KeNo's Housing and Economic Portal: Tuesday September 16 Housing and Economic stories

Monday, September 15, 2014

Tuesday September 16 Housing and Economic stories

This Is An Actual Conversation With A Car Dealer — And It Shows How The Industry Is Juicing Sales – (www.businessinsider.com) In Thursday's note, Jonas relays a recent conversation with his uncle "Chuck," a Chevy dealer in Canton, Ohio, which shows that this trend toward ever-lengthening hasn't slowed, but has in fact accelerated through the summer. Here's what "Chuck" had to say:

Jonas: How are August sales going so far?

Chuck: We’re holding our own. Nothing Earth-shattering. We’re pushing hard for a big, strong Labor Day weekend finish. The month hasn’t been as good as we hoped, but it could have been worse.

Jonas: How’s the incentive environment?

Chuck: GM brought back 0% for 72 on the trucks and selected models, so that was a Godsend to us. It’s not uncommon anymore to do 75- to 78-month loans. It used to be that 60 months was the norm. Then it went to 66, and now it’s over 70.

Jonas: Are you saying >72-month loans are normal?

Chuck: Absolutely. People don’t seem to care anymore. It’s all about the monthly payment. Folks just want a car, have a monthly budget and they say: "Just tell me how I can fit this into my monthly budget." They don’t care as much if they still have half the loan balance left after five years. Now we do get people who we put into 75-month loans from four or five years ago that are coming back today asking us: 'How can I get out of this loan?' ... but that’s a different story.

Deeper Argentine Default Pain Looms as Cash Concerns Grow - (www.bloomberg.com) When Argentina defaulted last month, it was a long-standing legal dispute that tripped the government up, not a shortage of cash. Now, though, as the nation sinks deeper into recession, Bank of America Corp. and Jefferies Group LLC are warning the money could soon start running out too. The distinction between the two events is crucial for bondholders. It’s one thing for an issuer to get entangled in a legal squabble that temporarily blocks debt payments. It’s another thing to not have the cash. While Argentina’s benchmark bonds traded yesterday at 79.9 cents on the dollar, four cents above their five-year average, Jefferies estimates they could plunge to 60 cents if the default morphs into a capacity-to-pay problem.

"The Buyback Party Is Over" - Albert Edwards Warns The "Market Is Now Running On Fumes" - (www.zerohedge.com) "two landmark firsts have occurred only recently, with the S&P500 breaking above 2,000 and the 10y bund yield breaking below 1%. Our Ice Age thesis has long called for sub-1% bond yields and I see this extending to the US and UK in due course. It is the equity markets where I have been consistently surprised. QE has been an essential driver for the equity market, providing the fuel for the heavy corporate bond issuance being used for share buybacks. Companies themselves have been the only substantive buyers of equity, but the most recent data suggests that this party is over and as profits also stall out, the equity market is now running on fumes." - Albert Edwards

Argentine Workers in National Strike as Economic Woes Mount - (www.bloomberg.com) Argentine labor unions are staging a second national strike in less than five months as July’s bond default threatens to fuel inflation and undermine growth. Truckers, train conductors, port workers and waiters walked off their jobs today in a 24-hour strike to demand higher wages and in protest at dismissals. While strikers blocked some of the main entrances to Buenos Aires, most bus and metro services worked as normal, according to TV channel TN. “There’s a great desire to take part and show the government that people are fed up, tired and seeking answers to these demands that haven’t been met,” Hugo Moyano, secretary general of the General Workers Confederation and a former government ally, told reporters yesterday.

New FICO criteria could help borrowers - (www.latimes.com) The nation's dominant credit-scoring system is being revised in a way that could save consumers nationwide billions of dollars, especially in qualifying for mortgages, auto loans and credit cards at lower interest rates. The changes to FICO criteria are aimed at reducing the negative effect of overdue medical bills and at removing the penalties to consumers who pay off debts that had been assigned to collection agencies. The revisions, to take effect this fall, will alter the formulas used to generate the credit grades used in more than 90% of the decisions that lenders make about how much consumers can borrow and at what interest rates. The scores also are used by employers and landlords. Improved scores could make it easier for millions of Americans with past credit blemishes to get loans or to get them at lower rates.

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