The metric I’m referring to is the National Financial Conditions Index (NFCI) published by the Fed’s Chicago district. They have a website dedicated to it here:
Their indicator has a financial component to it, including stock market volatility. I believe the VIX is one of the heavier weighted components, which is why I mention low volatility driving loose financial conditions. So that just means credit/money is relatively cheap and available, which should be good for the economy and asset classes like stocks.
Nice insights on small caps, thanks!
My pleasure!
Could you please elaborate on how the low volatility is "driving" loose financial conditions?
Thanks for the question!
The metric I’m referring to is the National Financial Conditions Index (NFCI) published by the Fed’s Chicago district. They have a website dedicated to it here:
https://www.chicagofed.org/research/data/nfci/current-data
Their indicator has a financial component to it, including stock market volatility. I believe the VIX is one of the heavier weighted components, which is why I mention low volatility driving loose financial conditions. So that just means credit/money is relatively cheap and available, which should be good for the economy and asset classes like stocks.