Quote:American banks experienced a historic contraction in the final two weeks of March, greater than even during the 2008 financial crisis, in the clearest indication yet that credit conditions are tightening as a result of deteriorating economic conditions.

According to Federal Reserve data dating back to 1973, commercial bank lending saw a drop of nearly $105 billion in the two weeks ending March 29th. The final week saw a decrease of over $45 billion, which can be attributed primarily to a decline in small banks’ loan offerings.

This reduction in lending has particularly impacted real estate, commercial, and industrial loans. The most recent report published on Friday indicated that commercial bank deposits also experienced a decline of $64.7 billion in the past week, marking the tenth consecutive decrease primarily driven by a drop in large firms’ deposits.

This aggressive decline in lending appears to be related to the failure of various firms, including Silicon Valley Bank and Signature Bank, over the past few months.

The Federal Reserve’s weekly H.8 report, which provides an estimated aggregate balance sheet for all commercial banks in the US, is under close scrutiny by economists who are keen to assess credit conditions. The recent spate of bank failures has also complicated the central bank’s efforts to curb inflation without tipping the economy into recession.

On Thursday, the American Bankers Association’s index of credit conditions dropped to its lowest level since the start of the pandemic, suggesting that bank economists anticipate a weakening of credit conditions over the next six months. This inevitably means banks will become even more reluctant to extend credit to even their wealthiest customers.

JPMorgan Chase & Co.’s CEO, Jamie Dimon, says the crisis may push the economy into recession. In his annual report to shareholders, Dimon stated that the failures have caused “jitters in the market” and will lead to more conservative financial conditions as banks and other lenders become more cautious.

Dimon wrote:

There has been a lot of market volatility over the past year, partially, in my opinion, as people over-extrapolate monthly data, which is highly distorted by inflation, supply chain adjustments, consumer substitution, basically poor assumptions about housing costs and other factors.

The failures of SVB and Credit Suisse have significantly changed the market’s expectations, bond prices have recovered dramatically, the stock market is down and the market’s odds of a recession have increased. And while this is nothing like 2008, it is not clear when this current crisis will end. It has provoked lots of jitters in the market and will clearly cause some tightening of financial conditions as banks and other lenders become more conservative.

Earlier this week, RedState reported that small businesses throughout the country are now filing for bankruptcy at a record pace, exceeding the levels observed in 2020 at the height of the coronavirus pandemic.

According to a UBS Evidence Lab note reviewed by The Epoch Times, the four-week moving average for private filings was 73 percent higher than it was in June 2020. They also warned the situation may worsen as the repercussions of the recent banking crises start to manifest.

Despite the worsening economic climate, President Joe Biden continues to downplay the gravity of the situation while claiming his economic plan is providing remarkable results.

“We’ve achieved the fastest, strongest, most equitable recovery in American history. We’ve created 12.4 million new jobs. That’s more jobs… in two years than any president has created in a four-year term,” he said last week. “Unemployment is near a 50-year low. And record number [sic] of people have applied to start new businesses — nearly 10,500,000 applications in the past two years.”

Link

Last year CNBC touted a run on Russian banks was well under way and that bank failures were sure to be begin. “More pain is to come” they promised.

As “proof” they offered a picture of people lined up a Russian bank operating in Czech Republic thar was being closed by sanctions, not bank failure. Not even in Russia? Not related to the value of the ruble? Not related at all to the stability of the bank? Who cares. Stick a pic up of some cold people standing on a street near a Russian bank and it’ll have the same effect.

https://www.cnbc.com/2022/02/28/long-lin...tions.html

A few days ago, Forbes is running an article explaining why there was no run on Russia banks.

“But a Russian banking crisis, one that looks like we have seen in the U.S. recently with Silicon Valley Bank and in Switzerland with Credit Suisse, has not occurred. There were never any runs on Russian banks. The ruble strengthened”

So which is the fake news? They’re opposites. Would Americans give foreign media a pass in this case or would they automatically be labeled as “disinformation.” What do we really think our “information” is?

https://www.forbes.com/sites/kenrapoza/2...9b365725fe

(04-09-2023 03:19 PM)CrimsonPhantom Wrote:  

Quote:American banks experienced a historic contraction in the final two weeks of March, greater than even during the 2008 financial crisis, in the clearest indication yet that credit conditions are tightening as a result of deteriorating economic conditions.

According to Federal Reserve data dating back to 1973, commercial bank lending saw a drop of nearly $105 billion in the two weeks ending March 29th. The final week saw a decrease of over $45 billion, which can be attributed primarily to a decline in small banks’ loan offerings.

This reduction in lending has particularly impacted real estate, commercial, and industrial loans. The most recent report published on Friday indicated that commercial bank deposits also experienced a decline of $64.7 billion in the past week, marking the tenth consecutive decrease primarily driven by a drop in large firms’ deposits.

This aggressive decline in lending appears to be related to the failure of various firms, including Silicon Valley Bank and Signature Bank, over the past few months.

The Federal Reserve’s weekly H.8 report, which provides an estimated aggregate balance sheet for all commercial banks in the US, is under close scrutiny by economists who are keen to assess credit conditions. The recent spate of bank failures has also complicated the central bank’s efforts to curb inflation without tipping the economy into recession.

On Thursday, the American Bankers Association’s index of credit conditions dropped to its lowest level since the start of the pandemic, suggesting that bank economists anticipate a weakening of credit conditions over the next six months. This inevitably means banks will become even more reluctant to extend credit to even their wealthiest customers.

JPMorgan Chase & Co.’s CEO, Jamie Dimon, says the crisis may push the economy into recession. In his annual report to shareholders, Dimon stated that the failures have caused “jitters in the market” and will lead to more conservative financial conditions as banks and other lenders become more cautious.

Dimon wrote:

There has been a lot of market volatility over the past year, partially, in my opinion, as people over-extrapolate monthly data, which is highly distorted by inflation, supply chain adjustments, consumer substitution, basically poor assumptions about housing costs and other factors.

The failures of SVB and Credit Suisse have significantly changed the market’s expectations, bond prices have recovered dramatically, the stock market is down and the market’s odds of a recession have increased. And while this is nothing like 2008, it is not clear when this current crisis will end. It has provoked lots of jitters in the market and will clearly cause some tightening of financial conditions as banks and other lenders become more conservative.

Earlier this week, RedState reported that small businesses throughout the country are now filing for bankruptcy at a record pace, exceeding the levels observed in 2020 at the height of the coronavirus pandemic.

According to a UBS Evidence Lab note reviewed by The Epoch Times, the four-week moving average for private filings was 73 percent higher than it was in June 2020. They also warned the situation may worsen as the repercussions of the recent banking crises start to manifest.

Despite the worsening economic climate, President Joe Biden continues to downplay the gravity of the situation while claiming his economic plan is providing remarkable results.

“We’ve achieved the fastest, strongest, most equitable recovery in American history. We’ve created 12.4 million new jobs. That’s more jobs… in two years than any president has created in a four-year term,” he said last week. “Unemployment is near a 50-year low. And record number [sic] of people have applied to start new businesses — nearly 10,500,000 applications in the past two years.”

Link

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Technical analysis is really nothing more than the market psychology. It is essentially the behavior exhibited by the entire pool of all market participants acting on the cumulative knowledge held by those market participants. You can kinda see that this is setting up for a Black Swan event---we just have no idea what that event will be. My guess is it will be a combo shock of banks being forced to realize bond losses due to excess withdrawals, coupled with the double whammy of excessive defaults in commercial and auto loan portfolios. Business changes since Covid have decreased the amount of commercial space needed by industry and high auto costs have made car payments increasing difficult for consumers to make (auto loan defaults have been rising steadily). Add that to already stressed banks beset by declining bond values and increased withdrawals----and it seems like the kind of combo that is a likely culprit to push banks over the edge. The lack of lending tells you the banks are worried about something (perhaps even what Ive suggested) and thats why they are holding tightly onto their cash---resulting in reduced lending.