One of the better economic and business cycle leading indicators related to credit is the C&I or Commercial and Industrial Loan delinquency rate. After hitting a low of 11.7 billion in the 4th quarter of 2014 C&I delinquencies have ballooned 137% to 27.8 billion in the first quarter of this year. Originally driven by the energy sector delinquencies are increasingly coming from other sectors as well. On a historical basis delinquencies have reached levels normally associated with recessions and similar to that seen just before Lehman Brothers blew up in 2008 and as the Dot Com crisis was getting underway in 2000.
Given this data and a number of other metrics the Fed is going to have a very hard time rationalizing an increase in interest rates next month. Though there is always the possibility that the data will surprise strongly to the upside between now and then, a very doubtful possibility if you ask me, but in a world where a carpenter’s son can be raised from the dead anything is possible.
This is Caleb Lawrence Registered Investment Adviser Scotts Valley Drive and Willis Road in the Scotts Valley Plaza, Suite 202 or call me toll free at 888-RICH PIG / 888-742-4744.
You can catch me on the radio at noon each business day as well on California’s central coast. KPIG 107.5 FM in the Monterey Bay or KPYG 94.9 FM in San Luis Obispo.
Advisory services offered through Caleb Lawrence Registered Investment Adviser Inc.