Is a crash coming?

Nobody can know when a crash will come, and anyone who says they do is guessing. What can be measured is stress: how hard it is for banks and companies to borrow, how nervous markets are, whether money is leaving. Our latest public reading is Stable. We check 138 sources every weekday and send the reading free every Friday.

We do not forecast. Since 2007 our method has been at its highest level, Alert, on about 6% of business days, mostly around real crises such as 2008, Covid in 2020 and the 2022 gilt crisis. Most of the time the honest answer is that the indicators are calm.

Crashes cannot be timed. They usually come after warning signs build up in several places at once: credit becomes expensive, funding markets tighten, volatility jumps, a currency or a large firm breaks. We watch those signs together, so you do not have to.

A recession and a market crash are different things, and one does not always bring the other. We do not forecast recessions. We do track signs that have come before them in the past, such as the gap between long and short US interest rates, and report them in plain English.

In past crises the early signs were: wider gaps between company and government borrowing costs, banks borrowing from the central bank's emergency window, deposits leaving banks, sudden jumps in volatility, sharp moves in the dollar, yen or yuan, and stress spreading from one market to another. No single sign is enough; what matters is several at once.

No. What a careful method can do is notice when stress is building, as it did before most past crises, and say so calmly. Our record is a backtest and hypothetical, and no method catches every crisis.

Ravenmaster, an independent monitor of global financial stress. It is information only, not investment advice: we do not tell anyone to buy or sell anything, and we have nothing to sell you except the reports themselves.