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Squeezing The Consumer From Both Sides

Authored by 720Global's Michael Lebowitz via RealInvestmentAdvice.com, The Federal Reserve raised the Federal Funds rate on December 13, 2017, marking the fifth increase over the last two years.  Even with interest rates remaining at historically low levels, the Fed’s actions are resulting in greater interest expense for short-term and floating rate borrowers. The effect of […]

Canadian Homeowners Take Out HELOCs To Fund Subprime Purchases

Authored by Steve Saretsky via VanCityCondoGuide.com, The HELOC (Home Equity Line of Credit) has been a blessing and a curse for Canadian households. While it has helped spur house prices and simultaneously provided consumers the ability to tap into their new found equity, it has also crippled many Canadian households into a debt trap that seems […]

These PE Firms Are About To Get Crushed By Their Subprime Auto Bets

In the aftermath of the ‘great recession,’ private equity firms placed massive bets on subprime auto finance companies with the typical “thesis” going something like this: “well, people have to get to work don’t they?”…genius, if we understand it correctly. Of course, the “thesis” seemed to be confirmed when auto securitizations performed relatively well throughout […]

Homebuilder Optimism Soars To Highest Since 1999… There’s Just One Thing

And so it appears that America’s homebuilders – cock-a-hoop over tax reform (which caps the mortgage interest deduction?) – aren’t concerned about affordability, about rising rates, and stagnant incomes. In fact they have not been this optimistic since December 1999. There’s just one thing… as University of Michigan consumer confidence data shows, for the ‘average […]

Global Deflation Alert: Chinese Credit Creation Tumbles To 27 Month Low

At the end of November, we showed a troubling observation for China – and global – macro watchers from Axiom’s Gordon Johnson: for the first time ever, record Chinese credit creation had failed to stimulate the economy, and in fact the exact opposite appeared to be unfolding – economic growth is slowing across a number […]

Housing Bubble 2.0: All-Cash Offers Increasingly Required To Compete In Overheating Markets

Back in 2005, anyone with a modest amount of startup capital and a dream could become a millionaire flipping houses.  The complete disregard for the underlying risk building up in what was later exposed as one of the biggest pricing bubbles in history resulted in investors dominating a market that had previously been reserved for […]

Second Cockroach: Canadian Mortgage Lender Crashes After Admitting Mortgage Fraud

Back in April/May, Canada's biggest mortgage lender, Home Capital Group, crashed its way into the headlines, coming clean over its balance sheet-full of liar loans, suffered a bank run, and was forced  to take emergency liquidty from taxpaying pensioners, and was eventually bailed out by good old Warren Buffett. "Probably nothing…" Well just when everyone […]

Blain: “The High-Yield Market Is Where The Bond Supernova Will Erupt”

Blain’s Morning Porridge, submitted by Bill Blain of Mint Partners It’s a US holiday and markets will be thin through today. To show my solidarity with our American cousins, I’m off for a proper lunch with clients in the West End and Malbec rules* will probably apply. What happened in China this morning? Stocks down […]

Signs Of The Top? Chinese Demand For 10x Levered Structured Products Surges In US… Again

In the run up to the ‘great recession’ of 2008/2009, it was unsuspecting European and Asian buyers that supplied the marginal capital required to turn America’s plain vanilla, fed-induced housing bubble into a turbo-charged, global financial time bomb by indiscriminately scooping up highly-levered structured mortgage products with absolutely no idea what was behind those products. […]

This Michigan Bank Just Brought Back The Zero-Down Mortgage; They’ll Even Cover Your Closing Costs

A small savings bank in Michigan, Flagstar Bank, has come up with a genius, innovative new mortgage product that they believe is going to be great for their investors and low-income housing buyers: the “zero-down mortgage.”  What’s better, Flagstar is even offering to pay the closing costs of their low-income future mortgage debtors.  Here’s more […]

So Why Did Capital One “Suddenly” Exit Mortgage Lending??

Last week, Capital One Financial (COF) announced that is was formally withdrawing from the residential mortgage loan market.  Some observers mistook this announcement for news, thinking that COF had actually been engaged in residential lending in a serious way.  Housing Wire, for example, reported that COF had “suddenly” exited the mortgage and home equity business. […]

One Chart Proves Auto SAAR Numbers Are Nothing More Than A Rigged, Debt-Fueled Farce

Earlier this morning the New York Federal Reserve released their quarterly consumer credit report which detailed, among other things, delinquencies rates on every type of consumer debt from mortgages to student loans.   Now, given the 4.3% unemployment rate in the U.S. (forget the ~95 million people out of the labor force for a moment) and […]

U.K. Litigation Cases On Defaulted Consumer Debts Soar Beyond 2008 Levels

Last month, S&P warned that UK lenders could incur £30 billion of losses on their consumer lending portfolios consisting of credit cards, personal and auto loans if interest rates and unemployment rose sharply.  Much like in the U.S., S&P warned that "loose monetary policy, cheap central bank term funding schemes and benign economic conditions" had […]

About 33% Of Students Drop Out Of College; Here’s How Many Go On To Default On Their Student Debt

Roughly 70% of America’s bright-eyed and bushy-tailed high school seniors will go on to binge drink study at a 4-year college, but, to our complete shock, less than two-thirds of them will manage to graduate with a degree.  Even worse, 30% of the students will drop-out after just one year on campus. Not surprisingly, a […]