With persisting inflation, central banks across the world will...

With persisting inflation, central banks across the world will likely have to show more resolve. Which means more hikes and importantly they need to convince everybody (consumers, corporates, governments) that they will go as far as causing a recession and unemployment to bring it down. The hope is that they don't have to and behaviours adjust to those warnings. But they will if inflations stays well above their target. That is why the credit outlook is dark and why valuations of non-bank lenders are likely to stay very depressed for some time. Many of these lenders just cannot navigate an environment where they're experiencing high credit losses. With credit losses, growth is turned off (no more funding from warehouse) and income is redirected to repay creditors. In an accelerated way even when the debt facilities at the company level triggers its covenants. It is this scenario that is priced at a meaningful probability that keeps share price low and access to capital very tight. It is also why I think some of these lenders must upgrade their senior staff to make sure they can manage better their financials in this very tricky environment. MME falls in that category in my opinion. I did not participate to the SPP, but it was touch and go.