Most of you reading this are probably aware the U.S. auto market is a train wreck waiting to happen, but a recent report by Moody’s really puts the industry’s insane lending practices into perspective….Typically, car dealers tack on an amount equal to the negative equity to a loan for the consumers’ next vehicle. To keep the monthly payments stable, the new credit is for a greater length of time.Over the course of multiple trade-ins, negative equity accumulates. Moody’s calls this the “trade-in treadmill,” the result of which is “increasing lender risk, with larger and larger loss-severity exposure.”
The retail apocalypse has descended on America. More than 3,500 stores are expected to close across the US in the next couple of months. Department stores like Macy’s, Sears, and JCPenney, and retailers including BCBG, Abercrombie & Fitch, and Bebe have all been forced to close up dozens of stores. Walking through a mall in 2017 is like walking through a graveyard. Here’s photographic proof that a retail apocalypse is hitting the US hard.
The New York Fed’s most recent household debt report showed ballooning debt and delinquency in student and auto loans. Total household debt has just about reached its previous late-2008 high of over $12.5 trillion……The overwhelming conclusion from all of this data is that we almost certainly have new bubbles in education and the auto industry. A trillion dollars of housing debt has been replaced by a trillion dollars (or more) of student and auto loan debt. Delinquency rates are increasing for student and auto loans, while other loan types have seen a decrease in delinquency.
There is much we do not yet know about what happened and there is probably quite a bit we will never know. But we do know several very important things about the government spying on Americans…..First, there is Section 702 itself. The provision was passed in 2008 as part of a package of amendments to the 1978 FISA bill. As with the PATRIOT Act, we were told that we had to give the government more power to spy on us so that it could catch terrorists…. We found out five years later from Edward Snowden that the US government viewed Section 702 as a green light for the mass surveillance of Americans. Through programs he revealed, like PRISM, the NSA is able to collect and store our Internet search history, the content of our emails, what files we have shared, who we have chatted with electronically, and more. That’s why people like NSA whistleblower William Binney said that we know the NSA was spying on Trump because it spies on all of us!
The percentage of subprime auto-loan securitizations considered deep subprime has risen to 32.5 percent from 5.1 percent since 2010, Morgan Stanley said. The researchers define deep subprime as lenders with consumer credit grades known as FICO scores below 550…..Consumers are falling behind on most subprime car loans, but deep subprime borrowers have deteriorated fastest, the analysts said. Sixty-day delinquencies for bonds backed by these loans have risen 3 percentage points since 2012, compared with just 0.89 percentage points on all other subprime auto securities, Morgan Stanley’s Vishwanath Tirupattur, James Egan and Jean Ng said in a report dated March 24.
It’s a fundamental economic truth that too much health insurance actually increases costs. That is why other types of insurance — think of car accidents or warehouse fires– only cover catastrophic costs. The full cost impact of our over reliance on health insurance, provided by both government and private insurers, is staggering. In 2014, real health spending per person was $9,532. However, if government policy had not encouraged control of health spending to shift from patients to governments and insurers, spending would have been about $4,316 per person — less than half of what we actually spend. The difference is explained by waste, fraud, and abuse that quickly finds its way into markets controlled by third-party payers, who then impose costs to try to control these problems.
The most immediate test comes at the end of April, when the government’s current funding expires. Lawmakers have only 12 legislative workdays before April 28, the date by which they will need to pass a new spending bill or trigger a partial government shutdown. More distantly, Congress must approve an increase in the nation’s debt limit, likely by this fall, and then fund the government for fiscal 2018, which begins in October.
At the end of the war with Iraq, it became evident that the mantra that the regime in Tehran now followed, as Henry Precht, the former head of the State Department’s Iran desk, once said, was not dominion abroad, but economic and political independence at home. Rather than an irrational ideological fervor, the Islamic Republic’s policies are primarily motivated by domestic stability, security, and economic growth. Iran has always been more sympathetic to the Christian Armenia than to Muslim Azerbaijan in their border disputes, more interested in closer ties with India than Pakistan, and in order to protect their trade relations with China, remained silent when the Chinese violently suppressed the grievances of their Muslims. Domestically, Iran has also changed significantly since the brutal years of the 1980s reign of terror. There exists a vibrant and growing civil society, more than fifteen independent newspapers are published in Tehran, meaningful presidential and parliamentary elections with real participation and rivalries happen, unlike the a commonplace perception, women participate in social life despite patriarchal laws and cultures, more than 60% of university students are women. I do not intend to draws a rosy picture of Iran, the Islamic Republic is not a democratic regime, but in all cases it is certainly more democratic than all our allies in the region.
Evercore Partners Inc.’s Ed Hyman warned that rising debt levels in China are bound to eventually disrupt the nation’s economy. “China’s a mess, and at some point it’s going to blow up,” Hyman said Monday in an interview on Bloomberg Television. “They have a ton of debt, which is unsustainable.”
Elon Musk, Silicon Valley’s automotive visionary, loves to wow the world with grandiose visions that serve primarily to reinforce his position at the top of the list of tech titans. That said, at some point we suspect his shareholders will actually expect him to perform against his ‘visions’ rather than simply talk about them. And while one can never be sure just how many chances investors in this frothy market will allow Musk before turning on him and his aggressively priced stock, it appears as though he isn’t doing himself any favors with his recent Model 3 production guidance. As Bloomberg points out this morning, Musk is guiding the market to production volumes of 10,000 Model 3’s per week by 2018, or roughly 5x his current volumes for the Model S and Model X, combined.