Our article regarding Sub-Prime 2.0 garnered a lot of attention.
After all, we’re talking about a $1.2 trillion credit bubble in auto-loans, with roughly 1 in 3 new loans going to sub-prime borrowers.
Today we’re building on that theme with some chart analysis.
One of the best means of wrapping your ahead around an industry is to examine the charts of its 3 biggest players.
Those charts represent the collective understanding of millions of investors looking at the same industry. As such it can paint a very clear picture, quickly, of what the investment world thinks of an industry and its prospects.
With that in mind, today we’re looking at the charts of the Big Three US Automakers.
General Motors (GM).
GM emerged from bankruptcy and went public again in 2010. And while things are not as bad as they were in 2011-2012, the company has basically been treading water since 2013. Even the Trump hype has faded here and we’re back in the doldrums.
Put simply, this chart says “no growth, and internal struggles continue.”
Fiat Chrysler (FCAU):
Here again the company disappeared for a while (this time when Fiat bought Chrysler, NOT through bankruptcy like General Motors). However, once again, we see a company that is gyrating in a large range, NOT growing or breaking to new highs. Again momentum is rolling over and we’re facing a LARGE drop.
Again, “zero growth, and big issues afoot.”
Ford:
This is the only one of the three that has been in continuous trading since before the 2008 Crisis. And again this chart is telling us there has been no real growth since 2010.
Moreover, the company is now turning for the worse. Momentum has broken down to the point that the trendline from the 2009 low has been broken. We’re now just sitting on the ledge of a cliff waiting to drop.
Taken as a whole, these three charts are telling us that the US auto-industry is experiencing next to no growth. And this is happening at a time when nearly 1/3rd of all new auto-loans are SUB-PRIME.
Zero growth and garbage loans? This is SUB-PRIME 2.0.
Fortunately there are ways to profit from this.
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Best Regards
Graham Summers
Chief Market Strategist
Phoenix Capital Research