Editor's Note: Below is a brief excerpt and chart from today's Early Look written by Hedgeye U.S. Macro analyst Christian Drake. Click here to learn more.
"... The Fed Senior Loan officer survey for 1Q16 showed a further tightening in corporate & commercial credit. Specifically, a net percentage of banks tightened C&I (commercial and Industrial) lending standards for the second quarter in a row. Moreover, demand for C&I loans inflected into negative territory this quarter. Eleven percent of banks saw C&I loan demand decrease from large and medium firms (13% saw it decrease from small firms), signaling that borrowers expect a decreased need for capital.
This matters because, historically, when two of the three C&I questions have turned negative, it has portended a recession in the near future (see Chart of the Day below).
This isn't coincident, it's causal."