Amid record auto loan ABS issuance, record loan terms, and record high average payments, it's no secret that the market for auto loans in the US has become dangerously stretched. Now, the NY Fed is out with what is perhaps the most shocking statistic yet on just how "darn easy" it is to get a car loan
China Soars Most Since 2009 After Government Threatens Short Sellers With Arrest, Global Stocks SurgeSubmitted by Tyler Durden on 07/09/2015 08:57 -0400
The Shanghai Composite Index had dropped as much as 3.8% to a 4 month low before the news that the cops were going to arrest anyone who was caught "maliciously shorting stocks", when everything suddenly took off, and the SHCOMP closed a "Dramamine required" 5.8% higher, the biggest daily increase since March 2009! Stocks around the globe followed, with US equity futures wiping out much of yesterday's losses and up 1% at last check.
Today's market battle will be between those (central banks) "hoping" that a Greek deal over the weekend is finally imminent (which on one hand looks possible after a major backpeddling by Tsipras - who may never have wanted to win the Greferendum in the first place - yesterday in Brussels and today during his speech in the Euro Parliament, but on the other will be a nearly impossible sell to Greece as any deal terms will be far harsher than the deal offered by the Troika 2 weeks ago and will have no debt reduction), and those who finally noticed that the Chinese central planners have effectively lost control.
Tumbling Futures Rebound After Varoufakis Resignation; Most China Stocks Drop Despite Massive InterventionSubmitted by Tyler Durden on 07/06/2015 06:52 -0400
More than even the unfolding "chaos theory" pandemonium in Greece, market watchers were even more focused on whether or not China and the PBOC will succeed in rescuing its market from what is now a crash that threatens social stability in the world's most populous nation. And, at the open it did. The problem is that as the trading session progressed, the initial 8% surge in stocks faded as every bout of buying was roundly sold into until every other index but the benchmark Shanghai Composite turned sharply red.
At the open, Europe looked in the abyss, and with no help coming from China, it did not like what it saw: And then the answer came from the Swiss National Bank, which stepped in to prevent the collapse just as Europe was opening. Because seemingly out of nowhere, a tremendous bid came in to life the EURCHF, buying Euros (against the CHF and the USD) and selling Europe's last left safety currency. We now know that it was the SNB, the same central bank which is the proud owner of well over $1 billion in Apple stock.
"Of the subprime vehicle loans bundled into securities, 73 percent now exceed five years, up from 64 percent during the first three months of 2014. 'Because cars depreciate quickly, a borrower is typically upside down or underwater toward the end of a long loan term.' 'The risk is that you extend a loan that a borrower cannot afford over its term schedule. Inching out to 75 and 84 months, I don’t think that has been tested yet.'"
The recent peak in profits, combined with substantially elevated P/E ratios, is likely suggesting that forward return expectations should be revised sharply lower.
Anyone that believes that this is “sustainable” in any way, shape or form is crazy. We have accumulated the greatest mountain of debt that the world has ever seen, and yet despite all of the warnings we just continue to race forward into financial oblivion. There is no possible way that this is going to end well.
Last week the government reported personal income and spending for April. After months of blaming non-existent consumer spending on cold weather, shockingly occurring during the Winter, the captured mainstream media pundits, Ivy League educated Wall Street economist lackeys, and Keynesian loving money printers at the Fed have run out of propaganda to explain why Americans are not spending money they don’t have. The corporate mainstream media is now visibly angry with the American people for not doing what the Ivy League propagated Keynesian academic models say they should be doing. An economy built upon the consumption of iGadgets, Cheetos, meat lovers stuffed crust pizza, and slave labor produced Chinese baubles, along with the production of enough arms to blow up the world ten times over, and the doling out of trillions to the non-productive class, is doomed to fail.
After yesterday's unprecedented volatility fireworks across all markets and continents, today so far has been a modest disappointment, with no crashes and subsequent surges in China, where the Politburo's only achievement was keeping the bubble dream alive by pushing the Shanghai Composite over 5,000 for the first time since January 2008, closing the index 1.5% higher on the day - a very modest gain by China's recent blow-off top standards. Europe, too, has been relatively tame with the 10 Year Bund starting off on the wrong foot, the yield rising back above 0.91% before once again dipping to the upper 0.8% range, tracking the move in the EURUSD tick for tick, which also is a tractor beam for the US 10 Year. On the equity, front, things are just as muted, with futures at the Low of Day as of this moment, despite yesterday's last minute manic buying spree, the S&P set to open below 2100 as a result.
With the Greek IMF payment just 48 hours away, and Europe having submitted its best and final offer to Greece in a battle of "deal proposals", today Greek PM Tsipras will meet with European Commission President Juncker to discuss the recently submitted reform proposals by the Greek premier. However, a Greek government spokesman says that Greek PM Tsipras will not meet Eurogroup's Dijsselbloem despite several reports suggesting that they would do so later today. Last night it was reported that the EU, ECB, IMF agreed on terms for a cash-for-reform plan to be presented to Greece. However, a senior EU official has said that they are concerned that the stringent measures of the proposal could be met with rejection by Greece.
May was a banner month for car sales and it's easy to see why. Nearly every conceivable metric for financing hit a record in Q1 according to Experian, including average loan term and average amount financed, suggesting the trillion-dollar US auto loan market has officially hit bubble territory. Meanwhile, the "cash out auto loan" is the new home equity loan.
June is off with a bang, and a very busy week in the macro economic calendar, both globally and in the US, which culminates with the latest "most important ever" payrolls report, one which will surely be closely watched by a Fed which may hike as soon as a few weeks from now (but probably won't).
- FIFA Raided by Swiss Authorities in 2018, 2022 World Cup Probe (BBG)
- Companies Send More Cash Back to Shareholders (WSJ)
- Time Warner Cable Deal Stirs Debt Concerns (WSJ)
- Qatar $200 Billion World Cup Under More Scrutiny Amid FIFA Probe (BBG)
- Philippine, Vietnamese troops play soccer and sing on disputed island (Reuters)
- The G-7's Problem: Can the World Deal With a Greek Default? (BBG)
- SocGen Deal for Bache Illustrates Commodity-Trading Woe (WSJ)
- China’s Naval Abilities Test Asia’s Insecurities (WSJ)
"Coins and bills are obsolete and only reduce the influence of central banks," German economist and sole Keynesian member of the German Council Of Economic Experts Peter Bofinger tells Spiegel, becoming the latest central planning proponent to suggest that a cashless society would solve the world's economic problems by allowing the government to control who spends what and when in a futile effort to control the business cycle.