The 2015-2016 scare: yuan, oil and credit
2015-16 market scare: from May 21, 2015 to February 11, 2016.
Updated
What happened?
China devalued the yuan in August 2015 and oil collapsed, dragging down credit to energy companies. US industry entered recession, but the rest of the economy held up and there was no general recession. For this analysis, the episode runs from May 21, 2015 to February 11, 2016.
What would Crisis Monitor have shown?
Recalculating the index each week with the data available at the time, it stood at 10 out of 100 when the decline began and peaked at 27 in Jan 2016. The index did not reach Alert (35).
This is a reconstruction made after the fact using weekly data: it helps show how the indicators behave, but it does not guarantee that things will happen the same way again.
How did the data move in that crisis?
From one year before to the end of the crisis. The vertical line marks when it began; the dashed red line is the level beyond which the data point becomes a concern.
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Which data points warned first?
No data point entered the stress zone before the crisis began: the shock came as a surprise.
Gold and copper are not part of the index, but they help show fear and activity: see how they moved on the gold and copper pages.
The first time each data point entered the stress zone (score 66 out of 100), searching from 12 months before the start. “Before” = it warned before the crisis began; “after” = it reacted late. Note: after another crisis, some data points were still elevated from the previous one.
| Indicator | How does it usually behave? | When did it first become a concern? | When did it warn? | Moment of peak stress |
|---|---|---|---|---|
| Factory output | Moves with the crisis | Jul 2015 | 2 months after | -4.5% Jan 2016 |
| Credit of ordinary companies | Usually warns early | Aug 2015 | 3 months after | 3.53% Feb 2016 |
| Financial stress (St. Louis) | Moves with the crisis | Never became a concern | — | 1.00 Jan 2016 |
| Copper vs gold | Usually warns early | Never became a concern | — | -24.9% Jan 2015 |
| Stock market fear (VIX) | Moves with the crisis | Never became a concern | — | 26.69 Jan 2016 |
| Ease of borrowing | Usually warns early | Never became a concern | — | -0.30 Feb 2016 |
| Store sales | Moves with the crisis | Never became a concern | — | 1.2% Dec 2015 |
| Consumer sentiment | Usually warns early | Never became a concern | — | -6.1 pts Jan 2016 |
| Dollar strength | Moves with the crisis | Never became a concern | — | 100.17 Nov 2015 |
| Recession probability | Moves with the crisis | Never became a concern | — | 2.4% Apr 2015 |
| Unemployment benefit claims | Usually warns early | Never became a concern | — | 7.1% Mar 2015 |
| Long vs short rates (2 years) | Usually warns early | Never became a concern | — | 2.12% May 2014 |
| Long vs short rates (3 months) | Usually warns early | Never became a concern | — | 2.47% May 2014 |
| Rise in unemployment (Sahm rule) | Moves with the crisis | Never became a concern | — | -0.10 May 2014 |
| Credit of risky companies | Usually warns early | FRED only publishes the last 3 years of this series (ICE license) | ||
Does the current moment resemble that crisis?
Score from 0 to 100 for each area, today and at different moments of that crisis.
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How does everything look now? See the live dashboard.