The 2008 downturn and the current downcycle have similarities as far as investor sentiment is concerned. We believe that investor sentiment will sour early next year as Q4 2022 earnings reports come in. 2023 earnings estimates and stock prices will move lower off of the Q4 EPS reports. Early cycle disbelief. I recall that in … Continue reading Not So Fast. This Won’t Be Quick & Painless.
I wonder what the Tesla/Elon Musk bulls are thinking now that TSLA shares are significantly off and Musk is distracted by Twitter? Musk is an erratic, volatile personality and getting distracted easily is what such personalities do. We warned you that Musk was not the world's greatest corporate chief (articles below), and certainly not the … Continue reading CEOs Matter: Elon Musk.
The Manheim/Cox Automotive team released its used vehicle price index through the first 15 days of October. Used vehicle values continued to decline as one would expect. We expect further declines this year and next as we wrote back in early October. Used vehicle valuations and sales are typically a leading indicator as it relates … Continue reading Wholesale Used-Vehicle Prices Decline Further
Ugly design language, cheap build quality (hope you like plastic and dated display technology, see our example at the end of this note), combined with a less than enviable financial position make one wonder if Ford (ticker: F), is long for this world. The same is true for other Auto OEMs that carry large debt … Continue reading Is Ford Long For This World?
Consumer spending is poised to take a nose dive. Outstanding consumer credit has expanded to approximately $911 Billion at a time when credit card interest rates are approaching 17% and likely to go higher (see chart below, click the caption link to expand the chart). As the Federal Reserve lifts interest rates and pushes the … Continue reading The Ticking Consumer Time Bomb
Used vehicle prices continue to decline as have sales volumes. This is not unexpected as interest rates have climbed over the past number of months. Wholesale used-vehicle prices (on a mix, mileage, and seasonally adjusted basis), decreased 3.0% in September from August 2022. The non-adjusted price change declined 2.3% year-over-year in September. September was the … Continue reading Used Vehicle Prices Decline As Rates Climb
The Fed wants a deep recession. There is no getting the CPI back to 2% without crashing the Bubble Economy that it created. The Fed was faced with a choice: a decade of 1970's style stagflation or a deep recession. The Fed wisely chose the latter. The Fed has had to move faster than it … Continue reading The Fed Intends To Cripple The Economy
The Fed will look to Core CPI next week - not the Headline CPI number - to assess the level of its next rate tightening move. We have advocated for a 100 BPS increase should Core CPI grow versus last month as the Fed Funds Rate remains accommodative and the markets need to be shocked … Continue reading Forget Headline CPI. Focus On Core.
The auto loan market is a leading indicator to the broader economy. Used car values are near record levels but have traded lower for three consecutive months. More used car loans will be underwater as used car values decline. Thus, the risk of loan default rises. LTV's exceed 100% while underlying asset values decline. This … Continue reading A Softening Used Car Market Does Not Bode Well for The Economy
The percentage of domestic banks that have tightened credit standards for auto loans has ticked up into positive territory (1.9%), for the first time since Q4 2020. This figure was negative from Q1 2021 through Q2 2022. Net Percentage of Domestic Banks Tightening Standards for Auto Loans: Click HERE for detail.