In addition to a miserable performance in the auto sector and a very poor GDP report, the Trump Era Brings Rare Drop in Loans at America’s Regional Banks.
Bank stocks have climbed since Donald Trump was elected president as investors bet his pro-growth agenda and rising interest rates would help lenders generate huge profits. But this month, executives at some of the country’s largest regional banks said customers, especially corporations and small businesses, are instead waiting for details on the new administration’s proposals and results before seeking financing for expansion.
Total loans at the 15 largest U.S. regional banks declined by about $10 billion to $1.73 trillion in the first quarter, compared with the previous three-month period, the first such drop in four years, according to data compiled by Bloomberg. All but two of those banks missed analysts’ estimates for total loans, as a slump in commercial and industrial lending sapped growth.
“The optimism and the willingness is there, but it has not yet translated into actions or behaviors,” Beth Mooney, chief executive officer of KeyCorp, said of the Cleveland-based bank’s small and middle-market business clients. “We did not see ‘flip the switch’ sort of behavior that led to loan demand or making different capital decisions or investment decisions.”
Nonsensical Statement of the Day
“The optimism and the willingness is there, but it has not yet translated into actions or behaviors,” said Beth Mooney, chief executive officer of KeyCorp.
Excuse me for pointing out the obvious, but if willingness was present, there would have been more loans.
Mainstream media and most economists are banking on consumer confidence sentiment, regional manufacturing sentiment, ISM sentiment, and now small business loan sentiment.
Sentiment Indicators
It’s time to throw the sentiment idea in the ash can where it belongs.
- April 28: Economists Expect 2nd-Quarter Recovery: Investigating the 1st-Quarter Weakness Theory
- March 21: Consumer Sentiment Statistical Noise: Modern Day Snake Oil
- March 28: Consumer Confidence Strongest Since December 2000: A Strong Contrarian Indicator?
- April 13: Econoday Parrot Squawks Again after Sentiment Rebounds to 17-Year High
Mike “Mish” Shedlock
– “Wolfstreet” had a blogpost on the rise in bankruptcies
Weblink:
http://wolfstreet.com/2017/04/08/commercial-bankruptcies-rise-consumer-bankruptcies-up/
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That link in the article should read “Federal Reserve turns down load volume to sabotage Trump”
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You got it!
Yellen needs to be yelling for the “right” reasons.
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“Yellen, you’re fired!”
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Mish, I personally have been following for a long time
Howe ever, I now view u just like you did during the campaign
Remind me of a used to be friend of mine(in Highschool
A guy that couldn’t get laid etc, u all know “the guy”
So what he did is piss on everyone’s party.) we all know
The economy is shit the market should be down but
Why are u pissing on the (only guy and I repeat only
Guy that threw the party??) wait before u answer the question
When was your last party? And who the fuc- came??
I say this with all due respect. Yea trump promised this
Trump promised that, whatever. Quit with the personal
Insults of the guy giving the party! Get it? We all know
It will come to and end it always does. But focus on the
Party. You can’t predict the Future . Like my son said
” I can tell you the red light will turn green” enjoy
The party quit pissing on the guy that’s throwing it.
I guess u weren’t at the last party it sucked! U geek.
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Trump and congress can’t even repeal Obamacare. This should have been a slam dunk (as Trump reminded us numerous times during his campaign). Trump’s tax plan will never get passed even in a most diluted form. Trump should spend less time war-mongering and more time on domestic issues (like he said he would during his campaign)
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Trump has hit some 120mph headwinds.
He has the RINOS, the liberals and the judicial branch all working against him.
Oh, and congress is saturated with RINOS. A GOP majority means nothing.
Trump has really zipped his lips. Now he’s being controlled. Not the same man you saw on the campaign trail.
Not much will change in 4 years. The best they can do is keep the house of cards from falling apart. And that’ll be a full-time job.
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trump has 50/50 lukewarm support from Republicans Inc and rabid opposition from dems in congress, no mandate to change anything there. All his appointments are being delayed and hung up and many of his key executive orders are being overruled by regional judges.
His bluff is being called on many high profile issues and he’s folded on most of them.
He’s expanding purposeless wars in middle east and playing nuclear chicken with a psychopath in No Ko
Hes being tied down like Gulliver’s lilliputians.
He’s a one term president who will throw the keys to Pence so the Rs can regroup for 2020. The country is being run like real world reality tv. I’m sure the dems are waiting with bated breath for an impeachment opportunity and they’ll probably have considerable R support, it will be a race to the podium by MCcain and Graham to see who can be the first to voice impeachment support.
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Dude, Hilary is a crook and lost the friggin election. Get over it
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“Now he’s being controlled.”
The ONLY way at this point any prez could significantly change things for the better would be to, first, take an entirely free market perspective on every issue, ditch the garbage economic theory now being used by everyone who matters and veto anything that doesn’t adhere to that new paradigm, using his bully pulpit to appeal directly to the people in order to override 2/3 overrides and, if necessary, bringing the fedgov to a halt. I’m not even going to say he should obey a strict interpretation of the Constitution because we are WAY beyond that.
Of course, absolutely NONE of that is going to happen because he’s advised by people who are not actually for free markets but, instead, are for crony capitalism enabled by owned governments, by economic “experts” who adhere to that garbage economic theory and, as shown by many things besides the Syria strike which has now miraculously virtually ended the Trump as Russian agent talk which shows why that talk was so prevalent in the first place and that his no more US as world police talk was BS, Trump will NOT be that “savior” prez who will veto everything CONgress spews that’s worthy of a veto (which would be most of it).
Trump – better than the Hildabeast, but just a few more lifeboats on the Titanic.
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Correction — Paul Ryan can’t get rid of Obamacare. Trump can’t sign a non-existent bill into law.
It took months of threats and bribes for Pelosi to shove Obamacare onto Obama’s desk. Even then, it didn’t really pass Congress (honest readers will remember the Dem’s lost control of Congress and had to use procedural trickery and extra bribes to jam thru something that none of them bothered to read).
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That was the most obnoxious comment ever so far. Trump up and get banned, I say.
Mish is doing great work giving his opinion for free. I might not agree on all of his predictions and he might not even know himself which ones will be accurate forecasts of the economical climate but I regard him to be a professional on his field and like to compare his views to others.
Personal insults in the manner of ‘mine is bigger than yours’ might work for the school bully but are really a show of bad manners in adult world.
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nah.. best comment of the day.
I figure Mish has to be over 60. Asking a 60+ year old when was the last time he threw a kegger.
Priceless!
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You’ve been TRUMPED !!!
Trumptard !
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The most worrying point in your comment is that you attended highschool
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Did you really graduate high school? You can’t write worth a damn.
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This can’t be a good sign. ☹ I am waiting for the April’s employment report, but i have a feeling it won’t be that good.
When credit card delinquency goes up, the banks take action to minimize losses so they cut available credit and close a lot of credit cards. That’s what they did in 2009. So people that rely on credit cards to make purchases will find themselves in a really bad situation when the banks close their credit card. I hope it doesn’t get that far this time around.
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The article is a Bloomberg article. Bloomberg people are leftists in business clothing. Just listen to their radio channel. They are the MSNBC of radio. Commercial and Industrial Loans have flat-lined. It just may be because of monetary reasons, like interest rates. But heck, it is just easier to take a pot shot at Trump. They even said, “a RARE drop in loans” to make it sound bad. The drop was 6 tenths of one percent. Oh my.
All mainstream people will blame everything on Trump. Because you know, the instant he was elected everything instantly went haywire.
Obamacare is eight thousand pages and has tentacles all over the economy. It isn’t so easy to repeal it without bad consequences. Not that it matters. Health care costs need to be reduced 50%, I don’t mean the subsidized price, I mean the cost. Nothing can be done about it as the nurses union and other lobbies will keep the medical industry cartel intact.
War mongering? Like a surgical strike on an airfield in which no one was killed? Or like Obama who is highly responsible for the greatest humanitarian crisis since Mao and Stalin?
Our economy is credit based. If loans are slowing down, it deserves to be treated seriously, not the main stream media way.
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Correct re: (((Bloomberg)))
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Bloomberg news was victim of a hostile takeover by the former Businessweek magazine. Officially Bloomberg bought Businessweek, but in practical terms the number of left wing employees at Businessweek outnumbered the former Bbrg staff 14 to 1. There was a really good reason why Businessweek was failing, but the management at Bbrg obviously didn’t get it.
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“All mainstream people will blame everything on Trump”. Is that going to happen after the media stop blaming Russia for the election results? Anyone who knows politics knows a low voter turnout will always let the least expected candidate win. The media ignored Trump until late August last year. The low voter turnout turned the media’s candidate into the loser. A handful of media moguls, who own almost every form of media, are doing the same thing in several countries now holding elections.
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I have my doubts about Californians, but I suspect most of America (even moderate democrats or democratic leaning voters) is starting to understand the status quo is not sustainable.
Voters (both parties) are starting to understand the balance sheet mess Obama created is a threat to elderly entitlement programs. Obamacare is a threat to the entire US economy.
The Fed’s artificially low interest rates are a threat to all retirement savings — and democrat’s retirements will be destroyed right alongside republicans. Loss of faith in the Fed’s competence is bi-partisan.
I don’t think Trump realized how bad things are in Washington DC… and looking in the mirror, I wonder if many voters also underestimated the damage Obama did to the nation’s balance sheet.
Clinton and Bush were terrible presidents, but Obama destroyed the federal balance sheet, the very thing that would have given us time to fix the problem.
Meanwhile, Congress (both parties) are completely out of touch. They have voted themselves exemptions and privileges that would make many 3rd world dictators blush. How many ordinary Joes (and Janes) would already be in prison if we pulled half the nonsense that our public servants pull?
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Banks are not lending. Period. My business has 7.5 million $. Equity in the building we occupy as tenant to ourselves. Bank said no to one $million take out against that 7.5$ million equity. Nope. Don’t like that owner is tenant. Probably nation wide problem. FUBAR imo. Trump can do nothing about this.
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Peter, based on the limited information you presented here and assuming the value you state holds, you are dealing with idiots at your bank. All things being equal, I’d much rather finance an owner occupied building verses investment property. However, this is contingent on the cash-flow and type of business you have. It’s not a nation wide problem. Curious, where is your business located and what industry area you in?
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Water treatment capital equipment. Emeryville. Ca.
It’s the incredible low loan to value that’s amazing. Building appraises for nine $million with a first lean of $1.5 million. But we offered to move our business to any new lender. We are growing rapidly and had a small loss for 2016 but banks should understand growth consumes money for work in progress which is why we need to borrow. They are idiots in my view. Or they simply are not lending.
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No one wants to borrow to invest… there is way too much debt in the system already. Its false economy to claim that more borrowing is always a good thing.
The only people borrowing now are people who can’t pay the money back — they are just delaying bankruptcy. They are borrowing to cover current expenses (not investment), and Obamacare is just pushing them even further into the red. Feel sorry for their predicament, but don’t claim that sort of borrowing is healthy for the economy.
Obamacare must be repealed. Another 30% increase in premiums next year will trigger a full out economic depression
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Banks et.al. are trying to be uncharacteristically prudent. Everybody and his brother knows we are taking out the million man North Korean Army, nukes and all. China deployed a modest 150K soldiers on the river border to hold back refugees. Any Chinese invasion would require more muscle. It’s all Trump. Assets are in position.
1. anti missile missile effective against all NK has.
check
2. 700 NK hardened artillery surveyed, and targeted.
check
3. enough air power to take out 4,500 tanks and 20,000 mobile artillery
check
4. nuclear weapons located and targeted
check
5. Kim & generals located and targeted
check
The list goes on. Yet no plan stands the test of battle. Killing a million roaches would take some time. The pre targeted stuff won’t last five minutes. Keep some powder dry and buy.
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Matters not.
They’ll find a way to paper it over until they can’t anymore.
You’ll know when they can’t anymore.
In the meantime, let’s all go whistling past the graveyard. Shall we?
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Businesses are not investing because they have lost confidence in price as a valid metric of shopper preferences. They don’t want to build anymore empty McMansion equivalents just because bankers want to “stimulate the economy” with fake GDP. Much of business borrowing has been to buy back their own stock, not invest in productive capacity.
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I follow sub-prime auto loans a bit. Seems profits were going up because banks were originating at a faster and faster pace while dropping standards. Not that these loans ever made much sense but it seems to take a few years for the inevitable losses to take hold and charge offs are rising. Doesn’t feel like sub-prime borrowers somehow appeared healthier since the last crisis only that they were frozen out of the market for a few years.
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There has to be a breather some time. Cycles and all that.
It’s not possible to banish the business cycle or prevent retrenchment when participants need to retrench. Trying to do that created much of this mess in the first place.
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+1
Can’t believe anyone in the real world would equate “more borrowing” with economic growth. Borrowing to invest is not the same as borrowing to cover current expenses — and we had 8+ years of the later.
Obama’s ghetto thinking and debt binging caused horrible damage to the nation’s balance sheet — and coming on the heals of Bernanke’s finance bubble, Obama’s mismanagement was even worse than it would have otherwise been.
Less borrowing in the current environment is a good thing, not sure why Mish can’t see that.
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Lots of businesses (if not all) are dependent upon the consumption addictions continuing, and ANYTHING that threatens the theme will be fought. What’s good for bankers and Wall Street is good for America, right? We are then confronted with the question of WHO are Americans, because increasingly it looks as though most of us are NOT, the the current theme is maintained. Look at the governments refusal to prosecute bankers who CONFESSED to illegal activities.
Ultimately no one in power is concerned one tiny bit about debt because NONE of it is theirs. It belongs to Americans. In this we suddenly realize the the definition of our nationality is determined our responsibilities and our liberties. We are Americans when the bill comes due, but we are NOT when it comes to our prosperity…..THAT belongs to our ruling financial elite and their many supportive minions who busily defend their crimes with delusionary theories, opaque math and FEAR.
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Your continued hatred for bankers, but not the politicians that enabled (and in many cases facilitated) the banker actions undermines your entire argument.
There is no way to prosecute bank CEOs without also prosecuting members of Congress including Barney Frank and Chris Dodd. No way to prosecute bank CEOs without also prosecuting Tim Geithner and Henry Paulson. No way to prosecute bank CEOs without also prosecuting Ben Bernanke.
As Nixon inadvertently showed, the President is not supposed to be above the law. Cabinet members, Fed chairman and members of Congress even less so. Members of Congress have been sent to jail for tax evasion, assault and money laundering (to name a few cases).
When Pelosi and Reid decided they weren’t going to prosecute Barney Frank and Chris Dodd — all other cases were poisoned, including anything against bank CEOs.
People are going to follow the example set by leadership. If you will not hold political leaders accountable for their crimes, you have to expect the population to follow that example.
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Let’s not pretend who is and isn’t the boss here. Washington is not populated by Goldman by accident, and they take a cut in pay to do it. Regardless it is not an issue of evil bankers and investment managers or politicians but it is an issue of absolute corruption from top to bottom and NONE of us can afford to end it.
It is just a matter of those who will acknowledge it and those who will not. No one can do anything about it. Its end is as inevitable as a meteor hurdling through space aimed directly at us, not know exactly when it will hit but knowing full well how it will end.
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@madash — when you claim that Goldman supposedly runs the government or the government supposedly runs Goldman… you are forgetting the entire thing is a revolving door.
You cannot prosecute bankers / politicians without prosecuting both, because they are one in the same.
Lets not kid ourselves. You want to prosecute a person’s right hand while making excuses for the left hand… both hands robbed the bank.
Either man up and admit that Congress robbed you blind, or else stop whining about bank CEOs. You can’t have it both ways.
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@madash — Barney Frank (a democrat from Massachusetts) and Chris Dodd (Democrat from Connecticut) the House and Senate banking chairs respectively, were pointing the gun at you while “Goldman” emptied your pockets. Or maybe Bernanke was pointing the gun at you while Dodd-Frank emptied your pockets. Bankers drove the getaway car in that scenario I suppose.
But anyway you look at it, bankers were doing exactly what the government wanted them to do; bankers got well paid for it, but government was if anything leading the charge. And revolving door between Goldman / Treasury exists (Geithner and Paulson) — but that wouldn’t explain Congressmen Frank and Dodd leading the charge … they didn’t work for Goldman at all.
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When the economy is based upon addictive “stimulants” rational behavior and the notion of cycles is lost. We forget that notion of growth was not economic as measured by dollars, but based upon real productive growth. We use dollars as a convenient measuring tool but it is no longer a measurement, it is our Ruler. What used to be recognized a cycles of creative destruction have become true peril like the sudden removal of an addict’s drug. If those taking stimulants could accept their “down cycle” they would not be addicts, but they can’t and they are.
We can only speculate how and when this will end, but it will NOT be in a down cycle, it will be a horrid withdrawal with much hostility and gnashing of teeth. It will be the true test of humanity.
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The mountain of unpayable debt is now a threat to “the powers that be”, not just in the USA.
Look how all the G7 countries are twisting themselves in knots and torturing their mother tongue desperately trying to convince themselves that debt levels can go to infinity. But this time is not different, debt has reached the point where it is a threat to the viability of all G7 governments.
Canada thought they were too high and mighty to be lumped in with the other G7 riff-raff… but this week proved Canada is no different.
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As I keep saying, in order for businesses, banks, or individuals to plan for the future, they need some certainty to be able to forecast and plan. They won’t get that with President Flip-Flop, who loves being unpredictable! Companies will not borrow to expand till they have more certainty. And even once they become more confident to expand, they can’t find the skilled labor to fill any new positions they want to create. That’s why the American economy will continue to move forward at a tepid 1-2 percent rate for Trumps 4 year term.
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There is only ONE certainty and EVERYTHING they are doing is to avoid THAT. The removal of credit, even subprime and sub-subprime will crash this economy. It is an uncollateralized pyramid of debt and the loss of ability to roll this over with new debt, with additional consumer debt, with suppressed interest rates, will light a fire to burn it to the ground. They have done ALL of this for our own good (while profiting handsomely) and will continue to do so till it kills us. There are a lot of profits in defying reality.
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@madash … the commenter calling itself “realist” is a troll
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Sorry. Not a troll. Not even American. Just someone who has been following Mish for years and have started posting recently. I happen to agree with many (though not all) of his positions. I tend to discount anyone who makes sensational projections about the coming depression or the 5% growth that’s around the corner. I’m more of a “middle of the road” Realist. I appreciate that you notice my post. Thanks!
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you are a troll
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A reading of the full Bloomberg article suggests that part of the drop bank loan demand is due to disintermediation, i.e. many businesses are borrowing, but not from banks. Instead they are borrowing directly from investors or via the bond market. For companies I own stock in I have noticed some a increase in the following: management thinks interest rates will be on the increase, therefore they want to lock in long term fixed rates now, for long term borrowing they can get a better deal via the bond market so they sell bonds, they use the proceeds of the bond sales both to supply current financing needs and to pay down shorter term and floating rate debt that is often provided by a bank. The net result is that bank borrowing goes down even though total borrowing goes up or stays the same. So, I believe that the situation is not a dire as may be suggested by simply looking at the quarterly bank loan statistics.
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Growth in all bank debt, not just business, is declining rapidly.
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The prudent are not borrowing. Trees can only grow so high and so can this fake economy. Winter is coming.
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How long before another Minsky moment?
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Many years I suspect. Steady as she goes for the next 4 years. Businesses will borrow when they see an opportunity. Since lending is a bit weak, then that just means continued slow growth of 1-2%. I find it interesting that many people post how the apocalypse is just around the corner. This has been going on for the last 4 years, and yet we continue to have slow and steady growth.
Still, I personally hope for the best, but prepare for the worst. I have raised the cash equivalents portion of my portfolio to over 30%. I continue to sell the rips and buy the dips, as I have for the last four years.
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I can tell you I was turned down for a car loan in February. I have 830 FICO. I was putting 50 percent down yes 50 percent and have a DTI of 20. Same job for 20 years. Also my new loan would be 200 less a month than my current. I was told I had insufficient income. I just agreed and paid cash I didn’t want to, not be able to make payments. If I can’t qualify who the hell can?????
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