by Mish

"Bank stocks have climbed since Donald Trump was elected president as investors bet his pro-growth agenda and rising interest rates would help lenders generate huge profits. But this month, executives at some of the country’s largest regional banks said customers, especially corporations and small businesses, are instead waiting for details on the new administration’s proposals and results before seeking financing for expansion.

Total loans at the 15 largest U.S. regional banks declined by about $10 billion to $1.73 trillion in the first quarter, compared with the previous three-month period, the first such drop in four years, according to data compiled by Bloomberg. All but two of those banks missed analysts’ estimates for total loans, as a slump in commercial and industrial lending sapped growth.

“The optimism and the willingness is there, but it has not yet translated into actions or behaviors,” Beth Mooney, chief executive officer of KeyCorp, said of the Cleveland-based bank’s small and middle-market business clients. “We did not see ‘flip the switch’ sort of behavior that led to loan demand or making different capital decisions or investment decisions.”

Nonsensical Statement of the Day

The optimism and the willingness is there, but it has not yet translated into actions or behaviors,” said Beth Mooney, chief executive officer of KeyCorp.

Excuse me for pointing out the obvious, but if willingness was present, there would have been more loans.

Mainstream media and most economists are banking on consumer confidence sentiment, regional manufacturing sentiment, ISM sentiment, and now small business loan sentiment.

Sentiment Indicators

It’s time to throw the sentiment idea in the ash can where it belongs.

  1. April 28: Economists Expect 2nd-Quarter Recovery: Investigating the 1st-Quarter Weakness Theory
  2. March 21: Consumer Sentiment Statistical Noise: Modern Day Snake Oil
  3. March 28: Consumer Confidence Strongest Since December 2000: A Strong Contrarian Indicator?
  4. April 13:Econoday Parrot Squawks Again after Sentiment Rebounds to 17-Year High

Mike “Mish” Shedlock

China Loan Shark Market Crashes; Scores of Chinese Business Owners Unable to Pay Black Market Loans

Here is an interesting email from reader “Kevin” regarding the crashing loan-shark market in China.

Free Money! Banks Paid $22 Billion to Not Lend?

Excess reserves of depository institutions peaked at $2.7 trillion in August of 2014. By December of 2016, excess reserves fell to $1.9 trillion but have since climbed back to $2.2 trillion.

Countrywide Bailed Out by Bank of America?

Forbes is reporting Bank of America Bails Out Countrywide.

Bank of America Tests Peopleless Banks

Tellers, cashiers, loan officers: Who needs em? Banks do need those services of course, but do those services have to be in every location?

60-Day Delinquency Rate in Packaged Subprime Auto Loans Highest in Nearly Two Decades

“Subprime Flashback” A High level of missed payments for recent subprime loans made recently has raised concerns about underwriting standards.

Cracks Appear in Philadelphia Fed Regional Manufacturing Report

Actual industrial output has been far weaker than the regional Fed manufacturing reports and the ISM report for at least a year.

Factory Orders a 2nd Quarter Disappointment: “High-Flying” Regional Nonsense

Hard data for the second quarter continues to suffer despite diffusion indexes that have generally performed better. Put more credence on the hard data.

Near panic at the Fed

There is near panic at the Fed. You can see it in their statements even if you can’t hear in their voices.