Commercial & Industrial Lending Growth BOOMS As Companies Seek Funds To Survive The Lockdown (Back To Just Before The Great Recession)

As the US economy slows thanks to the Novel Coronavirus, we are seeing business loans growing at a tremendous rate as they seek to live another day.

cilendingyoy

The growth rate of C&I lending (aka, business loans) is the highest since … just before Q4 2007 and The Great Recession.

ciloansbush

Hopefully, this situation is temporary. Otherwise, …

infinityqe

Liquidity Trap! 3M Treasury Yield At -0.025%

A liquidity trap is a situation in which, “after the rate of interest has fallen to a certain level, liquidity preference may become virtually absolute in the sense that almost everyone prefers holding cash rather than holding a debt which yields so low a rate of interest.”

Well, Buckaroos, we are in a liquidity trap with the 3 month Treasury yield at -0.025%.

ustillneg

A closer look at the T-bill market today.

fit

So here we sit in a classic liquidity trap!

liqtrsp

Fed Chair Jerome Powell in a liquidity trap!

powelljail

Mega thanks to Jesse at Jesse’s Cafe Americain for the jail jpg.

Frankly, I like The Byrds version of Buckaroobetter with the great Clarence White on the Fender Telecaster B-Bender guitar.

10Y T-Notes Bid-Ask Spreads Widen To Financial Crisis Levels

The markets are over, under, sideways, down.

Bid-ask spreads on the 10-year Treasury Notes have exploded and is back to financial crisis levels.

Screen Shot 2020-03-19 at 7.17.47 AM

A steepening Treasury yield curve bodes ill for stocks … and volatility.

ycstockds

Hedge, hedge, hedge!

Sea of Red! Brent Crude Down 12.38% As Dow Closes Down 13% (Or 3,000 Points) Hedging Anyone??

We are in a Sea of Red.

Brent Crude is down 12.38% today while agriculture prices are down too.

brentcrude

US, Europe and Asia are in red territory. With the Dow down 3,000 points or nearly 13%.

seaofredvirus

It seems like a good time to hedge the stock market.

skewindex

A scene at your local grocery store.

Screen Shot 2020-03-16 at 4.01.39 PM

Virus Volatility! VIX, Gold, Oil, Europe, Emerging Markets (No Where To Run, No Where To Hide)

Volatility is spiking in virtually all asset classes.

volfalls

Even gold the most in over three decades.

goldslump

Wow. No where to run, no where to hide … from volatility. At least in terms of risky assets. Cash and Treasuries are the places to hide.

twister

Big Bubbles? Fastest Bear Stock Market (Down 20% From Peak) May Happen! Dow Closes Down 1,467

The WHO (World Health Organization, not the 60s/70s rock band) announced that the coronavirus is a new PANDEMIC.

Or it is a bubble pop? Not tiny bubbles as Don Ho sang.  But a BIG bubble … burst.

Yes, The Federal Reserve and other Central Banks kept their target rate near zero for almost the entire Obama Presidency, then started to raise rates only to lower them again. But the S&P 500 and NAREIT – all equity indices have risen dramatically as well.

nareitbubb

A bear market in equities is when prices fall 20% from their peak. Over the past month, we are almost in a bear market.

blackhawkdow

Is this that fast 20% in history? Nearly.

Screen Shot 2020-03-11 at 3.51.47 PM

And there is lots of downward rotation in global equities.

Screen Shot 2020-03-11 at 4.42.36 PM

Yes, equity markets are fragile thank to the central banks. And now the bears have been awakened.

bearmkt

What Virus? MBA Mortgage Applications SOAR With Rate Declines (Particularly Refi Apps Up 55.43% WoW)

If you are watching panic at the Bank of Japan, European Central Bank, and Bank of England, you would think that the Spanish Flu from 1918 that killed between 17 and 100 million people was back.

cbrates

While we watch the DJIA shed another 800 points in the first 30 minutes of trading, mortgage applications for last week skyrocketed as is there was no coronavirus.

Mortgage applications rose 55.43% from the preceding week. Refinancing applications rose 78.585 (NSA) while mortgage purchase applications rose 7.21%, far less than refinancing applications.

mbacorona

Here is a chart of refinancing applications as mortgage rates tumble.

mbanoflu

Let’s see what happens with existing home sales in the next report.

 

Stimulypto! U.S. Stocks Rebound on Stimulus Speculation (Fiscal And Fed)

What do you call an expected 3 rate cuts by The Federal Reserve AND fiscal stimulus to combat the coronavirus? STIMULYPTO!!

(Bloomberg) — U.S. stocks turned higher in another wild day on Wall Street, with investors pining for details on the Trump administration’s expected stimulus to combat the coronavirus’s economic impact. Treasuries fell and oil jumped.

The S&P 500 whipsawed from the outset Tuesday, surging 3.5% before turning negative and the rising again. President Donald Trump promised “major” moves to counter the fallout, but he has not communicated his plans to Congress yet. He did say his administration would assist the airline and cruise industries. A 4% rally in European stocks got zapped.

stimulto

The Dow has recovered a bit from yesterday’s stock slaughter.

stimdow

The unknown fiscal stimulus (likely reduced tax withholding) in addition to the anticipated three Fed rate cuts coming in March.

ratescurs

Stimulypto indeed!

1583884729397blob

Update: after a few speed bumps, the Dow closed up 1165 points. Stocks Jump Most Since 2018 on Stimulus Hope

dowup1164

And the 10-year Treasury yield is up 26 basis points.

ust10up

Market Blitzkrieg! US Stocks Fall 7% At Opening, Entire US Treasury And Dollar Swap Curve Below 1%

Now this is something you don’t see every day. A true market blitzkrieg at opening.

A 15-minute trading halt took hold after the S&P 500 Index fell 7% to 2,764.21 as of 9:34 a.m. in New York, triggering the breaker for the first time since December 2008 at the depths of the financial crisis.

Screen Shot 2020-03-09 at 9.54.52 AM

seaofred

And the US Treasury 10-year yield plunged 33.3% to 0.429%.

bondblitz

Leaving the entire US Treasury and Dollar Swaps curves below 1%.

swaptreas

Commodities are getting crush too. Thanks in part to Saudi Arabia turning on the oil flow (but not if spot price < extraction cost).

commonyil

Put skew is in play.

oildownb

The VIX is at its highest level since the financial crisis.

vixenormous

Where is Jerome Powell and The Federal Reserve?

The Federal Reserve said on Monday that it will increase the amount of money it is pumping into short-term borrowing markets during the current turmoil, reversing an attempt to wean investors off financing it has been providing.

Update at 4:00 pm EST. Dow down 2025 points or 7.83%. For today.

dowdown2000