It's not hard to see the potential flash points on the horizon:the U.S. presidential election, Deutsche Bank AG's mounting legalcharges, the day central banks stop buying bonds. Yet when itcomes to gauging risks in the world's financial markets, these daysinvestors are flying more or less blind.

That's because the once-dependable indicators traders relied onfor decades to send out warnings are no longer up to the task. Theso-called yield curve isn't the recession predictor it once was.Swap spreads are so distorted they can't be trusted. Even thevaunted VIX—sometimes referred to as the “fear gauge”—is leadingits followers astray, strategists say.

As central banks around the world pump billions of dollarsinto the global economy every month and policy makers passregulations to safeguard against a relapse of the 2008 financialcrisis, the market's best and brightest say some warning signalsare flashing at precisely the wrong time. Now, rules to shore upthe money-market fund industry that kicked in Friday are stiflingthe predictive powers of yet another set of gauges. For investors,the big worry is they'll end up being taken by surprise when thenext crisis hits.

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