The Default Rate That Describes Last Spring
JPMorgan's credit card charge-off rate fell to 2.91 percent in the third quarter from 3.15 percent a year earlier. The share of its card balances thirty days or more past due rose between June and September, to 1.97 percent from 1.91.
Both figures came from the bank's third quarter results, published on October 13. Wells Fargo reported the same pair.
Its card charge-off rate fell to 3.73 percent from 4.02. Its thirty-day past-due share rose to 2.69 percent from 2.58 in June.
Coverage led with the first number in each pair. The shorthand across the day was that card defaults fell and that strong customers were keeping a lid on loan losses.
The key observation is that the loss rate describes loans that soured in the spring, while the delinquency rate describes September.
The two numbers are the same account at different ages.
Federal bank regulators require a credit card balance to be written off after 180 days of nonpayment. The rule sits in the Uniform Retail Credit Classification policy, which the Comptroller of the Currency adopted in 2000.
Six months is the distance between the two readings. A balance charged off in September stopped being paid in March.
The falling loss rate is therefore a verdict on the spring. The rising thirty-day rate counts those who stopped paying over the summer.
One qualifier belongs here. Measured against last September, JPMorgan's thirty-day share is lower, and Wells Fargo's is barely changed.
June is the more recent base. Loans that went past due then have not yet reached a write-off.
Other lines in the same releases moved with the newer number. Wells Fargo's auto charge-offs rose to 0.57 percent of loans from 0.45 percent a year earlier.
Its provision for credit losses was 1.03 billion dollars, up 51 percent. Its reserve swung from a release of 273 million dollars a year earlier to a build of 46 million.
Walmart, the war in Iran, and a margarita on the beach
Five years from now, there are going to be two types of retirees in America.
One is greeting strangers at Walmart in a blue vest. Not because they want to. Because the war in Iran was the first domino that knocked their retirement sideways and they never saw it coming.
The other is sitting on a beach with a margarita. Not because they got lucky. Because they understood what the Iran war was really about and made one simple move.
The war in Iran isn't about nukes. It's about oil being sold in yuan instead of dollars.
Every barrel that leaves the dollar system makes your savings worth less. And 40 countries are following Iran's lead.
The retiree at Walmart kept everything in the same 401(k) their advisor set up ten years ago. They watched the dollar weaken. They watched inflation eat their savings. They hoped somebody in Washington would fix it. Nobody did.
The retiree on the beach moved a portion of their retirement into the one asset that goes up when the dollar goes down. Took 15 minutes. No taxes. No penalties. And they slept fine while everyone else panicked.
A free report called "The Great Gold Reset" shows you exactly what the Iran war means for your dollars, why it's accelerating a shift that was already underway, and the simple move that separates the Walmart greeters from the beach retirees.
This is a delinquency-loss lag.
A lender records a missed payment within weeks and a write-off within months. Both describe the same borrower, half a year apart.
When the two move together, the distance does not matter. When they split, the older number is reporting a period that has closed.
The banks themselves do not read it the same way. JPMorgan cut its card allowance to 6.16 percent of card loans from 6.61.
Its consumer reserve build fell to 50 million dollars from 575 million. The commercial build went the other way, rising to 452 million from 242 million.
Those are judgments about the future rather than counts of the past, and the two lenders reached different ones.
China declared economic war on the U.S. The U.S. punched back - hard.
For months, I've been telling my readers that China's economy is cornered.
Now that story has been officially exposed:
China peaked in 2021, and AI can't save them.
"Official" 5% annual growth rate numbers coming out of Beijing are now considered false...
Independent economists have estimated their real growth is actually zero...
And that China is now a country in decline.
Their population is crashing... debt ballooning...
Foreign investment fleeing.
Their last hope? AI exports.
But Trump's "shadow committee" is cutting that thread as we speak.
If you thought the Iran War was about anything other than permanently crippling China...
Think again.
And when a superpower falls, the money doesn't disappear.
It moves.
Last time, it moved through Exxon - handing investors 7,000%.
This time, it moves through a company you haven't heard of - yet.
Where the six months show up
Transitions into delinquency in the quarterly household debt report. This counts the share of balances that slipped from current into arrears during the quarter, the earliest point a troubled loan shows up. A rising transition rate would show more losses entering the pipeline. A falling one would support the charge-off reading. (Source: Federal Reserve Bank of New York)
Commercial Chapter 11 filings. These are counted monthly and land well before a commercial loan reaches a write-off. A rising count alongside the larger commercial reserve builds would show banks reserving against something already in motion. A flat count would leave those builds as caution. (Source: Epiq Bankruptcy)
Non-current loans and reserve coverage across all insured banks. The quarterly profile covers every insured institution rather than the handful that reported this week. Reserve coverage rising while noncurrent loans hold steady would show the system reserving ahead of losses. Both rising together would show the losses arriving. (Source: FDIC)
Falling losses and rising arrears can appear in one release without contradiction. The first is a record of what already failed, and the second is a count of what is failing now.
Talk soon,
The Playbook Daily
