No sooner had we written about problems simmering under Tesla’s hood than the EV carmaker announced earnings earlier this week. 

Paradigm’s chief market analyst Greg “Gunner” Guenthner notes: “TSLA reported its biggest revenue decline in more than a decade. But that’s not what investors care about at the moment… 

“This is a stock that has already been beaten to a pulp — and there are few setups more powerful on the market than a beaten-down stock that catches a spark on perceived bad news.

“What has the Street excited? 

“For one, Musk commented that TSLA will start production on new” — cheaper — “models in late 2024–early 2025. 

“There’s also excitement brewing over the robotaxi segment,” Gunner adds, “and it’s clear Musk wants investors to view Tesla as an AI powerhouse.” 

TSLA shares are up about 14% so far this week. Go figure… 

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Your Rundown for Friday, April 26, 2024...

Canary in the Car Lot 

We’re taking a look at another segment of the auto industry that’s an albatross around the U.S. economy’s neck (to mix my bird metaphors). 

According to recent analysis at WalletHub — which compared consumer delinquency rates across the 50 states — Washington state experienced the most significant increase in auto loan delinquency between the third and fourth quarters of 2023. 

The state's residents were delinquent on 12.9% more auto loans in Q4 2023 compared to Q3 2023.

Despite this substantial increase, Washington still maintains one of the lowest overall auto loan delinquency rates, with approximately 10.7% of borrowers behind on their payments.

Additionally, Washington residents are accruing auto loan debt at a slower pace than most other states, which could potentially mitigate future delinquency rate increases.

Alaska ranked second in terms of the largest increase in auto loan delinquency from Q3 2023 to Q4 2023, with a 12.5% rise in delinquent loans. 

Notably, Alaskans carry the highest average auto loan debt in the nation, making it easier for interest charges to spin out of control when payments are missed, exacerbated by late fees. 

However, Alaska's overall auto loan delinquency rate remains around the middle of the pack, with approximately 12.6% of borrowers behind on their payments.

Oregon experienced the third-highest increase in auto loan delinquency, with an 11.7% surge between Q3 2023 and Q4 2023. 

Despite this recent increase, Oregon still boasts a low overall auto loan delinquency rate, with around 10.3% of borrowers delinquent, ranking among the top few states. 

The top-five states with the highest overall rates of auto-loan delinquencies in the country, as of Q4 2023, include: Mississippi (23.49%), Louisiana (21.08%), Delaware (18.09%), North Carolina (17.93%) and Alabama (17.61%).

Falling behind on car loan payments can have severe consequences, including long-term damage to credit scores and significant financial burden. 

Late fees accumulate and interest charges continue to grow, compounding the debt. In many cases, delinquency on auto loans eventually lead to vehicle repossession. 

Who or what’s to blame for these eye-wateringly high levels of auto-loan delinquencies? 

We repeat what we reported in November 2022: “Underwriting was incredibly shoddy during the free-wheeling early years of the pandemic when 96% of auto-loan consumers didn’t even have their income verified, per Consumer Reports.”

So, as dodgy underwriting practices come home to roost (ha, my third bird metaphor), repo firms should be doing brisk business in 2024. 

Market Rundown for Friday, Apr. 26, 2024

The S&P 500 is up 0.65% to 5,080. 

Oil is up 0.85% to $84.27 for a barrel of West Texas crude. 

Gold is up 0.60% to $2,356.60 per ounce. 

And Bitcoin is down 1%, just under $64k. 

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