Deutsche Bank is particularly concerned about this chart, the US MPF FCI (United States Monetary Policy Forum Financial Conditions Index), because this chart typically is at these levels during a recession or right before one.
It has, in the past, predicted recessions. But it has also been wrong, notably in 1994, 1995, and 2003, according to Deutsche Bank. The longer the index is lower, however, the more likely it will have an impact on GDP.
And its impact on GDP tends to be magnified in times of great financial distress, according to DB.
Certainly, something to be concerned about, or at least ponder.
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