In the context of the debate of whether banks are lending or not to
businesses and/or is the demand for loans still falling, Friday’s data
from the Fed for the week ended May 20th has commercial and industrial
loans falling to the lowest level since June ’08 and is down for 9 of
the past 10 weeks. This needs to be squared somewhat with the market
action over the past few months (even with the perceived forward looking
view of the stock market relative to the coincident nature of the C&I
data). The reflation trade, while likely extended in the short term,
still may have a ways to go in light of Fed and US govt policy and we
may be seeing the beginning of true global decoupling (unlike the failed
thesis in ’08) where certain parts of the world recover faster and at a
more sustainable pace than others as those economies with the greatest
amount of deleveraging ahead will lag.
