Defaults On Student Loans and Subprime Auto Loans

Blog Apr 18, 2017

Video

Hi guys LynetteÂ Zang chief market analyst here at ITM Trading a full-service physical precious metals brokerage house so we’ll start with our usual what the insiders are doing and you can go ahead and take a look at that so it’s a little calmer this week than it was last but as you know last week I did the one company so this week I thought we’d do apple which is really broadly owned these are the insider selling and you can see that this is by a wide Marsh margin that’s the green as the buying and the sort of burnt orange is the selling and this is the stock now I got a little more technical on that but you can see that it’s rising on declining volume so that’s clearly an indication of manipulation and I also wanted to point out a couple of interesting things see where I have gap and I have that circled a stock must don’t technically must always fill the gap so you see the gap was filled here well here’s a huge gap on this big spike in earnings so technically I would anticipate it to have to drop to fill that gap there’s no time frame on it but the point is insiders are selling the stock is near all-time highs they’re getting out so just a quick question then good good stock could the company be buying back and stop stocks and that’s what’s that is exactly what happened doing yeah so I other cells all right actor exactly and they’re taking on debt in order to do that yes so so the public just sees the stock going up right that’s all they see they don’t see underneath the insiders by and by the way anybody if you google if you want to look at an individual stock just google it and put whatever the stock symbol is or the name of the stock in insiders and NASDAQ and it will take you to what I’m showing you and so you could see it for yourself okay.

A little bit quickly on going on the fiduciary a rule which they’re trying to get rid of well I’m going to read this to you employees went certification and JPMorgan ERISA management suit for a breach of fiduciary duty it alleges the suit alleges that JP Morgan breached its fiduciary duty by heavily investing it’s stable value funds always be conscious of the name stable value funds which are supposed to protect against market volatility in risky intermediate bond fund and intermediate public bond fund and they say that this didn’t work exclusively in the interest of the plan beneficiaries okay so I pulled it because number one you know i like talking about the fiduciary role where they don’t have to do with in your best interest worst but I also pulled it because they put it in the fund of funds so if you should by any chance own mutual funds fun to funds are really fees of fees there are so many layers it’s completely opaque and it really is about generating feast my opinion and also apparently the courts.

Defaults On Student Loans and Subprime Auto Loans

Okay this is what I really wanted to talk about though so we saw that consumers have been buying less and I’m thinking that part of it might be what’s going on in the automobile car industry where there have been a tremendous amount let’s see I have this in here sorry about this okay loans securitize remember we’ve been talking about how these different loans have been turned into products which very well could be in some of those mutual funds that you own you can see this rapid rise once the crisis hit okay so and these have been turned into financial products but the problem is is that delinquencies are also on the rise so it isn’t just about the auto loan itself that now translates into mutual funds and Wall Street it’s significant because as you can see from this little graph these are subprime auto loans and these are prime auto loans you can see that the prime auto loans really never dipped even during but look at the fact that the subprime loans are higher than they were when the crisis hit the last time and that’s probably in a lot of products that people don’t realize that they’ve positioned into so that’s on the auto loans and it is a big problem coming about the other one are the student loans and there’s been a lot of delinquencies and default I think it’s really interesting and I’m going to read this and I’ll show you percentage of student borrowers owing this top chart percentage of student borrowers owing more after the first two years of repayment.

Remember how we talked about a lot of things changing in the s well the higher education amendments of made student loans non-dischargeable in bankruptcy and allowed banks to charge collection rates of up to twenty five percent of past due balance banks also have the ability to garnish wages Social Security and disability benefits okay so this is the percentage of loans that actually owe more students that owe more on their loans after they have been making payments for two years and this bottom one off our delinquency rates on those same loans so there were a few changes but still you cannot charge those off in bankruptcy and look at what those student loans actually look look like this are the student loans that are owned by art by the federal government which is you and me taxpayers okay this bottom chart shows how to ition has outpaced incomes these are for normal people these are for the one percent so it’s not really a big surprise that that we’re having some problems but aside from them being turned into a security which you and I might own well I don’t own it but if you have a mutual fund you very well might own it this is the percentage from the from the Federal Reserve the percentage of securitized student loans to the GDP these securitizations are seven and a half percent of the gdp so what I’m trying to show you here bottom line is that everything has been turned into a financial product and then you pay for these financial products but there’s only so much debt than anyone can take on and with costs rising faster than income’s there are a lot more defaults which is going to impact everything it’s like a spider web remember they’re all incestuously interconnected.

So the last thing and then I’ll close with this is on the st we may have accredited Jim records and I have a tendency to agree with him on this it could be announced that the SDR will replace the dollar in global trade that announcement may come on the st or in meetings right now I will definitely keep you posted on that any wind of it that will be a special YouTube Facebook thing i’ll definitely let you know but the clock is ticking on that and we’ll see what happens I can’t guarantee it my guess is is there won’t be an explosion on that day it’ll be quiet so we will talk more about it but it’s a significant significant shift so we need to pay attention and be prepared

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