Consumer Credit

The Keynesian Cult Has Failed: "Emergency" Stimulus Is Now Permanent

What do we call a status quo in which "emergency measures" have become permanent props? A failure. The "emergency" responses to the Global Financial Meltdown of 2008-09 are, eight years on, permanent fixtures. Everyone knows what would happen if the deficit spending, money-printing, zero interest rates, shadow banking, asset purchases by central banks and all the rest of the Keynesian Cult's program stopped: the status quo falls apart.

We Now Know "Who Hit The Brakes" As Loan Creation Crashes To Six Year Low

We can now close the book on the WSJ's previously unanswered question of "who hit the breaks?" The answe the US consumer, the driver behind 70% of US GDP, officially tapped out. In fact, it was almost as if US consumers were hit by a perfect storm of adverse events in late 2016 and early 2017

US Household Debt Surpasses 2008 High, Hits Record $12.7 Trillion

“Almost nine years later, household debt has finally exceeded its 2008 peak. This record debt level is neither a reason to celebrate nor a cause for alarm. But it does provide an opportune moment to consider debt performance,” said Donghoon Lee, Research Officer at the New York Fed.

Moodys Slashes Ratings On 6 Canadian Banks, Fears Asset-Quality Deterioration, Soaring Household Debt

Amid Poloz-described "unsustainable prices" in various cities, and just days after the collapse of Canadian mortgage lender Home Capital Group and our discussion of the dire state of Canadian savers (and their record household debt), Moodys has cut the rating son six of Canada's largest banks because of "ongoing concerns that expanding levels of private-sector debt could weaken asset quality in the future."

RBC Asks (& Answers) "What In The Market Most Concerns You?"

"Central banks are pivoting ‘tighter’ which affects ‘financial conditions’ which affects ‘inflation’ and ‘risk assets’... but the data is holding firm, companies are making money, and rates are still extraordinarily low which incentivizes yield-seeking behavior from asset allocators. "

US Student, Auto Loans Hit New All Time High Of $2.6 Trillion

As of the end of the first quarter, US consumers owed $1.44 trillion in student loans, an increase of $32 billion for the quarter, as well as $1.12 trillion in auto loans, an increase of $73 billion Q/Q. This means that as of March 31, Americans owed two and a half times as much on their auto and student loans, as on their credit cards, a new all time high.

Oil Fireworks Unsettle Global Markets Ahead Of Payrolls Report

With all eyes on crude, following last night's mini flash crash which sent WTI lower by 3% from just above $45 to under $43 in under 10 minutes, equity markets, generally quiet overnight, have taken on a secondary importance ahead of today's key risk event, the April payrolls report. In global equities, Asian and European stocks are lower, while S&P futures are little changed.

Economic Reality: Bottom 50% Of Americans No Longer Matter

Previously, the bottom third did not matter. Then the bottom 40% did not matter. Now the bottom 50% do not matter. Brexit was the first warning shot. Trump was the second. As soon as the bottom 65% don’t matter, those 65% may vote to take matters into their own hands.

Key Events In The Coming Busy Week: FOMC, Payrolls, 131 S&P Companies Report

Besides the upcoming FOMC meeting on May 2-3, and French & Italian politics - the decisive runoff round of the French election takes place this Sunday - this week's releases are dominated by US payrolls expected to come around 170k. The busy release calendar continues with Norges bank and RBA meetings as well as global manufacturing PMIs.