Forget about the mortgage subprime crisis. Next crisis to erupt could be the auto loans crisis.
To date, auto loan has surpassed US$1T. Below are some important points taken from Zerohedge:
In July, 60 day subprime loan delinquencies were up 13 percent on a month-over-month basis and were up 17 percent compared to the same month last year.
Prime delinquencies were up 12 percent on a month-over-month basis and were up 21 percent compared to the same month last year.
The following comes from USA Today…
In a quarterly filing with the Securities and Exchange Commission, Ford reported in the first half of this year it allowed $449 million for credit losses, a 34% increase from the first half of 2015.
General Motors reported in a similar filing that it set aside $864 million for credit losses in that same period of 2016, up 14% from a year earlier.
Between Ford and GM they have set aside a whopping US$1.3B for credit losses.
This is pure insanity. It goes to show that the consumer spending, especially in the autos are driven by reckless lending.
I will stay away from the auto stocks as the data seems to suggest that a bubble could burst in the coming months. Why? Because auto sales are dropping and inventories are rising. Even Ford acknowledged that the sales have reached a plateau. Can't remember which news website I read it from, but the author nailed it when he said "A plateau is a cliff on one side and another cliff on the other side."
No comments:
Post a Comment