Share the Wealth – April 9, 2018
Registered Investment Adviser Caleb Lawrence
The major averages begin the week with substantial gains despite disappointing data. And a so far absent Chinese response to the latest round of announced trade tariffs. I’m certainly not going to hold my breath on this last one.
Consumer Credit came out after the close on Friday. February saw a much less than expected 10.6 billion Dollar gain and this marks a 3rd consecutive decline for the series. Credit card or revolving debt use almost stopped completely increasing just 100 million. Non-Revolving debt essentially student and auto loans advanced an ok 10.5 billion. There’s two ways to look at this, consumers are being sensible after the November blowout and are trying to paydown their bills. Or they have lost confidence in 2018, rattled by the stock markets recent gyrations.
On the subject of credit, sub-prime auto loan delinquency rates have increased significantly in the last 4-years and now stand at 5.8% for 60+ days delinquent. Far higher than the 5% seen during the previous crisis. While loss rates have slipped a bit recently they remain very elevated and a number of subprime auto lenders have recently filed for bankruptcy amid allegations of fraud etc., shades of 2007-2008 as the last crisis got underway.