John Hempton eyes one tiny spec of good news in the Fed's Beige Book:
...the used car business is holding up surprisingly well. This was mentioned in the Federal Reserve’s Beige Book – but also in the Manheim index of used car prices at auction. This index spiked up last month!
The biggest single determinant of losses in a subprime auto finance book is not loss rate – it is severity – the loss after the car is auctioned. I am not about to buy non distressed auto securitisations or anything – but if you want to play in the distressed stuff this is clearly good news.
Hopefully, this is good news for companies like Nicholas Financial (NICK). That stock got knocked around hard last week. On successive days, the shares ranged from $1.80 to $2.71.