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Ben Davies Profile picture
@BenjamDavies
Mar 28 • 3 tweets • 3 min read Twitter logo Read on Twitter
Bankers are tightening lending standards faster than a squirrel can hide a nut up its ar*e for the 'credit' winter!

Velocity is collapsing | Ratio NGDP to M2
(Rate of money turnover in economy)...

#fintwit @ttmygh @LawrenceLepard @SantiagoAuFund @SamanthaLaDuc
US M2 Money Supply depth dive

- With the IORB at 4.90% and ON-RRP at 4.80%
- Banks will only continue to arb Fed Reserve Balances
to pay zero interest on bank deposits
- Reduces meaningful CRE, RE + commercial lending

Courtesy: Chris Watling, CEO Longview Economics
Check-out time at the Fed

Fed B/S
Mar 8 - 8.34 tn
Mar 15 - 8.64 tn
Mar 22 - 8.73 tn
Since Mar 23 (228bn) - 8.51 tn vs 8.34 tn (8 Mar)

Note: Loans = BTFP and other credit extensions

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More from @BenjamDavies

Ben Davies Profile picture
Oct 19, 2022
UK Govt and BoE now applying the handbrake and slamming on the foot brake - counter to my original tweet "Watching the dynamic between G7 govts and their Central Banks - it’s analogous to slamming on the brake while pumping the accelerator"….
UK debt to GDP is in an intractable situation now, tighter financial conditions will occur from both fiscal and monetary which means…
1. Fiscal = less spending stimulus but higher taxes discourage investment leading to tax avoidance…
Read 9 tweets
Ben Davies Profile picture
Oct 17, 2022
This UK gilts chart got me really thinking...Why is the term premia so tight here; bond buddy made one observation in a low coupon environment dollar prices are very low already...
Tight term premia aside, the gilt debacle was a liquidity crisis - QT was imminent, and the BoE had systematically failed to get inflation expectations under control. They have been behind the inflation curve all the way; it's actually unfathomable...
Recently when SONIA 3mo rates began to rise in Aug, pricing 75bps hikes by year-end, before the Energy Price Guarantee + mini-budget, the BoE could and should have raised rates faster and higher...
Read 20 tweets
Ben Davies Profile picture
Oct 16, 2022
Central bank and govt largesse we now all understand by now distorted the credit spectrum so firms took on greater risks, none more so than the UK Pension industry…
Pension funds have to match assets to liabilities in such a manner as to meet their future liabilities to pay an individual’s pension “annuity” in retirement, this is particularly problematic for final salary pension schemes but most firms don’t adopt these now…
As you have a fixed liability you have to put aside for and frankly no firms ever set aside enough capital and leave it to pension funds to manage, and how can they when rates are at effectively zero…
Read 17 tweets
Ben Davies Profile picture
Oct 16, 2022
Snapshot of credit guarantees of private credit in 2020…
And then Jan 22 - this does not include the plethora of additional state (govt)-backed credit guarantees of hydrocarbon energy (gas, LNG, oil) | green energy | defence (weapon) production all to support Ukraine and bolster the West’s defence systems…
All implicit guarantees that will largely be forgiven | written off as debt ratios fall due higher nominal GDP growth vs inflation rates…
Read 6 tweets
Ben Davies Profile picture
Oct 15, 2022
Watching the dynamic between G7 govts and their Central Banks - it’s analogous to slamming on the brake while pumping the accelerator….
Govts will win this friction, as they provide what electorates want, which is protecting them from energy, climate and providing security from geopolitical risks…
Govt Credit guarantees have sprung up with Banks across G7, eg energy credit lines, Germany, UK, France etc anywhere from 30 to 100pc of all new private sector bank loans are now guaranteed by the State…
Read 15 tweets

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