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Editor's Note: Below is a chart and excerpt from today's Early Look written by Hedgeye U.S. Macro analyst Christian Drake. Click here to learn more.

CHART OF THE DAY: Red --> Senior Loan Officer Survey Data - z red

As Josh Steiner, our head of Financials Research, summarily commented yesterday: 

  • Banks appear to have paused their prior efforts to relax C&I loan pricing and underwriting standards in response to increasing inter-bank competition and the growing presence of non-bank lenders. As global growth slows, with trade negotiations and a new Congress fueling heightened domestic uncertainty, restrained corporate CAPEX and M&A activity is driving weaker C&I loan demand.
  • Banks continue to exercise caution over particular loan categories, namely commercial real estate as underwriting standards continue to tighten. Moreover, on the consumer side, banks are exercising new caution in residential mortgage and non-mortgage household lending as they look beyond the latter innings of the current economic expansion and begin to form expectations for deteriorating household finances.

Unless we see a durable re-inflection in the growth cycle, the next few quarters are likely to see progressive caution and similar constriction in the collective credit box.   

In other words, the State of the (Global Macro) Union to start 2019 remains one of discrete Deceleration with an investing citizenry conditioned to the pervasive but vapid notion that policy driven asset price reflation isn’t subject to term limits.  

CHART OF THE DAY: Red --> Senior Loan Officer Survey Data - CoD SLOS