We know that 2013 has been a great year for stock markets, US markets in particular. People are openly talking of "stock market recovery". We also know that the FED has been pumping paper into the system. But what has this really done to the economy, apart from increasing the values of market indices?
Since Nature offers no free lunch (the economy probably doesn't either) printing money must have its consequence. If you make markets rally based on steroids you inevitably end up paying for it somewhere. We claim that such policies create fragility. Hidden fragility. Well, hidden to conventional pre-crisis analytics technology and to those that are concerned with numbers and numbers alone.
Assetdyne analyzes the major US markets every two weeks and publishes the results here. The focus of the analyses is resilience - the capacity to resist impacts, shocks, contagion, extreme events and, ultimately, sustained turbulence. The results are far from exciting, revealing mediocre levels of resilience. Here they are:
NASDAQ 100 - NDX
S&P 100 - OEX
Dow Jones Composite Average - DJA
Dow Jones Industrial Average - DJI
PHLX Semiconductor - SOX
A two to three-star resilience rating. Nothing to celebrate. The S&P 100, in particular, has an alarming two-star (64%) rating. We leave the comments to the readers.
Navigate Interactive Complexity Maps of the indices here. Just click on an index and move the mouse. More soon.