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Real Estate Bank Loans and Leases Hit Historic Low

Loans and Leases
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EDITOR NOTE: A recent Bloomberg headline reported that “U.S. banks’ loans and leases dropped to 47.15% of total assets in the week to Sept. 1 from 47.24% the week before, according to the Fed.” Based on this, the folks at Confounded Interest believe that “only in this deranged, hyper-stimulated market can bank stocks be soaring despite slowing loan and lease growth.” This implies that, like all markets, when something is so out of whack, a massive correction can’t be far away. A major correction in Big Bank stocks would seriously take a bite out of the U.S. stock market when it comes. 

US bank loans and leases are slowing, yet The Federal Reserve has helped keep their stock values elevated thanks to the extraordinary monetary stimulus.

(Bloomberg) — U.S. banks’ loans and leases dropped to 47.15% of total assets in the week to Sept. 1 from 47.24% the week before, according to the Fed

Total assets increased to $22.19 trillion from $22.10 trillion

The share of safe assets — virtually riskless investments such as cash, Treasuries, and securities effectively guaranteed by the U.S. government — increased to 51.2% of total assets from 51.0%

Loans and Leases

Loans and leases as a percentage of deposits were unchanged at 59.7%
Cash was the highest as a percentage of total assets since January 2015
Residential real-estate loans hit a historic low as a percentage of total assets at 10.0%

Commercial real-estate loans were the lowest as a percentage of total assets since August 2015
Consumer loans were the lowest as a percentage of total assets since May
Commercial and industrial loans were the lowest as a percentage of total assets since June 2012

Only in this deranged, hyper-stimulated market can bank stocks be soaring despite slowing loan and lease growth.

Loans and Leases

Original post from Confounded Interest

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