The situation is getting serious as banks are experiencing one of the sharpest declines in lending activity ever recorded. This means they’re not lending money as readily as before. At this rate, we might be heading towards a “credit event,” which essentially means a big problem in the world of credit and lending.
Moreover, banks are now dealing with more bad loans than they have in the last three years. These “bad loans” are essentially loans that may not be repaid, and when banks have too many of these, it can create a lot of financial trouble. This is a sign that the banking system is under stress.
Warning: Bank credit has now entered contraction territory
After witnessing one of sharpest declines on record
Since 1974, this has only happened ONCE:
→ The Financial Crisis
Back then, this metric reached levels as low as -5%
At the current rate, a credit event is nearing… pic.twitter.com/CTP9Z4pGIj
— Game of Trades (@GameofTrades_) October 11, 2023
Business demand for bank loans across both the U.S. and Europe has fallen to levels not seen since the Global Financial Crisis pic.twitter.com/6h4hkfHBM3
— Barchart (@Barchart) October 10, 2023
50% of large and mid-sized banks are imposing tougher criteria for commercial and industrial loans, per Bloomberg.
That’s the highest share since the 2008 financial crisis, besides for the pandemic. pic.twitter.com/7k0dQfHSNv
— unusual_whales (@unusual_whales) October 11, 2023
Banks are writing off more bad loans now than they have in 3 years pic.twitter.com/hmHJFaLPvC
— Joseph Brown (@heresyfinancial) October 11, 2023
Delinquency rates on credit card loans and auto loans are rising.
But delinquency rates on mortgages as near all time lower.
Why? Because so many mortgages are locked-in to low rates.
Truly a unique time.
Follow us @KobeissiLetter for real time time analysis as this develops.
— The Kobeissi Letter (@KobeissiLetter) October 11, 2023
A record 17.5% of buyers purchasing a new car in the third quarter are paying more than $1,000 a month for their vehicle, per WSJ.
— unusual_whales (@unusual_whales) October 11, 2023
Former Walmart U.S. CEO Bill Simon Warns: Consumers Starting to Buckle for First Time in a Decade
Former Walmart U.S. CEO, Bill Simon, warns that consumers are facing challenges not seen in a decade, due to factors like inflation, higher interest rates, budget issues, polarized politics, student loan debts, and escalating tensions in Israel. These pressures are causing consumer caution, leading to a potential slowdown in spending.