We have commented on both of these before, but it is worth  checking in again on the velocity of money (M2), as reported by the St Louis Fed, and Bloomberg's Financial Conditions Index (FCON) after the first couple of rocky weeks in 2016.

Velocity of M2  Money Stock

No change in the trend here.  Velocity continues to fall off the floor, which has got to be frustrating, and a little terrifying, for the Fed.  It should be noted this is below levels during the 1930s.  

The Financial Conditions Index looks a bit stressed at this point, but is not nearly into red light territory yet, i.e. below -2.

Source:  Bloomberg

This index is composed of ten indicators from the money, bond and stock markets.   Interestingly, at time of writing, the index was -.63 with all bond market indicators still positive, indicative of massive QE.  The money market indicators were trending negative - a  definite cause for concern, because almost all financial train wrecks start in the money markets.  Still, these were only mildly negative overall.  The only sore thumb of the bunch was the S&P 500, which implied substantial distress in equities.  Watching the money market indicators in the coming days will give us a clearer sense of whether markets are stabilizing or whether there is more volatility ahead.