Credit Managers Index: Credit Contraction

“There is quite obviously some serious financial stress manifesting in the data…”

That is not me, the caution-toned risk manager writing.  That is a quote from the first paragraph of a report (kindly forwarded by a subscriber) that goes on to imply a credit contraction in the making.

In an age of debt manipulation for economic growth, a credit contraction means an economic contraction out there on the not too distant horizon… which just happens to be our main big picture theme, unchanged through these last few years of economic Indian Summer.

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“By far the most disturbing is the rejection of credit applications as this has fallen from an already weak 48.1 to 42.9.”

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Here is the graphical view of the index’s monthly change…

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As  a market manager, the only rational course (in my opinion) is to take what the market gives, not fight trends until they indicate strong probabilities of reversal and simply be ready with the proper investment plans for what comes next.

I will take a challenging environment that may be subject to changes over the steady Robo Market any day.  The data in this report indicate changes to come.

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