Taps Coogan – August 18th, 2022
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This is hardly a surprise but, as the following chart from Morgan Stanley via Acemaxx Analytics highlights, banks are rapidly tightening lending standards.
![](https://thesoundingline.com/wp-content/uploads/2022/08/bank-lending-standards-tightening-1024x703.jpg)
The chart above shows the percent of lenders that are tightening or loosening lending standards for commercial and industrial loans based on a survey by the Fed.
Given the deteriorating economic outlook, high inflation, and rising funding costs for banks, it would be shocking if this wasn’t happening.
Nonetheless, this is part of a process by which lower quality borrowers and zombie corporations are getting cut off from their sources of funding. We recently noted that junk bond issuance was grinding to a halt and IPOs have also all but stopped.
Given how much of the economy has been zombified by a decade of excessively accommodative monetary policy, don’t under-estimate the effects that this will have down the road.
Cashflow is king.
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