Auto Loans And The Potential For A Bubble?

Over the weekend, I was reading about the all-time record in auto loans and the potential for a bubble in a sub-prime auto loan sector.  The stats are pretty scary…. All time high on the average length of loans (67 months for new cars), all time high dollar amount being financed (29k for new cars), all time high of the average actual payment (approximately $500), etc.   The only way to continue this momentum is to find more buyers and/or offer even more “creative” financing.   This looks bubble-ish to me.     In addition, the FED is telling us the economy is heating up, however even with super low fuel prices, Walmart is closing stores, warnings from Tiffany’s, Macys, Gap,  etc. are telling me a different story.     The Commerce Dept. report from last Friday shows that 2015 overall year retail sales were the weakest since 2009.   This does not mean the market can’t rally, but again, we just need to remain cautious.

Bruce Marshall

Bruce Marshall Income Trading Specialist

Bruce began his career working for a Wall Street firm on a bond desk after the Crash of ’87. He spent several years trading bonds until he switched to the equity side which developed his love of trading equities and options early on. He traded IPO’s, secondaries, and preferred’s. In the early days, he actually had to hand write “tickets” to buy and sell securities.

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