Andreas Stover

Consumer Credit: The Next Bubble?

Marc Faber recently mentioned in an interview that the sectors of the stock market bottom out around the same time, but peak out over a longer stretch of time.

It might not be too far fetched to believe that the credit cycle would follow the same pattern. After all people who need credit will try to obtain it another way, if one credit market tightens. They will thereby cause a yet loose market to expand further and eventually push up rates of default there too.

The most important credit data for investors is the default rate on corporate loans, which is still exceptionally low. However, according to the July data from the Federal Reserve Board's Senior Loan Officer Opinion Survey on Bank Lending Practices credit standards are slowly beginning to tighten on commercial and industrial loans.

Should we see a spike in this data, investors should probably be very careful where they put their money.

See: www.federalreserve.gov...

Andreas Stover
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