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Day: November 3, 2019

Santander Consumer Is Setting Up For A Short Position

November 3, 2019 Published by

Santander Consumer USA
Holdings Inc., a specialized consumer finance company, provides vehicle finance
and third-party servicing in the United States. Its products and services
include retail installment contracts and vehicle leases, as well as dealer
loans for inventory, construction, real estate, working capital, and revolving
lines of credit.

The company also offers
financial products and services related to recreational and marine vehicles;
originates vehicle loans through a Web-based direct lending program; purchases
vehicle retail installment contracts from other lenders; and services
automobile, and recreational and marine vehicle portfolios for other lenders.

Santander Consumer (SC)
reported earnings this past week and their quarterly earnings of $0.67 per
share beat Wall Street estimates of $0.66 per share. This compares to earnings
of $0.64 per share a year ago.  Over the
last four quarters, the company has surpassed consensus EPS estimates three
times.  But don’t let the numbers fool
you.

Santander Consumer is one of the largest subprime auto lenders in the market. Delinquencies for auto loans in general, including both prime and subprime, have reached their highest levels this year since 2011.

Image result for banks sell mortgages as loans to wall street great recession cdo

Source Image

Prior to the Great Recession, banks were approving just about any applicant regardless of their income or ability to pay the mortgage.  The banks didn’t care as they just packaged the loans as CDOs and sold them to Wall Street.  All kinds of debt were repackaged and resold as collateralized debt obligations. As housing prices declined, many homeowners found they could no longer pay their mortgage resulting in mass defaults.

Santander Consumer does
the same thing today.  The package these
auto loans and sell them to bond investors. 
But in Santander Consumer’s case, if the debt can’t be paid back Santander
Consumer is often obliged to buy the loans back, which ends up being a loss on
their books.

Santander Consumer had
$26.3 billion of subprime auto loans as of June 30 that it either owned, or
bundled into bonds, According to a report from S&P Global Ratings, Santander
Consumer has more than $25 billion in subprime auto loans which is almost 50%
of the company’s total managed loans.

Are you thinking what I’m thinking…the stock is setting up for a short. Based on the monthly chart, the chart is suggesting two targets.

With the first testing being the level at $23.

This post is my personal opinion. I’m not a financial advisor, this isn’t financial advise. Do your own research before making investment decisions.

Ag Analysis Report 11/2/19 – How Did The Trade War Affect Cotton Prices???

November 3, 2019 Published by

Cotton has been used in textile production for 1000s of years and used in providing thousands of products like apparel, but even gunpowder. The US, India and China produce over 65% of cotton used by citizens of the world. A bale of cotton weighs about 500 lbs and can produce over 1000 T-shirts. Harvesting cotton begins in July until late November and is grown in about 15 states such as, but not limited to North Carolina, South Carolina, Tennessee and Virginia. 

Image result for cotton grown in us map

Georgia produces about
20% of cotton in the US, which is also its leading crop. The climate and
environment in Georgia facilitate the high-quality cotton growth which textile
mills worldwide desire.

In 2018, President Trump
put tariffs on Chinese goods coming into the United States earlier this year,
and the Chinese retaliated. The US is the top producer and exporter of soybeans
with China purchasing about 25% of what the US produces U.S. annual soybean
crop.  China is the largest importer of
soybeans in the world.  However, China
has canceled all shipment of beans from the U.S. causing the prices in the
soybean futures market to drop to the lowest price in a decade.

So what did farmers do, at least those located in the Southeast region of the US, they planted more and more cotton?

Recently on AgDay TV, Tyne Morgan spoke with David Hudson, an economist at Texas Tech University, about the trade war’s impact on cotton.

He says increased acres are part of that equation.

“As soybean prices fell more acres shifted over to cotton in year two and so now we’re seeing the effects in year two of this pretty substantial drop in cotton price,” says Hudson. “That is a trade effect, but it’s a delayed effect.”

Hudson even the strong MFP payments for cotton won’t be enough to offset falling prices in 2019.

“We’re talking about nearly a 40% decline in prices, year over year,” says Hudson.

Source

So where is the price of cotton going next, the chart suggests to short at the monthly supply at $67.50.

There is a monthly demand down at $43.

But the chart suggests your first target should be at major/resistance band at $57.50.

This post is my personal opinion. I’m not a financial advisor, this isn’t financial advise. Do your own research before making investment decisions.

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