Sub-Prime 2.0: Is This The Needle That Will Burst the Bubble?

May 2, 2017

By now, anyone with a working brain knows that stocks are in a massive bubble. For most valuation metrics stocks have NEVER been more overvalued than they are today.

However, up until now the question has remained, “what will be the needle that bursts this bubble?”

We now know… once again, it’s in subprime lending, not in housing, but in auto-loans.

Auto-loan generation has gone absolutely vertical since 2009, rising an incredible 56% in seven years. Even more incredibly roughly 1/3 of these loans are sub-prime AKA garbage.

In the simplest of terms, this is Sub-prime 2.0... is the literally the fuse for a $1.2 trillion debt bomb.

I’ve been watching this industry for months now, waiting for the signal that it’s ready to explode.

That signal just hit.

Auto-sales have peaked and are now rolling over. Indeed, looking at the chart this is a virtual repeat of what happened in late 2007 right before the economy fell off a cliff and the stock market crashed

This is the signal I’ve been looking for. When auto-sales roll over, it shows the consumer is tapped out.

The fact that this is happening at a time when auto lenders are making subprime loans (meaning people aren’t buying even when the offer is ridiculous) means this industry has turned.

It’s now just a matter of months before the defaults start hitting. And given that we’re talking about well over $120 billion in garbage loans here, this could very well be the needle that bursts the Fed-fueled $60+ trillion debt bubble.

Fortunately there are ways to profit from this.

To pick up a FREE investment report outlining three investments that you could make you a ton of money when the markets collapse… 

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Graham Summers
Chief Market Strategist
Phoenix Capital Research

Graham Summers is Chief Market Strategist for Phoenix Capital Research, an independent investment research firm based in the Washington DC-metro area with clients in 56 countries around the world.

Graham’s clients include over 20,000 retail investors as well as strategists at some of the largest financial institutions in the world (Morgan Stanley, Merrill Lynch, Royal Bank of Scotland, UBS, and Raymond James to name a few). His views on business and investing has been featured in RollingStone magazine, The New York Post, CNN Money, Crain’s New York Business, the National Review, Thomson Reuters, the Glenn Beck Show and more.

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