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November 15, 2017 | Auto-Loan Subprime Blows Up Lehman-Moment-Like

But there is no Financial Crisis. These are the boom times. Given Americans’ ceaseless urge to borrow and spend, household debt in the third quarter surged by $610 billion, or 5%, from the third quarter last year, to a new record of $13 trillion, according to the New York Fed. If the word “surged” appears […]

November 9, 2017 | Next Phase of Carmageddon: the Banks

Banks have started to tighten lending standards for prime and subprime borrowers, and it shows. Banks are further tightening their lending standards for prime and subprime auto loans. This process started in Q2 2016, when auto lending had reached the apogee of loosey-goosey underwriting that had boosted sales of new and used vehicles to record […]

November 3, 2017 | The Fed Actually Begins its QE Unwind

But what’s happening with mortgage-backed securities? Thursday afternoon, the Fed released its weekly balance sheet for the week ending November 1. This completes the first month of the QE unwind, or “balance sheet normalization,” as the Fed calls it. But curious things are happening on the Fed’s balance sheet. On September 20, the Fed announced […]

October 23, 2017 | Wall Street Piles into Cryptocurrencies, Others Speak of “Biggest Scam Ever”

I don’t remember ever having seen crazier times of more pandemic proportions. “It is the biggest scam ever, such a huge gigantic scam that’s going to blow up in so many people’s faces. It’s far worse than anything I was ever doing,” explained Jordan Belfort concerning ICOs (initial coin offerings) of cryptocurrencies. The former penny-stock […]

October 20, 2017 | Is the Fed Getting Cold Feet about the QE Unwind?

Curious things are happening on its balance sheet. The last Fed meeting ended on September 20 with a momentous announcement, confirming what had been telegraphed for months: the QE unwind would begin October 1. The unwind would proceed at the pace announced at its June 14 meeting. It would shrink the Fed’s balance sheet – […]

October 10, 2017 | It’s Over for Sears Canada

Brick and mortar meltdown. Sears Canada hired the same leading bankruptcy advisory firm on June 12 that had represented Target Canada in its insolvency proceedings. Ten days later, it filed for bankruptcy protection to restructure its capital and its operations, shutter dozens of it 225 stores and lay off nearly 3,000 employees, but planned to […]

October 5, 2017 | Update on the Deflating Housing Bubble in Toronto

Missing Chinese money? Hardest hit is the priciest segment: detached houses. Home sales in the Greater Toronto Area plunged 35% in September compared to a year ago, to 6,379 homes. The plunge in volume was spread across all types of homes. Even condos got hit: Detached houses -40.4% Semi-detached houses -30.2% Townhouses -34.4% Condos -27.5%. […]

September 24, 2017 | Harvey and Irma Unlikely to End Carmageddon

GM cuts entire shift at factory for crossovers due to “moderating” sales, layoffs not temporary. For the first eight months of the year, car sales by GM and Ford plunged 19%. Industry car sales fell 11%, despite record incentives. Sales of trucks – pickups, SUVs, crossovers, and vans – have been the big hope. Total […]

September 10, 2017 | Finally the Contrarian Warning from Small Investors

They did the same in January 2000 just before the dot.com crash. For years, individual investors in the US have been a dreary bunch, as stocks soared relentlessly since bottoming out in 2009. But 18 months ago, in February 2016, they finally caught the bug, and now optimism has surged at a record pace. Optimism […]

August 29, 2017 | The US Cities with the Biggest Housing Bubbles

This is how monetary policies have crushed the value of labor. For the good folks who hope fervently that the Fed doesn’t have reasons to raise rates or unwind QE because there isn’t enough inflation, here is an update on one aspect of inflation – asset price inflation, and particularly house price inflation – where […]

August 20, 2017 | US Asset Bubbles Crack as Frantic China “Restricts” Outbound Investments

What happens to prices when the biggest, reckless buyer walks away? China’s State Council has issued guidelines on what Chinese companies can and cannot acquire overseas. The purpose is to “promote healthy growth of overseas investment and prevent risks.” These risks would be that the $18 trillion of Chinese corporate debt will balloon further, though […]

August 14, 2017 | Volatility in Housing: What Surges & Crashes the Most?

It depends on the value of the home. What happens to home prices during the current housing boom and the next housing bust depends to some degree on whether the home is relatively “affordable” — whatever that means at today’s prices — or more expensive. This is an important data point in the consideration for […]

August 2, 2017 | Carmageddon for Hyundai, GM, Chrysler, Ford

But not every automaker got crushed. Every month in 2017, auto industry data providers have given dismal forecasts of auto sales. And every month, these forecasts weren’t nearly dismal enough. On July 27, Kelley Blue Book forecast that total new vehicle sales in July would fall 5.7% year-over-year. It would be the worst year-over-year decline […]

July 18, 2017 | What’ll Happen to US Commercial Real Estate as Chinese Money Dries Up?

See Manhattan. In the second quarter in Manhattan, Chinese entities accounted for half of the commercial real estate purchases with prices over $10 million. By comparison, in 2011 through 2014, total cross-border purchases from all over the world (not just from China) were in the mid-20% range. “At a time when domestic investors have pulled […]

July 12, 2017 | VISA takes its War on Cash to US Retailers

Forget “legal tender.” “We’re focused on putting cash out of business,” Visa’s new CEO Al Kelly said on June 22 at Visa Investor Day. Pushing consumers into digital and electronic payments is the company’s “number-one growth lever.” Visa has been dogged by the stubborn survival of cash and checks, despite widespread government and corporate efforts […]

July 4, 2017 | US Auto Sales Sag, Hyundai Meets Carmageddon

So let’s see how we can put a positive spin on this Ford, GM, Hyundai and others tried hard to curtail their sales to rental car companies, or whatever. That’s was the theme among analysts on Monday, after automakers reported crummy June new vehicle sales. What really happened? Rental car companies continued to trim their […]