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Weekly rollup | Nov 14-20 2022

Stocks Mentioned: Global Ship Lease (GSL), Credit Acceptance Corporation (CACC), Silvergate Capital (SI)

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November 14 2022

Buy Global Ship Lease (GSL)

Weekly RSI is under 50 but it's close. I'm going to take the leap and consider that my buy criteria have been met.

November 15 2022

From a ZeroHedge article:

With prices rising and real wages falling, many Americans are struggling to make ends meet. They are increasingly turning to credit cards and other debt to fill the gap. But that creates other problems. Debt has to be repaid and a growing number of Americans are struggling to keep up with payments.

“TransUnion tracks more than 81 million auto loans in the United States. According to the consumer credit reporting agency, 1.65% of auto loans were at least 60 days delinquent in the third quarter. That is the highest rate for 60-day-plus delinquencies in more than a decade. TransUnion senior vice-president Satyan Merchant told CNBC inflation was making it difficult for people to keep up with their car payments.

Consumers still want to stay current as best that they can. It’s just this inflationary environment is making it challenging. It leaves fewer dollars in their pocket to make the auto loan payment, because they’ve got to pay more for eggs and milk and other things.”

Unsurprisingly, subprime borrowers are having the most difficult time keeping up with their payments. With loan-accommodation programs implemented during the pandemic, some borrowers managed to avoid delinquency. As those programs have ended, delinquencies have spiked. Merchant told CNBC that these programs pushed some delinquencies into the future.

According to TransUnion, 200,000 borrowers who took advantage of the pandemic-era auto loan accommodation programs are now listed as 60 days delinquent.

Like mortgage rates, auto loan rates have increased significantly since the Fed started pushing up rates to battle inflation. The average interest rate on new-vehicle loans rose to 5.2% in Q3. Interest rates on used vehicle loans average 9.7%. Combined with the rising cost of both new and used vehicles, along with rising fuel prices, the cost of owning a car continues to rise dramatically".

Stay short CACC.

November 16 2022

November 17 2022

November 20 2022

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