Below are charts and brief excerpt from today's Early Look written by Senior Macro analyst Darius Dale.
Investors should be aware that the US economy is currently undergoing a transition from economic depression to a recession, not a “recovery”. The autocorrelated nature of the credit cycle is likely something that will contribute to delaying a truly investable recovery until we see a wave of impairments and charge-offs later in the year.
One last thing to call out is that the underperformance of large and medium-sized firms across the board in its C&I lending surveys vs. its small business counterparts suggests to some degree that the Fed’s late-March guidance on its Main Street Lending Facility likely made it way to Senior Loan Officers.
That’s obviously not to say that the program was fully implemented in these data, but it is to say that it’s not typical to see banks tighten underwriting standards for their riskiest borrowers the least heading into a downturn. At any rate, best of luck to each of you as you navigate these policy-driven ebbs and flows the Credit Cycle in the coming months and quarters!