Why Albert Edwards Thinks “NOW Is The Time To Worry”

Thursday, March 29, 2018
By Paul Martin

by Tyler Durden
ZeroHedge.com
Thu, 03/29/2018

When back in February, we pointed out a disturbing and dramatic divergence in the delinquency and charge-off rates between America’s thousands of small banks and the 100 or so biggest…

… we wondered if anyone would notice it. After all the implications were profound, and as TCW had previously noted, it “was America’s smaller banks – those not in the Top 100 by asset size – that have experienced in just the recent months a surge in charge-off deterioration, which at 7.9% is on par with the last financial crisis!”

Well, just a few days later, the WSJ did, and overnight so did SocGen’s Albert Edwards, who unlike the paper of record had a kind introduction to this critical inflection point in the economic data, if only for those banks which cater to the less affluent, more “regional” Americans:

I know some people don’t like the Zero Hedge (ZH) blog, but I certainly do –and not just for the confirmatory bias it gives me regarding own bearish views. ZH often flags up economic data and issues I would otherwise miss, ahead of the pack. Not much surprises me or shocks me nowadays, but I was truly gobsmacked by the surge in charge-offs and delinquency rates on credit card loans made by smaller US banks (see chart above).

In the aforementioned WSJ article, Robert Hammer, chief executive of credit card industry consultant R.K. Hammer, says, “The small banks’ experience is simply a leading indicator of a downturn to come. In the run-up to the last recession losses accelerated for small banks before they did for big ones.”

The Rest…HERE

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