Author Archive

Another Subprime Boom

This time in autos, not houses.  The lede: 

It’s classic subprime: hasty loans, rapid defaults, and, at times, outright fraud.

Only this isn’t the U.S. housing market circa 2007. It’s the U.S. auto industry circa 2017.

A decade after the mortgage debacle, the financial industry has embraced another type of subprime debt: auto loans. And, like last time, the risks are spreading as they’re bundled into securities for investors worldwide.

Subprime car loans have been around for ages, and no one is suggesting they’ll unleash the next crisis. But since the Great Recession, business has exploded. In 2009, $2.5 billion of new subprime auto bonds were sold. In 2016, $26 billion were, topping average pre-crisis levels, according to Wells Fargo & Co.

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Read the whole thingwww.bloomberg.com

Corporate Buybacks Powering The Bull

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Corporate buybacks versus Institutional purchases, stunning to say the least. 

Is a Major Rally Ahead For Emerging Markets?

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The MSCI Emerging Markets Index is breaking above a major overhead trendline that has been in place for the last ten years.  A powerful rally may be on the way. 

Hat tip Ryan Detrick

From Investopedia.com:    An emerging market economy (EME) is defined as an economy with low to middle per capita income. The term was coined in 1981 by Antoine W. Van Agtmael of the International Finance Corporation of the World Bank.

Although the term “emerging market” is loosely defined, countries that fall into this category, varying from very big to very small, are usually considered emerging because of their developments and reforms. Hence, even though China is considered one of the world’s economic powerhouses, it is lumped into the category alongside much smaller economies with a great deal fewer resources, like Tunisia. Both China and Tunisia belong to this category because both have embarked on economic development and reform programs, and have begun to open up their markets and “emerge” onto the global scene. EMEs are considered to be fast-growing economies.

Talk About a Waste of Time

And Money.  Let this sink in:  Searching for Parking Cost Americans $73 Billion a Year

– INRIX Research combined the world’s largest parking database with survey results from nearly 6,000 drivers in 10 U.S. cities to reveal the cost of parking for drivers, cities and the economy

– Americans spend an average of 17 hours per year searching for parking, resulting in a cost of $345 per driver in wasted time, fuel and emissions

– Overpaying for parking costs Americans more than $20 billion a year or $97 per driver

– The U.S. economy bears the brunt of parking pain as 40% of motorists say they have avoided driving to shops due to parking challenges

Hardly time and money well spent.  Read the whole thing: www.prnewswire.com

Hat tip instapundit.com

Thunderbirds Over Loch Ness

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From strategypage.com:  Members of the Thunderbirds, the Air Force’s air demonstration squadron, fly over Loch Ness in Scotland, July 10, 2017. The squadron flew over several bases and landmarks while preparing for the 2017 Royal International Air Tattoo in England. Air Force photo by Tech. Sgt. Christopher Boitz

Hat tip Austin Bay

Despite The Raging Post Election Rally

Investors remain quite cautious.  For the second week in a row, AAII survey shows more bears (29.6) than bulls (28.2) while those with a neutral view remain above 40% for third consecutive week.

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As contrarian indicator, this should be viewed as a positive for the market.

Hat tip See It Market

There Will Be No More Corrections, Part 2

Let this one sink in:  Since 1950, the average S&P 500 pullback from the yearly high is 13.6%.  Puts the 2.8% pullback thus far in 2017 in perspective.

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Hat tip Ryan Detrick

 

Bears Nearing Extinction

SPY shorts(bears)continue to throw in the towel.  Short interest at the end of June was down 31% over the last four months.  Now at an extremely low level:

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Hat tip See It Market

 

Five Straight

The S&P 500 has gained ground for five straight months.  That’s quite a streak but not all that uncommon.  The record streak is 12 straight back in 1936:

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The important question is, what’s next for the market following a five month winning streak.  Simple, more upside.  Some color from LPL Research:  Going back to 1950, this was the 24th time the S&P 500 was up for five straight months.  Diving into those previous 23 times, the results are extremely impressive. Incredibly, the S&P 500 has been higher a year later all 23 times, with an average return of 12.9%. The near-term returns are also stronger than the average returns. Does it matter if the S&P 500 closes at a new monthly all-time high (like in July)? That has happened 13 other times and the returns are fairly similar to what happens after any five-month win streak, but once again, much better than the average future returns.

Hat tip Ryan Detrick

Mexico Loves Donald Trump

Russia, not so much…

Since the election, Mexico  +36%   Russia  -9%:

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Hat tip Charlie Bilello

 

 

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