp-image-18925\" title=\"us+fci\" src=\"https:\/\/thedisciplinedinvestor.com\/blog\/wp-content\/uploads\/2012\/05\/usfci-2.jpg\" alt=\"\" width=\"566\" height=\"389\" \/><\/a><\/p>\n<p>While the EU FCI has stabilized after the LTRO, but has now stalled.<\/p>\n<p><a href=\"https:\/\/thedisciplinedinvestor.com\/blog\/wp-content\/uploads\/2012\/05\/eufci-1.jpg\"><img loading=\"lazy\" decoding=\"async\" class=\"aligncenter size-full wp-image-18926\" title=\"eufci\" src=\"https:\/\/thedisciplinedinvestor.com\/blog\/wp-content\/uploads\/2012\/05\/eufci-1.jpg\" alt=\"\" width=\"561\" height=\"375\" \/><\/a><\/p>\n<p>Watching these along with the surprise index for the U.S. has been a good forward indicator of where markets and sentiment may be heading. For now, it is clear that it will take a good deal of positive news and a a solution to the EuroZone woes to turn the tide.<\/p>\n","protected":false},"excerpt":{"rendered":"<p>The sudden shift of market sentiment over the past several weeks is not just due to the re-emerging concerns over Greece. There are some very strong indications that financial conditions are starting to show additional strain as economic reports and earnings outlooks are disappointing. A great tool to use to gauge the actual &#8220;conditions&#8221; is [&hellip;]<\/p>\n","protected":false},"author":1,"featured_media":0,"comment_status":"open","ping_status":"open","sticky":false,"template":"","format":"standard","meta":{"_acf_changed":false,"_et_pb_use_builder":"","_et_pb_old_content":"","_et_gb_content_width":"","footnotes":""},"categories":[5,12],"tags":[481],"class_list":["post-18923","post","type-post","status-publish","format-standard","hentry","category-economy","category-markets","tag-economy","et-doesnt-have-format-content","et_post_format-et-post-format-standard"],"acf":[],"_links":{"self":[{"href":"https:\/\/thedisciplinedinvestor.com\/blog\/wp-json\/wp\/v2\/posts\/18923","targetHints":{"allow":["GET"]}}],"collection":[{"href":"https:\/\/thedisciplinedinvestor.com\/blog\/wp-json\/wp\/v2\/posts"}],"about":[{"href":"https:\/\/thedisciplinedinvestor.com\/blog\/wp-json\/wp\/v2\/types\/post"}],"author":[{"embeddable":true,"href":"https:\/\/thedisciplinedinvestor.com\/blog\/wp-json\/wp\/v2\/users\/1"}],"replies":[{"embeddable":true,"href":"https:\/\/thedisciplinedinvestor.com\/blog\/wp-json\/wp\/v2\/comments?post=18923"}],"version-history":[{"count":0,"href":"https:\/\/thedisciplinedinvestor.com\/blog\/wp-json\/wp\/v2\/posts\/18923\/revisions"}],"wp:attachment":[{"href":"https:\/\/thedisciplinedinvestor.com\/blog\/wp-json\/wp\/v2\/media?parent=18923"}],"wp:term":[{"taxonomy":"category","embeddable":true,"href":"https:\/\/thedisciplinedinvestor.com\/blog\/wp-json\/wp\/v2\/categories?post=18923"},{"taxonomy":"post_tag","embeddable":true,"href":"https:\/\/thedisciplinedinvestor.com\/blog\/wp-json\/wp\/v2\/tags?post=18923"}],"curies":[{"name":"wp","href":"https:\/\/api.w.org\/{rel}","templated":true}]}}