Today's fear index is 15.
When F&G is in extreme fear, historical patterns show two scenarios:
① Insufficient liquidity support → continued decline (2022 pattern); ② Oversold sentiment with decent capital conditions → rebound opportunity (late March 2020 pattern).
Current liquidity conditions: Tight in quantity but not a cliff, with RMP $10B/week still being injected, and SRF providing a floor. There's a slight divergence between sentiment and capital conditions—sentiment is extremely fearful, but the $3T reserve level hasn't seen the structural depletion seen at the end of QT in 2022 or 2018.
This divergence suggests that the extreme fear is more due to geopolitical (Hormuz) and stagflation narrative fears, rather than a depletion of liquidity itself. The structural conditions for an oversold rebound exist, but the trigger signal hasn't appeared yet.
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