I'm in Washington, D.C., all week for the IMF-World Bank spring meetings. We'll have a number of items, quotes and insights from fund managers, government officials and global policymakers on the current and future outlook for financial markets.
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There are worrisome trends developing in the lending market, reporting from the Washington Post and Bloomberg shows.
"Actions by federal regulators and Republicans in Congress over the past two years have paved the way for banks and other financial companies to issue more than $1 trillion in risky corporate loans," Damian Paletta of the Post writes, "sparking fears that Washington and Wall Street are repeating the mistakes made before the financial crisis."
Why it matters: Big banks and other financial institutions have originated the risky loans to "hundreds of cash-strapped companies, many of which could be unable to repay if the economy slows or interest rates rise."
Further, there's also been a growth of so-called covenant-lite loans, which lack traditional loan requirements and offer less protection for lenders and investors than traditionally structured credits if borrowers default.
There's more: Financial institutions are lending to less-qualified borrowers as a result of "grade inflation," Adam Tempkin at Bloomberg reports.
My thought bubble: There are a lot of bad bets in the global debt market. As the economy slows, borrowers may have trouble making payments, which could lead to a wave of defaults. Fortunately, much of the risk is not held by banks as it was during the financial crisis, so there's unlikely to be a repeat of the systemic failure we saw in 2007.
Despite well-documented pushes by Apple, Samsung and others into the mobile payments space, more Americans still write checks than use mobile payments.
The U.S. is growing increasingly out of step with the rest of the world. By 2022, mobile payments from companies like Alipay, WeChat Pay and others are projected to account for nearly 50% of global e-commerce sales.
Why it matters: Mobile payment transactions in China rose to nearly $13 trillion in just the period from January to October last year, according to official figures from the Ministry of Industry and Information Technology cited by the South China Morning Post.
The U.S. saw less than 1% of China's total, at $49.3 billion in estimated total mobile payment transactions, according to data from eMarketer.
Why it's happening: Debit and credit cards continue to dominate Americans' wallets. John Dick, CEO of CivicScience, says it really comes down to trust.
The bottom line: There's a clear opportunity here. Apple appears to be trying to close the trust gap through its new Apple Card with Goldman Sachs.
Twenty-three companies — or about 5% of the S&P 500 — have reported first quarter earnings so far, Axios' Courtenay Brown writes.
The good news: This is actually an improvement. At this point in last year's earnings season, even more of the same group of companies (about 74%) saw profit estimates cut for Q2 2018.
The bad news: The likelihood of an earnings recession — or 2 straight quarters of year-over-year earnings declines — is increasing.
Courtenay writes that the CEOs of big U.S. banks will spotlight the way their companies have transformed since the financial crisis at Wednesday's House Financial Services Committee hearing — and they'll say the system has become less risky thanks to regulations, released testimonies show.
The backdrop: It's the first time the heads of America's biggest financial institutions will testify together since the aftermath of the financial crisis. It's "part of an opening salvo in House Democrats' plans to examine the industry’s activities," the Wall Street Journal points out, and it comes amid heightened scrutiny of capitalism's effectiveness.
The message is similar to that being laid out by the Financial Services Forum — a trade group whose members are all testifying, with the exception of Wells Fargo's interim CEO.
According to a memo from the House Financial Services Committee, chaired by Rep. Maxine Waters (D-Calif.): “A number of questions remain regarding whether America is being well-served by the largest and most systemically important banks, and whether there is appropriate accountability."