The Repo Man Is Here!
Today is my “Friday” – we are two days away from Thanksgiving, my weekend spa appointment is booked, and I am feeling good about being off from classes. The rain is falling gently outside, and it sort of makes me feel like the Lofi Girl on YouTube.
For breakfast, I made a wrap with a toasted Sinaloa tortilla, spinach, eggs, bacon, and caramelized onion. Let's just say that they went down faster than it took you to read that last sentence. Before lunch, I did some practice for an upcoming interview, and then had some forbidden rice toast with apricot jam, avocado, and a can of smoked mackerel. Somehow, I was not full. I did some errands and then settled on my usual pizza place for dinner.
“One cheese slice and one pepperoni slice, please.” “To-go?” “Yes, please.”
I pulled in at home and ate my slices in the car while I watched the sun set even further before I turned my mind to some productive thought. My Thanksgiving dinner is tomorrow, the day before the big day. I mentally went over the menu: Roasted whole chicken, made-from-scratch stuffing, spinach rice, pikliz, steamed broccoli, and a remarkable apple cider + sage gravy that I prepped yesterday.
I sat for a bit more before I slid my phone out of my pocket and swiped up to see what the rest of the world was up to. What caught my attention in my moonlight scrolling was an Instagram post by the Wall Street Journal: The Repo Man Is Busier Than Ever: Car repossessions are on the rise as delinquency rates on some auto loans hit record levels.
I refrained from opening the comments to this post because I have a habit of blocking people with opinions that irritate my chest – I am ok with opposing opinions! I am not ok with unintelligent opinions.
My gears started moving as I began to think.. What publicly traded companies are struggling with this right now? There has to be someone hurting outside of the people who are losing their cars. I began reading the (well-written) article and decided –
Subprime lenders and used car dealers will suffer.
Think about it – higher defaults on loans means risky credit lines supplied by banks like Capital One, Santander, and even Bridgecrest, will not be paid in full. These institutions make a killing raking in the money from high interest loans. What happens when Rebecca in Wisconsin can no longer afford her Toyota Highlander loan that is literally paying out $200+ a month in interest to the bank.
I believe this will then have a trickling effect on used-car dealers. Some dealers finance in-house, but if buyers are becoming more wary of making larger purchases that they know come with higher than normal interest rates, why would they walk into CarMax within the next 3-6 months?
Here are my watchlist tickers to consider for options trading after Thanksgiving:
ALLY (Ally bank)
COF (Capital One) - I probably will only watch this one. Capital One has phenomenal room to scale after their acquisition of Discover.
BAC (Bank of America)
CMK (CarMax)
CVNA (Carvana)
I still have more to read this week about consumer spending anxiety. I am honestly not sure where it is going, but I did have a good win with Walmart’s latest earnings release.
That is all from me folks!
Frank.
