Message from @Zyzz
Discord ID: 406784996896931841
@ThisIsChris Thanks for the heads-up! I'm going to take a look. I'll let you know if I decide to piggyback it
@Deleted User Yeah I am curious what you think!
Wow, that stock has been on a tear the last two weeks.
I would have jumped on it if I had seen it yesterday.
With that huge gain today I think I've missed a lot of the opportunity.
What's surprising is that Intel's stock is basically unchanged from its earlier highs despite the tech-heads freaking out over Spectre and Meltdown
At the same time it's clearly more wind in nvidia's sails.
Yeah it's hard to judge when the NVDA train might stop. I mean, "now" is a valid answer, but earnings report is just 2 weeks away
@ThisIsChris knowing when it’ll stop is a tough game to win. SSO is currently up 1% since I sold half my stake. Of course I would have loved to make that extra money but I had no idea it would continue to go up. At some point you have to look at your current profit, be content with what you made, and sell a portion (or all of it)
As the saying goes “bears make money, bulls make money, but pigs get slaughtered”
@Zyzz yep, good thing to keep in mind. I just heard one of the signals I consider bearish: normies in my office talking about NFLX earnings. Reminds me of sitting on the subway last month and hearing normies talk about Bitcoin.
http://mondoweiss.net/2012/03/wall-street-firm-slammed-the-door-on-young-warren-buffett-for-religious-reasons/ this is an interesting article I'm not sure what to make of yet. It's written by a Jew, talking about bitter Jews controlling Wall Street, and the non-prejudiced non-Jews who eventually warmed some of their hearts.
@here anyone who's been watching the market especially with respect to AMZN and NVDA
@Zyzz remember a few weeks back you said you were trying to identify where an asset bubble might be coming from? I was interested too so I hunted down this information from the Federal Reserve:
Here it shows that the total debt balance is higher than '08's levels, but it's way lower for Mortgages and HE Revolving this time, somewhat lower for credit card debt, but way higher for auto loans and student loans, just as you were saying.
@ThisIsChris nice find! Seems like the auto loan and student loan balances have increased tremendously.
If those asset bubbles were to pop you’d have to have something happen in the economy where a lot of jobs are lost
I don’t think either will lead us into a recession but they will prolong it
I think the read through here is 1) there will be a ripple effect when the auto loan bubble does indeed pop, 2) the popping of the bubble will cause automakers to pull back on production (cutting jobs) and will cause dealerships to cut back on sales/financings (cutting jobs), 3) lenders have court precedent saying they can garnish wages - this will ripple through the rest of economy as it will take away from other spending, 4) negative equity balances on trade-ins are being rolled into the next car loan - this has its own set of problems and issues
We have 3 varibles that impact how much car someone can buy(monthly payment) - 1) term, 2) interest rate, 3) principal. we know interest rates are increasing. if there is any shock to the economy it would be reasonable to assume interest rates on sub prime and near prime auto loans would spike (flight to quality). Principal balance is increasing - 1) used car prices are increasing, 2) negative equity being rolled into next loan. The only relief for borrowers is to extend the term of their loan.
Historically low interest rates forced there by central bank manipulations is creating crazy levels of indebtedness. It will end ugly. Thanks for sharing, this is the first I've seen data on the equity of trade-ins and I'm not surprised at all.
Good stuff.
@Zyzz Is there anything to stop lenders from extending the terms of the borrowers loans indefinitely?
Are 7 year car loans a thing yet?
This madness must stop.
@ThisIsChris I dont think so. or at least i hope not because an unwillingness to extend the loan term wil result in a cascade of defaults
@Zyzz yeah I don't see why a lender wouldn't allow it unless he's worried the borrower is going to die soon. What this makes me wonder if this bubble could just keep growing for a decade or two, since I don't see why lenders would start clamping down now. Although I think that's what you are saying, now that I think about it, that it is something that will instead exacberate some other crisis if lenders become short on money and start demanding the balances start getting paid off. Right?
@ThisIsChris an easy way around "the borrower may die soon" is to require a cosigner to the loan. or require a down payment upfront. yes, the zero hedge article does mention this could be a slow build in the level of debt some people have. a slow snowball effect. I think this is probable.
yes i think in times of crisis during a refinance a lender may require a downpayment from the borrower. or they may require the borrower pay down the negative equity balance
Interesting, do you have any suggested investments that might take advantage of this information? Shorting car manufacturers perhaps? @Zyzz This is on my todo list of things to research this week but I don't have many ideas to start. As I understand it for new cars it is often the manufacturer themselves that provides the financing, I don't know about the used car market though.
@ThisIsChris yeah shorting car manufacturers and suppliers is a good start. Subprime lenders or really any company that has exposure to subprime credit is a good area to look. I do not have the conviction to name companies/price targets but those are the areas
Another way to think of it is what ripple effect will these defaults have.
I remember during the financial crisis is seemed like it was one subsector after the other that was getting hit on different weeks and months. First it was the banks, then the agencies, then the home builders, etc