The Dark Lord Libor Rising Again

Let us examine some charts to get a sense of the current level of risk in the market and economy in general.

First - LIBOR (London Inter Bank Overnight Rate) - The rate at which banks lend to each other.

Second - BDI - Baltic Dry Index (shipping costs)

Third - Ted Spread

Finally - VIX the volatility index - Weekly chart

Consider the following:

1. Rising Libor means the interest rates that banks charge each other is rising.  This implies a general risk off atmosphere in which banks do not trust each other.

2. Baltic Dry Index, the measurement of the cost of shipping continues to plunge.  This reflects a softening in global trade.

3. Ted spread - the difference in interest rates on interbank loans and short term US T bills.  It is a measure of credit risk.  While it remains within "normal" range, the upward trend is troubling.

4. VIX - the volatility index rising quick to high levels outside the upper Bollinger Bands suggest an increasing level of fear and falling liquidity levels.  Note historically that this indicator is at levels not often seen on this weekly chart.
Could we be falling into a crisis triggered by an illiquid  market resulting from the Fed ceasing QE combined with a Russian Ruble currency event?
We need to see a break in the gold trend-line for confirmation.

5. Oil price collapse (no chart).  As we all know, crude oil has dropped from the $115 range to the low $50s in a period of six months.  The similarity of this event to the 2008 financial crisis is uncanny.

While the stock market volatility is likely to calm down somewhat over the next few days, the environment remains troubled.  Of particular concern are currency developments in Russia and the rise in Libor.  We fear a Russian recession and series of corporate bond defaults could also pull into full recession a very fragile European Union over the next few weeks.