Penn Wealth Publishing

2019.12.08 Penn Wealth Report Vol 7 Issue 05

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08 Dec 2019 penn wealth Report volume 7 issue 05 5 Penn Wealth Report Copyright 2019. All Rights Reserved. Charts tell the story. Here are some of our favorites from recent weeks. For the top business and economic stories of the week, visit Penn...After Hours at www.penneconomics.com. The Week in CharTs Trouble on the motorways e Q4 meltdown, a year later US versus German interest rates e Fed recently made its second rate cut, from a lower band of 2% down to 1.75%, and we expect to see one more. Consider, however, how "rich" those yields must seem for buyers of German bonds, who must pay for the honor of owning those instruments. e differential between US and German rates is now 240 basis points. is will not end well for the Europeans. It is hard to believe, but it has been precisely one year since the calm before the Q4 storm, the peak of the market before it began its fourth-quarter slide that hit rock bottom on Christmas Eve. By that time, the S&P had fallen 20% and the Dow was down 19%. At the time, we compared it to 1986—stocks fully rebounded by the middle of the next year. And that is precisely what played out this time. Most auto loans are packaged, bundled, and offloaded to investors. Does that sound famil- iar? Granted, the $1.3 trillion in outstanding auto loan debt is nothing compared to the housing loan crisis that caused the 2008 finan- cial meltdown, but it is something to pay close attention to—especially if we go into a recession. Auto loan delinquencies also turned the corner and began rising in the third quar- ter of 2014. Is anyone paying attention to the warning signs?

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