LESSON 1 / 4 · 8 MIN
Markets: fear and greed don't cancel out
Read the two sides of market risk and why calm can be a warning.
The Markets tab asks one question: is there fear, or is there greed? Fear is measured with the VIX, corporate credit spreads and the Chicago Fed's financial conditions index. Greed, with the Buffett indicator (market value over GDP), Shiller's excess CAPE yield and complacency (a very low VIX with very tight credit for a month).
Key idea
The VIX and credit have two sides. Very high is fear. Very low for a whole month is complacency — as in February 2007, with the VIX at 11, months before the crisis.
The grade is the worse block, with two limits. Greed alone never takes it below 4: an expensive, confident market is a risk, not a panic. And panic rules: if a fear indicator reaches 2 or 1 (VIX above 37, for example), that becomes the grade.
Common mistake
The history uses month-end data. In April 2025 the VIX closed at 52 on the 8th, but by month-end it was at 25 and the month came out amber. A few days of panic can be invisible in a monthly chart.
Tip
The VIX in the fear block is a five-day median, so one day of panic does not move the grade. If you want the daily VIX, it is on /futures.
On the site · /fred/markets
Open Markets and read the Greed block. Which of its three indicators is the weakest today?
Open it on the site →Check yourself
VIX at 11 and credit spreads at record lows for a month. How does Markets read it?