저자: Kevin · 외국인
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웰스파고가 개인 신용한도(personal line of credit)를 해지하는 조치를 발표했는데, 이는 유동성 축소→소비 감소→성장 둔화로 이어져 위험 신호일 수 있다고 주장. 신용카드·마진 대출로의 전환 위험과 은행 측의 위험 회피 가능성을 언급. 마진 부채가 8,300억 달러 이상으로 사상 최고치라는 점과 S&P500 15~20% 조정 가능성(5~15%에서 상향 조정)을 제시하며 경계감을 표명.
다듬은 글
hey everyone meet kevin here i've been giving the a wells fargo credit align cancellation issue a lot of thought and why it could be actually happening and what implications that might have for the broader market so let's talk about this a little bit first of all in case you don't know i guess you haven't heard yet wells fargo declared that all of a sudden anyone with a personal line of credit is getting their personal line of credit cancelled now here's something that's very important to know about lines of credit the lines of credit are like credit cards but they usually carry lower interest rates the cool thing about lines of credit is you only pay interest on them generally interest only when you use the line of credit so if you have a home equity line of credit which i'm a big fan of i can write a check from a line of credit if i need to or not so for example i have a 125 000 line of credit on my house if i want to write a check from that for 125 000 i can do that and it's like cash then i pay interest on the balance that's outstanding i repay that over time however i want to repay it and then i stop paying interest on that money it's very very convenient i see lines of credit as a very good emergency fund and they're also a relatively safe emergency fund for example home equity lines of credit which those aren't getting cancelled those usually carry lower interest rates and the collateral is real estate personal lines of credit those carry slightly higher interest rates but they give folks a line for emergency purposes or if they want access to cheaper credit than credit cards could offer now why is wells fargo ending these personal lines of credit potentially dangerous and risky well in my opinion first of all there are a few issues here the first issue is you're removing liquidity from people that is people have less access to cash when people have less access to cash you first of all reduce consumption which is a big problem so a side effect of having less liquidity is reduced consumption that hurts the economy that hurts growth that's bad now it's just wells fargo but then again wells fargo is a big company okay it's part of the big four bank of america city chase right big big big company so it's a big deal so liquidity is obviously an issue consumption can go down growth can go down with individuals who would otherwise be able to use their personal lines of credit now what else is an issue well the other issue of not having access to this liquidity is you potentially end up driving these individuals who had personal lines of credit into riskier forms of credit such as credit cards or personal loans now the reason personal loans are riskier than personal lines of credit is because again with the line of credit you're only using the money when you've spent it you're only paying interest on the money when you spend it you go into wells fargo and you go on a personal loan for 100 grand they give you a hundred grand you're paying interest on that whether you need the money or not that's a problem that's that's an issue in my opinion i'd rather have a line of credit now you do have credit cards as an option as a line of credit at wells fargo which is something they said oh we got personal loans and credit cards but you got to be out of your mind to pay the interest rate on credit cards so sometimes exceed 20 20 20 to 24 it's absolutely nuts it's highway robbery you should never pay a dime of interest on some of these ridiculous credit cards so that's very risky in my opinion and it's dangerous and so what does that potentially do well in my opinion it potentially drives folks into using margin on maybe investments that they have such as stocks now unfortunately margin is risky because if your underlying collateral falls beneath a certain point because the stock market corrects or whatever well all of a sudden you could get liquidated and so you're forced into the situation where either you don't have an emergency fund or use margin as an emergency fund or to fund your consumption or you use more expensive credit cards and all those things are worse for the consumer it's worse for wells fargo customers less access to liquidity is bad for the economy it's bad for wells fargo customers now wells fargo is probably looking at this as a profit driver because they're like oh well if people are using these lines of credit they have all this access to credit but maybe they're not using it all well let's take away that opportunity from folks and force them into higher interest rate products that's that's the only thing that makes sense to me because remember businesses are and this is why you know look i'm a big fan of free market capitalism and everything but you know sometimes business motives are misaligned with societal motives and one of those could be the fact that if wells fargo is saying oh well people have all this access to credit but they're not paying any interest on this because they're not using it ah well uh how about we force them into something where they have to pay us interest i almost feel like there's a like a a secret profit motive here that wells fargo is going for and if that's not true then wells fargo should come out and give us a real reason because right now they're not giving us a real reason uh and it's scary to me because it makes me wonder what's gonna happen at other banks is this the first of many now i don't want to you know come across it's like fear mongering or whatever but you always want to look at that if one of the big four is doing it what i mean either look the other banks can look at this and go great more customers for us wonderful go switch from jpmorga from from wells fargo and go to jpmore whatever go to the other banks uh but the the danger is that this had some kind of precedent that we're going to get rid of personal lines of credit because here's the thing during the pandemic home equity lines of credit have been much harder to come by a lot of banks aren't even doing home equity lines of credit anymore banks a lot of banks used to do rental property lines of credit after the pandemic they're not doing these anymore so it's really interesting because really what you're doing is you're eliminating uh equity well liquidity opportunities for people and you're pushing them into riskier forms of debt credit card debt or margin and here's the thing margin rates the main data that came out highest levels we've ever seen before over 830 billion dollars i thought maybe the margin that a few months ago i was saying hopefully we start seeing margin debt go down and we start seeing a deceleration of people using debt no we haven't seen that we're seeing more debt flowing into the stock market uh so uh it makes me nervous especially if folks uh emergency levers are being taken away and they're being forced into higher credit or higher interest rate bearing accounts to have liquidity and potentially other banks follow suit robbing folks of consuming power that slows down the economy that slows down growth and all of this is honestly quite ironic because banks have they're flush with cash they got too much money they got too much cash so part of me wonders the other possible reason is if it's not a profit motive for banks then it has to be a risk aversion uh you know reason for wells fargo to do this in other words our banks worried that markets are are inflated we're starting to see a slowdown in the economy we're seeing real disposable income go down we're seeing consumption go down we're seeing credit card transactions go down we're seeing mobility data going out going down just month over month over the last few months here which makes sense get a big explosion at the reopening and people kind of go back to settling into a normal average uh like a pre-pandemic average but look if the stock market is valuing companies and all of a sudden these new massive growth metrics and then companies like wells fargo are going oh man you know we we have too much potential for people to take debt out there it's too risky because if we have a bubble or something that pops which i you know look i'll give you my odds at a moment well then maybe wells fargo is trying to mitigate their risk that way by making sure people don't have access to all this money during a potential crash which sucks because you want cash during a crash so you can buy the dip right but anyway maybe maybe that's what wells fargo is doing maybe they're they're their administrators or their executives are going look they're not profitable now because people aren't using them maybe i mean that's one option or the other option is hey if we're going into a market correction we don't want folks being able to take out a bunch of debt uh in in a correction which does happen like in in the recession in 2008 uh we we saw credit lines get frozen it's one of the first things that happened credit lines got frozen when the pandemic came in february of last year i warned everybody i said folks draw down your lines of credit and what that means is you literally go to your credit lines and you take all the money out and you go park it somewhere else maybe even at a different bank you usually don't have to do that but you could park it at a different bank and why are you doing that you're doing it so you have access to that money before they freeze your credit line so i don't know it's weird now regarding odds i still think i still believe we're i may have revised this up a little bit okay i was saying like five to fifteen percent chance of an s p correction of somewhere between fifteen to twenty percent i i think that's maybe closer to fifteen to twenty percent now and this is something we've been talking about over the last few days just some indications that we're seeing uh we've talked about another video so anyway i i am a little bit worried about this wells fargo thing being a little bit of a sort of a it's a red flag put it that way it's a red flag i don't know make sure to subscribe as always take advantage of that forty percent of coupon code down below that does expire july 22nd and folks price will be going up on july 23rd the morning july 23rd so get in and folks we'll see you next one bye
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