Eric Basmajian is a clear-eyed independent looking to anticipate complete business cycles, making for rare, helpful economic insight.
Is a recession imminent? What will the impact be on asset prices – and to what degree would it cause the Federal Reserve to stop tightening monetary policy? Today Jack welcomes Joseph Wang, former senior trader for the Federal Reserve, and Eric Basmajian, founder of EPB Macro Research, to answer these very important questions. Here is a direct video link.
Home loans around a million $ and more are painfully commonplace today—# financialrisk.
Almost 40 per cent of Australians with mortgages who have locked in ultra-low fixed interest rates will roll off them as soon as next year. If more people default on their home loans, economists warn that could create financial system instability. Here is a direct video link.
As shown below, among OECD countries, Australia ranks 4th in terms of property market downside (unsustainable prices to rents, to income, price and credit growth trends). Unfortunately, coming in 5th, Canada is right there with them.
When money is ultra-cheap, many people do dumb things with it. During the pandemic, interest rates dropped to record lows and demand for vehicles (and auto loan securities) lept while repossession actions halted. Some 86% of new purchases and 56% of used vehicles are financed. Canadian auto loans presently range in interest rates from 3.99% to 31.99%, depending on the borrower.
With many having bought vehicles at elevated prices over the past two years, now interest rates are sharply higher, and fuel costs are crushing. People need to spend less on transportation. Naturally, defaults are rising, and repo activities are back in full force. On the leading edge of the credit cycle, auto defaults are an economic indicator that leads mortgage defaults by about six months.
Massive used car supply is coming to market as two million-plus US repossessions in the first six months of 2022 eclipse full-year norms pre-pandemic. This video offers a good update. Here is a direct video link.
