the comeback of stimulus

can you show the chart that shows

Consumer Debt isn't higher than it has

been so the chart that you're referring

to isn't that Consumer Debt is not

higher than it has been the chart you're

referring to is the chart we looked at

yesterday which is the ability for

consumers to pay that so what you would

do is you would look at household

spending as a proposal or on debt

service payments

as a percentage of disposable income

that would be what you're looking for so

yeah I'd be happy to pull that up

because I think that's an easy one to

forget so that chart would be right here

this chart shows you household Debt

Service payments as a percentage of

disposable income and so you could see

that percentage is really just on Trend

with what we've seen over this last

decade so so we know that a lot of folks

are under this impression or not oh well

consumer data skyrocketing this is true

Consumer Debt is at a higher level but

our capacity to pay for that is not at a

higher as is not suffering from these

higher debt levels which I think is

really interesting by the way if you

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product that I absolutely love okay

great so uh let's look at some other

things here do you see opportunities to

buy in Longs

yeah uh so so

I'm just I just find it very difficult

to be bearish at the moment because

again the more bear reports I look at

the more I'm I'm I'm unimpressed by bear

reports I do want to be transparent that

I am concerned by some things such as uh

the inverted yield curve and the depth

of the inverted yield curve uh however

when it comes to actual data I I'm not

I'm not seeing it as heavily uh that's

right how do you like Eastern I actually

don't mind Eastern because you know you

can wake up at like a normal human being

time

so I actually really enjoy Eastern

uh new car payment delinquency or repos

I'm sure we could get something like

that uh the car market is doing poorly

if you're looking for signs of recession

cars are probably the place to look

credit tightening is happening the most

in cars in my opinion especially

subprime Auto uh Auto delinquencies for

subprime would I would expect would be

very high I think it's very difficult to

sell vehicles right now uh with the

exception of of of some you know maybe

EVS but in terms of regular cars it's

it's a difficult Market

uh so I'd be interested we could

probably get some Auto data here let's

see if I get some Auto Loan Data but

yeah Autos are are getting hit hard

so Consumer loans ltvs

let's see what we can oh yeah well

here's an example for you this this is

actually consistent with what I

suspected but look at this particular

chart here Ah that's not the chart that

I wanted to show because that's the same

one I had we're done let me get used to

what I'm doing here ah there we go I

pressed the wrong buttons it was the

user and over there we go net net

percentage of domestic Banks tightening

standards for auto loans as you can see

it's the auto loan sector uh that is

seeing the substantial and this is based

on Q2 2023 a substantial increase in the

tightening for auto loan standards

almost consistent with the levels that

we saw in the pandemic uh with 55

percent of banks tightening standards

for auto loans right now only about 27.5

however well above what we had seen in

the decade prior so you clearly see an

expansion of tightening for uh well Auto

auto standards and I think if you well I

I see this at least if you you look at

the auto Twitter space you consistently

see this uh fear over oh my gosh uh

Autos are clearly in a recession because

uh banks are continuously cutting

dealers off of uh uh lending it's

getting harder to find lending uh for

for autos subprime auto sector is

getting hit frequencies up repossessions

you would expect rub none of this is a

terrible surprise though and it would be

consistent with the credit tightening

that we're seeing really driven by the

Federal Reserve

so uh and subprime is going to be the

segment that first gets hit always oh it

always makes sense that Supreme gets

whacked first uh and that's what we're

seeing

so uh yeah I'd like to get some more

data on delinquencies though let's see

Auto

yeah delinquency rates at least on St

Louis

uh the Fred website they're a little

more difficult to grab and then if we

look at uh auto loan delinquency rates

90 days or more for all auto loans

rather than just the delinquency rate

for subprime you're not seeing a

substantial explosion I mean you could

look on screen now uh you could look at

y charts here we're at a 3.89 percent q1

2023 90 day or more auto loan

delinquency rate uh that is that is

substantially lower than what we saw

obviously during covid uh in 2018 Q2 we

were even higher at 4.17 2019 we were

4.6 now it's possible that because this

is 90 days late there's going to be a

lag in this data but we shall see

again I really think you're seeing more

repossessions and more issues in

subprime than in the broad Autumn Orchid

this chart here being specifically uh or

specifically referring to the entire

Autos Market rather than just the uh the

subprime sector now if you do look at uh

subprime specifically there is an axios

piece out and uh axios makes it very

clear that low-income households are

falling behind on car bills and this is

really what you have to differentiate

with is that there's subprime model and

then there's pry model so a subprime

auto score uh is usually considered to

be under 620. so if your credit score is

under 620

my friends you are probably in a

recession because you're looking around

going

food's more expensive

everything's more expensive rents more

expensive cars are more expensive I

can't get a loan for a new car getting

screwed left and right

if you have a low credit score under 620

or you are a low income household you

probably feel this recession more so

than anyone else now there is the

argument to be had that

the wealthier individuals that would be

like your white collar individuals are

also feeling the recession quite hard or

this recessionary time specifically

because of this Fallen asset values that

we've seen but most of that pain was

felt in the second half of 2022 not so

much now anymore since we've seen so

much of a recovery so uh I find this uh

this this consistent with what you would

expect in a recession that yes uh or or

a recession or or this sort of

tightening process whatever we call this

recession of last year or tightening

process whatever you want to call it I

would find this pain in lower income

households falling behind on car

payments and subprime auto delinquency

rates uh exceeding what we've previously

seen I would find this consistent with

with the environment that we're in right

now as you can see it's actually not

that much higher than what we saw

between 2017 to 2018 or during the

recession of 2008 which is kind of

remarkable you would think that this

line would be higher this is probably

going to go up even more so stay tuned I

would probably see this go up even more

uh so uh some comments here about

carvana being a joke I I think that goes

without saying but yes thank you for

reading that uh consumers with little

credit scores are falling behind other

auto loans at a record rate and this

does lead some people to be able to

create

um this sort of Click bait of oh my gosh

recession I'll just look at the auto

sector it's imploding

I I don't find a consistent argument to

suggest that the entire Auto sector is

imploding I do think that the auto

sector is seeing price decreases I think

it's seeing a normalization of inventory

and the lower end is certainly getting

hit harder uh that that is that is clear

without a doubt uh but but I don't say

this at crisis levels we'll see but

anyway the share of payments on

so-called subprime auto loans that were

at least 60 days late Rose to more than

six percent in December sub private

loans have high interest rates that are

typically made to people with low credit

scores delinquent payments are the first

step towards default in the car being

possessed the December delinquency rate

is a record e can pass prior Peaks just

before the pandemic according to s p

global

the uptick reflects the steady weakening

of the finances of poor American

households for one the cost of living

has surged now uh not only has the cost

of living surge but now you're seeing

again it's becoming more difficult to

actually Finance these vehicles as well

as more expensive rents and more

expensive food prices is a problem for

for poor individuals in fact there is an

argument to be made that we might see

the return to some form of stimulus

stimulating of the economy stimulus of

poor individuals specifically because of

the disproportionate burden they might

share in in this this correction that

we're going through whatever it might be

called so you could end up seeing in my

opinion if we ever did return to to

stimulus checks again I think you would

see something that was very tailored to

your lower end I would say that would be

individuals making less than forty

thousand dollars a year that's also very

consistent with what we saw during the

pandemic with Mitch McConnell programs

right Mitch McConnell programs

consistently uh

aligned with hey let's let's give people

who need the money the most the money so

give people making forty thousand

dollars or less stimulus checks or more

unemployment benefits but don't preserve

that for you know households making up

to 200 000 or or you know in California

where they're handing out stimulus

checks to to households making over uh

five hundred thousand dollars that's

just insane right that I I would not

expect to see any kind of return to that

sort of level of uh of stimulus not not

any time uh anytime soon so uh

furthermore let's look a little bit more

at this axios piece because I actually

think it's pretty decent sometimes

sectors of both mortgage and auto

finance tend to have higher incidences

of practices perceived to be predatory

as well yeah this is also true because

you're getting uh you know there was a

there was a piece in the Wall Street

Journal a couple months ago uh and I

could be wrong in my memory or

recollection of it but I believe it

stated

that 70 of subprime Autos loans that are

made could default and subpride lenders

would still be profitable they would

still be profitable because subprime

lenders charge so many points up front

to even make your loan that they make

most of their money up front and uh you

know the fact that you're you default is

almost this foregone confusion or a

conclusion rather which is which is

quite quite remarkable uh and uh you

know it's unfortunate but again a lot of

this is just consistent with with what

you would expect with with higher

interest rates

so again we'll pay attention to it but

uh I I don't know that I would consider

this a a red flag for the the broadest

parts of the econ