Used auto sales are getting the hook

Here’s one job that’s sure to be hiring, but you will not see it on the Bureau of Labor Statistics employment data for August.

It’s the Repo Man.

All those subprime auto loans for eight years, 0 percent down and no credit check, were not all that secure, but then again the car makers sold the vehicle and put the risk on someone’s’ books.

Much like the housing crisis, the finance companies making these risky loans securitized the loans and sold the bonds to investors, which are creating some cracks in the $1.2 trillion market for auto financing.

Investors starving for yield are grabbing these securities with two fists. In 2009, $2.5 billion of new subprime auto bonds were sold. In 2016, $26 billion exchanged hands, according to a Wells Fargo report.

However, the glut of vehicles arriving on the back of tow trucks onto lots has accelerated leading to a 4.1% price decline on used cars in August.

Also with so many cheaper cars on the lot that are only one or two years old, new car sales are hurting. July’s sales numbers were stunning when compares to the record number of 17.5 million cars sold in 2016.

General Motors reported a 15.4% sales decline in July compared to the same period a year ago, selling 226,107 cars and trucks. Ford Motor said sales slid 7.4% last month to 199,318 vehicles. Fiat Chrysler posted a 10% decline in July, selling 161,477 vehicles.

“So, what i can I do to put you in this beauty?”

“Not much obviously. Give me that one-page loan form, I’ll sign it and pick up the car tomorrow. Maybe I’ll be back in six months to pick up a different model.”

Does sound like another recipe for disaster.

Advertisements

Yesterday’s IPOs could be tomorrow’s take out rewards

This year’s tech IPOs have had a spectacularly awful performance. Snapchat and Blue Apron just can’t get out of their own way.

Snap is down 60% from its 52 week high in early March a day after the first trade. Blue Apron is off 55% from its early July highs.

Snap has the distinction of being downgraded by Morgan Stanley, which underwrote the offering.

Both these stocks but especially Snap are suffering from the Twitter effect. The micro-blogging site came up with metrics other than revenue to show their early growth. The engagement numbers of monthly users and now daily users show how people use the service, but if you can’t bank engagement, Wall Street will let you know it’s not ok.

So Twitter is down 77% from its all-time high Nov. 2015, which may be the level Snap and Blue Apron do not wish to attain.

So how far do these stocks have to go before they get a buy-out offer from the Silicon Valley heavyweights? I’m sure Amazon may be looking at Blue Apron, while Google could see Snap as a relaunch of its failed Google+.

The template for this is Yahoo’s purchase of Tumblr or Facebook buying Instagram and basically making it the Snap for the masses.

So it’s the falling knife on these stocks, but there could be a big reward down the road.

Goldman may be running its own “Storage Wars”

How close are we to seeing Goldman Sachs CEO Lloyd Blankfein standing in front of storage unit telling perspective bidders, “You can just look in, don’t touch, don’t go in.”

That the mental image I have from a story moving Thursday morning of Goldman repossessing a 217-ft luxury yacht from a former (i assume) client down in Palm Beach, Fla., according to a WSJ.com story.

Goldman, Morgan Stanley and UBS wealth management units have been active in lending cash to their clients against some esoteric belongings, such as wine collections, art collections and equity portfolios.

These banks are pushing these loans for two very specific reasons. They have an existing relationship with the client and knows his asset holdings. The banks also keep more of the profits from these loans, since there are little broker fees or other charges against the loan.

Goldman’s private bank has quadrupled its overall lending balances since 2012 to $29 billion. Morgan Stanley wealth-loan balances are up 420% since 2012 to $74 billion, according to the article.

To get back to the yacht, the luxury boat is listed for $39.9 million, according to broker​. The outstanding balance of the loan owed to Goldman is roughly $28 million. So there is some wiggle room to haggle with Lloyd.

Inside Google’s echo chamber

Google fired the male engineer who created the Silicon Valley uproar over the weekend  after writing an internal memo asserting there are biological causes behind gender inequality in the tech industry.

Now this is not Bernie on the loading dock saying women have no place on the job. No James Damore has a doctoral degree in systems biology from Harvard University, according to his LinkedIn page.

It sounds like he has a bit of scholarship behind his thoughts, despite that the search giant saying Monday he had been fired for “perpetuating gender stereotypes”.

What I believe got Damore sacked was the assertion in his 3,000-word memo was that “Google’s left bias has created a politically correct monoculture” which Damore saw as stifling and discussion of diversity in the company. As witnessed by his firing.

He wrote in the memo:

I value diversity and inclusion, am not denying that sexism exists, and don’t endorse using stereotypes. When addressing the gap in representation in the population, we need to look at population level differences in distributions. If we can’t have an honest discussion about this, then we can never truly solve the problem. Psychological safety is built on mutual respect and acceptance, but unfortunately our culture of shaming and misrepresentation is disrespectful and unaccepting of anyone outside its echo chamber.

Now, I know very well that you serve at the pleasure of the boss and that free speech in the workplace is not to be tolerates. Damore as well as thousands of other workers have lost their jobs from speaking out against employers.

But the reason this saga has gotten so much play is the fact that in the groovy, rarefied air of Silicon Valley where work is play and play is work, you may not question the great and powerful Oz that leads your company.

These CEOs who have become the faces of technology from the first uber valley chief  Apple’s Steve Jobs to the newest member Snapchat’s Evan Spiegel believe their press clippings that they know all. Please don’t look behind the curtain.

The “echo chamber” that Damore takes to task appears to be spurned by YouTube’s recent announcement that it would change its search results to promote socially progressive videos, and censor content, which it considered “potential hate speech.”

Google’s Vice President of Diversity, Integrity, and Governance Danielle Brown, who only started on the job last month, probably isn’t comfortable with her whole title just yet as she said the company will not tolerate diversity of thought or honor the integrity of a doctoral employee speaking on his subject of expertise.

Brown writes in her memo to Google employees:

Diversity and inclusion are a fundamental part of our values and the culture we continue to cultivate. We are unequivocal in our belief that diversity and inclusion are critical to our success as a company, and we’ll continue to stand for that and be committed to it for the long haul.

And with that thought the company fired Damore.

So as long as the company line is followed “diversity and inclusion” will be valued.

Helllllllo, Hellloooo. I think I’m in an echo chamber.

EDITOR’S NOTE: The subreddit r/google has barred me from posting after I put this story on the Reddit. While over a 1,000 hits from Reddit the moderator labeled this post spam.

This only confirms what Damore says about the echo chamber. Certainly it’s not spam, but it is not in keeping with the “truth” as Silicon Valley sees it.

How can you chart future price bitcoin? No one knows.

On July 15th bitcoin was trading at $1,999, with the news being that there was a split in the direction that the people working within the digital community of how the cryptocurrency was going to move forward.

This morning it is trading at an all-time high of $3,392. It rose $70 by the time I wrote the paragraphs below this one. The question is why?

How can I rationalize telling people to get into BTC, if I have no idea what the price will be in 12 hours, or two hours from now?

Understand that this is so new that 99% of Americans have no idea what I am talking about. And if they heard about BTC, 99% of them do not know how to buy it.

So with that said and according to the bitcoin white paper that roughly 70% of the 21 million bitcoins that will be created are in the marketplace, what the driving force behind the price discovery?

It’s not like buying Apple at $0.21 a share in 1982, based on the idea they have a magical box called Lisa. The reason being they had a box and how well the box was received would determine the price.

Bitcoin has the utopian premise that it is outside the dollar hegemony, yet it is priced in dollars and all other currencies. It has the full-faith and credit of the code behind it, which means it is not legal tender for all debts public and private.

How can you turn any profit into a purchase, since most retailers will not accept bitcoin because the transfer of the transaction could take days sometimes. So if you buy something worth $4,000 with a BTC on Moday and the price crashes on Tuesday, the retailer is out.

Listen I have dabbled in it, just like I did in Apple in the early 80’s, because I’m into those type of things and am not complaining about the run up in price of either investment.

However, telling someone this is a good investment and you should get in, is another thing entirely.

These are heady times for all cryptos, and a year from now I could be laughing at this post as the price hits $10,000 or maybe $1,000. I have no way of knowing which outcome is more likely, since I have no way of modeling the price movements.

I will say this about BTC. If someone builds a better and easier way to purchase BTC, without needing to be a computer whiz of finding a digital wallet and yada, yada, yada, that would go a long way of bringing more people into the pool.