Equity Strategy: Auto Loans Dragging Equities Lower?
There is a real question emerging in macro around auto loan delinquencies. The implications matter because this could be signaling a deeper underlying issue. The data is unambiguous. Serious delinquencies in auto loans are rising across every age cohort. The real test is whether this stays isolated or whether it starts to bleed into the broader consumer and pull the equity market lower. And if it does have an impact, the real calculation becomes how much.
The auto sector of the S&P500 has led the way to the downside in the recent pullback from all time highs.
Understanding this risk will be critical for identifying where risks might be building in the underlying system.