Sign me up!
The auto junk paper market is so out of hand that an unemployed NYC food stamp recipient recently got a $30,770 loan to buy her daughter a BWM 328xi so that she could drive to work…..in style, apparently.
This beneficent mom even told the truth to the lender and dealer. As related by the NYT:
Ms. Payne went with her daughter to a dealership that arranges loans for Santander and other auto lenders to buy the car. She said an employee at the dealership in Great Neck, N.Y., assured her that, even though she was on food stamps, she could afford the loan. At the time, Ms. Payne said she thought she was co-signing the loan with her daughter.
“I looked him in the eye and said, ‘I don’t have any income,’ ” said Ms. Payne.
Needless to say, Santander Consumer USA is a pure artifact of financial engineering deeply subsidized and coddled by the Fed. As a former LBO and now IPO, it is overwhelmingly funded with securitized auto paper. That is, it is able to fund BMW loans to mom’s on food stamps because it can bury them in massive baskets of loans that are then sliced and diced by Wall Street, and sold to gullible mutual fund investors desperate for “yield”.
If that sounds familiar—it is. Yellen did not see it coming last time, nor did the buy-the-dip bulls who claimed that the market was “cheap” at its peak in October 2007.
The S&P was then trading at 20X reported LTM earnings. That’s where it is today, as well.
But there is one huge difference. This time the casino gamblers have been playing with free, newly printed money for 73 months running.
The stock market is an accident waiting to happen. Forget buying the dip. Get out of dodge. Run from the Casino.