05.15.22 | Following End-of-Week Snapshots in Sector Illiquidity

Small Sample Size … But Reflects Expectations

The NYU V-Lab publishes summary information about the fitted liquidity models for equity sectors.   Liquidity is defined as the degree to which an asset can be bought or sold in a market without affecting the asset’s price.
In a crisis, undercapitalized sectors, funded largely with fragile short-term debt, experience capital shortfalls and failures.
I’ve begun to follow this data … on an end-of-week basis.   This is a small sample size and provides only a very preliminary impression.   Notwithstanding those limitations, I think there’s a message here.

In Short, What is the Illiquidity Data Saying?

First, the sector with the smallest number of companies experiencing illiquidity is Financials.   The Financials sector’s relative health is followed by Energy and Utilities.   At present, Health Care, Technology, Real Estate and Telecommunications are experiencing the greatest stress.