3 charts show where Jamie Dimon’s credit ‘cockroaches’ might be hiding in the market

• There are signs that Jamie Dimon might be right about cockroaches lurking in the debt market, Rosenberg Research says.

• The research firm pointed to signs of growing distress across household and corporate credit.

• Consumers and businesses are under pressure and falling behind on payments.

Jamie Dimon might be right about the cockroaches.

The JPMorgan boss recently warned markets that trouble could be brewing in the credit market. His reasoning? There’s always more than one cockroach if you see one, he said.

Dimon was commenting on the recent high-profile failures of auto parts company First Brands and subprime auto lender Tricolor Holdings. But there are signs the infestation Dimon hinted at is already more widespread, according to Rosenberg Research.

“Jamie Dimon looks increasingly correct — there is always more than one ‘cockroach’ as signs of credit stress build across households and the corporate sector,” the firm said this week, pointing to the top signs of credit distress it was monitoring.

Here are the warning signs that credit cockroaches could be lurking:

More loans are transitioning into late-payment status.

The balance of loans that are newly delinquent, or where borrowers are at least 30 days late on payments, rose to 5.3% in the third quarter. That’s the highest rate of new delinquencies since 2014, according to data from the New York Fed.

Here’s the breakdown by loan type for the third quarter:

More consumers are also falling into what’s known as “serious” delinquency, where loan payments are 90 days or more late.

The percentage of loans that transitioned into serious delinquency rose to 3% the last quarter, also the highest rate in more than a decade.

Here’s the breakdown by loan type for the last quarter:

“Simply put, the consumer is stressed. More and more households are having to siphon funds towards servicing their debts and away from discretionary spending as borrowing costs remain elevated,” the firm wrote.

Corporations are also under more pressure. The percentage of corporate loans considered to be distressed spiked in 2022 and has remained elevated ever since, Rosenberg said, citing data from Bloomberg Intelligence.

The delinquency rate on business loans has increased steadily for the last several years. The percentage of business loans in late-payment status rose to 1.2% at commercial banks in the second quarter, up 28 basis points from the second quarter of 2023, according to Fed data.

The balance of distressed loans rose another $70 billion in October alone, Bloomberg data shows.

“The chickens may now be coming home to roost. For many of the same reasons, households are feeling the stress, businesses have had to deal with elevated borrowing costs, slowing demand (outside of AI), and overall elevated levels of uncertainty,” the research firm wrote, pointing to the boom in private lending in recent years.

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