Lend Academy Network Forum

General Category => General P2P Lending Discussion => Topic started by: Fred93 on June 03, 2017, 06:27:17 PM

Title: consumer distress
Post by: Fred93 on June 03, 2017, 06:27:17 PM
Article in Barrons today. 

http://www.barrons.com/articles/the-surprising-threat-to-the-american-economy-1496463255?mod=BOL_twm_ls&tesla=y
Quote
For some time now, Stephanie Pomboy of MacroMavens has highlighted the accumulating stress on consumers. “People who save are those who have the wherewithal to save,” she says, “while poorer consumers are borrowing out of distress to fund purchases normally paid for by income.”

The fact that delinquency rates are starting to turn higher “across all segments of the consumer space, despite near record-low interest rates, is a powerful indictment of the strong consumer narrative so widely embraced,” Pomboy says. How can folks have trouble paying their debts with unemployment at 4.3%, mortgage payments low, and net worth at record highs? “One shudders to imagine what delinquencies would look like if rates actually did move up, or—heaven forbid—stocks went down,” she adds.

When Stephanie Pomboy speaks, I  always listen. 

Title: Re: consumer distress
Post by: AnilG on June 03, 2017, 07:27:55 PM
Unemployment at 4.3% but there is no job security. Net worth at record high but wages are stagnant. Majority of net worth is due to asset bubble (real estate/stocks). Anyone who borrowed based on the rising net worth  and steady employment is going to be in trouble when either their employment is in jeopardy or their net worth declined as asset bubble deflates.
Title: Re: consumer distress
Post by: Rob L on June 04, 2017, 03:31:12 AM
Article in Barrons today. 

http://www.barrons.com/articles/the-surprising-threat-to-the-american-economy-1496463255?mod=BOL_twm_ls&tesla=y
Quote
For some time now, Stephanie Pomboy of MacroMavens has highlighted the accumulating stress on consumers. “People who save are those who have the wherewithal to save,” she says, “while poorer consumers are borrowing out of distress to fund purchases normally paid for by income.”

The fact that delinquency rates are starting to turn higher “across all segments of the consumer space, despite near record-low interest rates, is a powerful indictment of the strong consumer narrative so widely embraced,” Pomboy says. How can folks have trouble paying their debts with unemployment at 4.3%, mortgage payments low, and net worth at record highs? “One shudders to imagine what delinquencies would look like if rates actually did move up, or—heaven forbid—stocks went down,” she adds.

When Stephanie Pomboy speaks, I  always listen.

For non-subscribers:
https://www.google.com/#q=+The+Surprising+Threat+To+The+American+Economy+Barron's (https://www.google.com/#q=+The+Surprising+Threat+To+The+American+Economy+Barron's)
Title: Re: consumer distress
Post by: rawraw on June 04, 2017, 07:28:51 AM
Unemployment at 4.3% but there is no job security. Net worth at record high but wages are stagnant. Majority of net worth is due to asset bubble (real estate/stocks). Anyone who borrowed based on the rising net worth  and steady employment is going to be in trouble when either their employment is in jeopardy or their net worth declined as asset bubble deflates.
Are you sure wages are stagnant?  The reality seems much more interesting than the populist narrative:

https://qz.com/963872/the-us-middle-class-is-doing-better-than-most-statistics-say/
Title: Re: consumer distress
Post by: rawraw on June 04, 2017, 07:36:28 AM

When Stephanie Pomboy speaks, I  always listen.
Thanks for sharing!  Any particular reason you listen when she speaks?
Title: Re: consumer distress
Post by: nonattender on June 04, 2017, 10:49:23 AM
Article in Barrons today. 

http://www.barrons.com/articles/the-surprising-threat-to-the-american-economy-1496463255?mod=BOL_twm_ls&tesla=y
Quote
For some time now, Stephanie Pomboy of MacroMavens has highlighted the accumulating stress on consumers. “People who save are those who have the wherewithal to save,” she says, “while poorer consumers are borrowing out of distress to fund purchases normally paid for by income.”

The fact that delinquency rates are starting to turn higher “across all segments of the consumer space, despite near record-low interest rates, is a powerful indictment of the strong consumer narrative so widely embraced,” Pomboy says. How can folks have trouble paying their debts with unemployment at 4.3%, mortgage payments low, and net worth at record highs? “One shudders to imagine what delinquencies would look like if rates actually did move up, or—heaven forbid—stocks went down,” she adds.

When Stephanie Pomboy speaks, I  always listen.

For non-subscribers:
https://www.google.com/#q=+The+Surprising+Threat+To+The+American+Economy+Barron's (https://www.google.com/#q=+The+Surprising+Threat+To+The+American+Economy+Barron's)

1.5-2 yrs ago, that article would have been prophetic - now it's just backward-looking dressed up as future-telling.  I don't subscribe. ;)

My thesis:  "normal" people just waking up to uptick in defaults of last 2 years (really a renormalization), and credit expansion is just about to kick back in (tax cuts, new FICO, +NIM due to rate increases) which will propel us into the next part of the growth (credit and real) cycle = no problem.

Up from here, but no one will believe me, because I'm not a blonde with a pixie cut.  That's ok, I'll just take the money for being right.

"people who save are people with wherewithal to save" - that profound, kindergarten insight tells me she doesn't "know consumers", and that I should probably check her $80,000 Birkin bag for a bunch of workers of the world unite, rich lady hobby materials in the side pocket --- TSA style.

Anyway, I just bought some DFS and some SYF - and if I'm wrong, don't you worry, the market will punish me for being so uncivil here.

Meantime, I'm with this guy:  http://www.kwqc.com/content/news/Man-mowing-lawn-near-tornado-says-he-was-keeping-an-eye-on-it-426305481.html
Title: Re: consumer distress
Post by: nonattender on June 04, 2017, 02:15:02 PM
Here's some real "consumer distress" for you.  In the name of "helping", the solar power industry and contractors have gotten together and somehow talked a number of state governments (starting with California, go figure) into collecting "PACE" loans via property tax assessment:

http://www.latimes.com/business/la-fi-pace-loans-20170604-story.html
(Can we get the govt to turn p2p loans into undischargeable tax debt?)

What started out as just roofing loans for solar panel installation is now ballooning into government acting as collection agent for some private companies financing any work on a home.  "We're from the government - and we're here to help redo your kitchen and baths!" -Ronald Reagan

I am sure that the people who came up with it feel like they've helped...

That's what's important - to feed one's saviour complex, damn the cost!

ETA:  Oh, I missed the 2nd part of the article:  http://www.latimes.com/business/la-fi-pace-reforms-20170604-story.html

Quote
The financing programs, formally known as Property Assessed Clean Energy, are established by governments to help homeowners pay for energy-efficient appliances and projects through loans that are paid back as line items on their property tax bills. The programs can be a moneymaker for governments, which collect the loan payments and turn them over to the lending companies, which pay and manage the contractors.

Quote
Though the PACE industry has been receptive to changes in California law, it strongly opposes an effort in Congress to put the loans under the federal Truth in Lending Act — a move that would treat the financing more like a mortgage and subject the lenders to oversight from the federal Consumer Financial Protection Bureau.

Upon introducing their Senate bill, Sen. Tom Cotton (R-Ark.) called PACE loans a “scam” and Sen. Marco Rubio (R-Fla.) said “residential PACE loans should have to play by the same rules as other forms of home financing.”

The Mortgage Bankers Assn. has been one of PACE’s biggest critics, because the loans are usually secured by a first lien on the property. That means the holder of the PACE loan, typically an investor who has bought a PACE bond, gets paid ahead of the mortgage holder if there is a foreclosure.

PACENation, a trade group, has characterized the Senate bill as a banking lobby effort to “kill one of America’s most successful energy-efficiency and clean-energy financing models.”

This sounds totally legit.  Save the planet, man.
Title: Re: consumer distress
Post by: investny on June 12, 2017, 01:21:42 AM
Credit cards defaults are up

http://www.businessinsider.com/credit-card-defaults-have-spiked-as-lending-standards-fall-2017-6?utm_source=PeerIQ+Weekly+Market+Update&utm_campaign=fb6a8e9716-EMAIL_CAMPAIGN_2017_06_11&utm_medium=email&utm_term=0_1a3ccbed26-fb6a8e9716-157393997
Title: Re: consumer distress
Post by: Fred93 on June 12, 2017, 01:34:24 AM
Notice that the chart in the business insider article has separate curves for different card cmopanies.  Cap One looks much different than Amex.  Its a good reminder how different groups of consumers behave differently, and why much of the aggregate (US Govt) data doesn't show a problem.
Title: Re: consumer distress
Post by: fliphusker on June 12, 2017, 07:47:05 AM
What is not surprising is how these cards are used. Synchrony is mainly store cards, if I have that right, and AMEX would be an everyday card. AMEX also has pretty tough standards on FICO score approval. I do find it odd that Discover is quite low. I figured that they are easier to get would lead to a higher default rate.
Is this a turn for the economy or just a statistical outlier?
Notice that the chart in the business insider article has separate curves for different card cmopanies.  Cap One looks much different than Amex.  Its a good reminder how different groups of consumers behave differently, and why much of the aggregate (US Govt) data doesn't show a problem.
Title: Re: consumer distress
Post by: SLCPaladin on June 12, 2017, 01:05:26 PM
From the QZ article:

"Sacerdote’s paper begins by showing that, for a variety of goods, US household consumption increased despite stagnant wages."

Well, consumption can indeed increase in light of stagnant wages if debt loads are increasing too. Isn't that what we are seeing? This QZ article seems to skirt the debt issue. If people are funding consumption and an increase in quality of living on increasing debt without a commensurate rise in wages, eventually we are in for a correction and it will end in tears. Defaults will happen, creditors will get stiffed (and P2P lenders), and a retrenchment will ensue.

I am an RN at a major hospital in Southern Utah, about 1 1/2 hour away from Vegas. I've seen enough anecdotal evidence among the extremely wide variety of patients I take care of to tell me that things are not good.  I live in one of the best economies in the nation, and everywhere I go I see young couples vastly overextending themselves. I remember going on a run the other day and talking with a guy who was in the process of buying a $500k house. This guy was a shuttle driver, probably making no more than $20/hr. The other "ah ha" moment I had which made me sour on the expansion was when I read Matt Levine's blurb about "puppy leasing."
Title: Re: consumer distress
Post by: nonattender on June 12, 2017, 06:14:50 PM
Synchrony is mainly store cards, if I have that right

Yes, Synchrony is the most different from the others - and probably the most analogous to lower grade LC borrowers (though, since they'e managing their own book, they keep the rates high enough to ensure it stays profitable).  They do stuff like PayPal Buyer Credit and Amazon Store Card.
Title: Re: consumer distress
Post by: Rob L on June 12, 2017, 07:41:42 PM
Synchrony is mainly store cards, if I have that right

Yes, Synchrony is the most different from the others - and probably the most analogous to lower grade LC borrowers (though, since they'e managing their own book, they keep the rates high enough to ensure it stays profitable).  They do stuff like PayPal Buyer Credit and Amazon Store Card.

Yeah, think they were spun off from GE when it was more of a financial company than an industrial. Meanwhile GE's "highly regarded" CEO was shown the door today. I have an emotional problem with GE; really, really don't like the company! Not just business, it's personal and no, neither I nor anyone I know ever worked for them. However, for me GE didn't "bring good things to life".
Title: Re: consumer distress
Post by: SLCPaladin on June 15, 2017, 11:34:20 PM
Bloomberg's Matt Levine wrote a blurb in his "Money Stuff" blog today on LC and Prosper:

Quote
Bad loans.

Here's a story about how Prosper Marketplace Inc. and LendingClub Corp. "don’t always check whether borrowers are lying to them, and if they find errors in an application, they may still approve the loan":

Quote
Quote
Alia Dudum, a LendingClub representative, said the company uses “machine learning and other techniques to build robust models that segment which borrower applications need verification and which do not.”

Doesn't that seem ... fine? Like, in theory, I mean. Lending, as a business, is essentially statistical; the point is not to have all your loans pay off, but to have enough of them pay off that your losses are covered by the interest that you charge. Even if you verify income on every loan, some of those loans will default anyway. And while verifying income, or whatever, on every loan might help your statistics, you don't have to believe that a priori. You could just test it out: Your machine learning could look at the statistics and tell you, you know what, if you skip verification on half your loans, your default numbers won't go up materially.

Of course you could still be wrong:

Quote
Loans made on platforms including Prosper and LendingClub have gone bad faster than security underwriters had expected, according to data from Morgan Stanley, and most of the startups have seen their funding costs rise over the last year.
But never mind that. One basic tension in modern finance is that the financial industry largely thinks of itself in statistical terms, while regulators and the public tend to think about individual cases. When Wells Fargo fired 5,300 employees for opening fake accounts, the public was aghast, but Wells Fargo executives "received the figure positively, believing it proved that a vast majority of individuals were behaving appropriately." Banks and securitizers and online loan marketplaces know that there will be defaults, and want to optimize the level of defaults for maximum profit. The public wants lenders to take appropriate care with each loan.
Title: Re: consumer distress
Post by: nonattender on June 16, 2017, 02:33:56 PM
I've seen one version or another of that story at least 20 times in the last 10 years, each time some journo "discovers" how lending works.

Anyway, back to wondering how I feel about Amazon's move into food distribution - and whether I think they've crossed one line too many.
Title: Re: consumer distress
Post by: Rude Dude on July 31, 2017, 01:10:41 PM
Article in Barrons today. 

http://www.barrons.com/articles/the-surprising-threat-to-the-american-economy-1496463255?mod=BOL_twm_ls&tesla=y
Quote
For some time now, Stephanie Pomboy of MacroMavens has highlighted the accumulating stress on consumers. “People who save are those who have the wherewithal to save,” she says, “while poorer consumers are borrowing out of distress to fund purchases normally paid for by income.”

The fact that delinquency rates are starting to turn higher “across all segments of the consumer space, despite near record-low interest rates, is a powerful indictment of the strong consumer narrative so widely embraced,” Pomboy says. How can folks have trouble paying their debts with unemployment at 4.3%, mortgage payments low, and net worth at record highs? “One shudders to imagine what delinquencies would look like if rates actually did move up, or—heaven forbid—stocks went down,” she adds.

When Stephanie Pomboy speaks, I  always listen.

I always knew that there's a correlation between c/o rates and interest rates, but in this cycle the correlation is even stronger. Pomboy's right that borrowers (maybe even more that just the "poor") are super sensitive to higher interest rates and can't afford to make the higher monthly payments. Compared to previous cycles, the c/o rate isn't lagging behind int rate increases - the c/o rate is moving virtually in tandem, according to Fed data:

(https://fred.stlouisfed.org/graph/fredgraph.png?g=exP6)

The the inflection point in c/o rates happened in Q4 15, right when the Fed made the first hike. 

I agree with her (and Anil's) comments that some folks don't have the ability to save and are borrowing out of distress. Interest rates really have the most potential to do damage, as the Fed intends to make more rate increases. Other than increased loss provisions, are lenders protecting themselves? I don't think most lenders are ahead of this - will lenders adjust volume and pricing quickly enough this time?
 
Title: Re: consumer distress
Post by: nonattender on July 31, 2017, 02:36:31 PM
When chargeoffs rise, so, too, should interest rates.  This is what I see happening, even though I don't interpret it the way Pomboy does - she probably takes her car into the shop and says "it's firing on all cylinders and the timing and alignment are in near dead-sync --- pls fix!"

Oh, who are we kidding... she probably only rides in black cars.  That quote about her being "distressed" that chargeoffs are rising despite record low interest rates tells me exactly to which school of economics she subscribes.  To anyone without a Patrice Lumumba doctorate, a slight renormalization/rise in chargeoffs, after a massive recessionary rescue, just means that things are going swimmingly, and to tighten.
Title: Re: consumer distress
Post by: AnilG on July 31, 2017, 04:02:45 PM
Chargeoffs rise when interest rates rise making existing floating rate loans such as credit card unaffordable. As an investor you should expect higher interest rate to compensate for higher Chargeoffs but as an existing borrower higher interest rate may be the death knell.

When chargeoffs rise, so, too, should interest rates.  This is what I see happening, even though I don't interpret it the way Pomboy does - she probably takes her car into the shop and says "it's firing on all cylinders and the timing and alignment are in near dead-sync --- pls fix!"

Oh, who are we kidding... she probably only rides in black cars.  That quote about her being "distressed" that chargeoffs are rising despite record low interest rates tells me exactly to which school of economics she subscribes.  To anyone without a Patrice Lumumba doctorate, a slight renormalization/rise in chargeoffs, after a massive recessionary rescue, just means that things are going swimmingly, and to tighten.
Title: Re: consumer distress
Post by: nonattender on July 31, 2017, 05:19:53 PM
Ergo, tighten up loose policy - stay with (or ahead of) the curve - and stop borrowers from digging in so deep at artificially low rates... ;)

I think you and I are saying the same things - though from a variety of angles...  Wrt the Pomboy talk, I was talking macroeconomically.

Chargeoffs rise when interest rates rise making existing floating rate loans such as credit card unaffordable. As an investor you should expect higher interest rate to compensate for higher Chargeoffs but as an existing borrower higher interest rate may be the death knell.

When chargeoffs rise, so, too, should interest rates.  This is what I see happening, even though I don't interpret it the way Pomboy does - she probably takes her car into the shop and says "it's firing on all cylinders and the timing and alignment are in near dead-sync --- pls fix!"

Oh, who are we kidding... she probably only rides in black cars.  That quote about her being "distressed" that chargeoffs are rising despite record low interest rates tells me exactly to which school of economics she subscribes.  To anyone without a Patrice Lumumba doctorate, a slight renormalization/rise in chargeoffs, after a massive recessionary rescue, just means that things are going swimmingly, and to tighten.
Title: Re: consumer distress
Post by: SLCPaladin on July 31, 2017, 08:25:08 PM
Ergo, tighten up loose policy - stay with (or ahead of) the curve - and stop borrowers from digging in so deep at artificially low rates... ;)

I think you and I are saying the same things - though from a variety of angles...  Wrt the Pomboy talk, I was talking macroeconomically.

This is the biggest issue I have with LC right now. I don't feel like they have gotten ahead of the curve; they are playing catch up with rates.
Title: Re: consumer distress
Post by: Rob L on August 01, 2017, 12:09:57 PM
Ergo, tighten up loose policy - stay with (or ahead of) the curve - and stop borrowers from digging in so deep at artificially low rates... ;)

I think you and I are saying the same things - though from a variety of angles...  Wrt the Pomboy talk, I was talking macroeconomically.

This is the biggest issue I have with LC right now. I don't feel like they have gotten ahead of the curve; they are playing catch up with rates.

It may be that LC literally can't play catch up. For the sake of argument let's say there are now enough sources of unsecured personal  loans such that competition between these sources forces rates to be what they are. LC raises rates too high and they lose borrowers to their competition. To go one step further, we can put the cart before the horse. LC knows their revenues required from loan originations to break even or make a profit. They have to set interest rates low enough to attract enough borrowers for revenues from originations to keep the company going. Of course if rates are too low LC loses lenders but that takes a while. They're between a rock and a hard place. Maybe they should think about some major cost cutting. Low cost suppliers are usually winners and LC doesn't strike me as a low cost operation (my speculation only).
Title: Re: consumer distress
Post by: rawraw on August 01, 2017, 12:38:59 PM
Yeah not sure how LC will compete on costs.
Title: Re: consumer distress
Post by: Rude Dude on August 01, 2017, 01:11:20 PM
Ergo, tighten up loose policy - stay with (or ahead of) the curve - and stop borrowers from digging in so deep at artificially low rates... ;)

I think you and I are saying the same things - though from a variety of angles...  Wrt the Pomboy talk, I was talking macroeconomically.

This is the biggest issue I have with LC right now. I don't feel like they have gotten ahead of the curve; they are playing catch up with rates.

It may be that LC literally can't play catch up. For the sake of argument let's say there are now enough sources of unsecured personal  loans such that competition between these sources forces rates to be what they are. LC raises rates too high and they lose borrowers to their competition. To go one step further, we can put the cart before the horse. LC knows their revenues required from loan originations to break even or make a profit. They have to set interest rates low enough to attract enough borrowers for revenues from originations to keep the company going. Of course if rates are too low LC loses lenders but that takes a while. They're between a rock and a hard place. Maybe they should think about some major cost cutting. Low cost suppliers are usually winners and LC doesn't strike me as a low cost operation (my speculation only).

I agree. I like LC's management, but the marketplace model is going to be seriously tested soon. In addition to your points, I'm not sure who will continue to buy the loans as defaults rise. Remember late 2016/early 2017 when almost all inst investor appetite for loans dried up? That could easily happen again. LC knows there aren't enough retail investors to support the costs of the model, so where would LC get its revenues? Even if LC begins to balance sheet loans, how much cash and how big of a credit facility will the company need to keep things afloat until buyers come back? Traditional CC lenders are also going to take it on the chin, but because they balance sheet their loans their revs/income aren't dependent on institutional investors.

Hopefully the c/o rates of 10% the largest CC issuers suffered in 2008-10 will be avoided, but I don't have any faith that the largest lenders can manage their risk properly. This is because all of the banks/lenders (including marketplace lenders) have been obsessed with growth and, again, are (historically) very poor at identifying macro risk that will damage returns. Or at least identifying it early enough and changing tack.

It all starts with the fact that top management and their staff at lenders are compensated for growth, not credit quality. And then the inevitable downturn comes, followed by high c/o's, then paltry earnings, and layoffs. Never mind what happens to the consumer or the small business, neither one of which should've been granted a loan in the first place. Granted, some borrowers do take advantage, but not most. I feel like we've all seen this movie before, but will the cycle ever end? Isn't there a better way? 

 
Title: Re: consumer distress
Post by: SLCPaladin on August 04, 2017, 01:26:57 AM
Ergo, tighten up loose policy - stay with (or ahead of) the curve - and stop borrowers from digging in so deep at artificially low rates... ;)

I think you and I are saying the same things - though from a variety of angles...  Wrt the Pomboy talk, I was talking macroeconomically.

This is the biggest issue I have with LC right now. I don't feel like they have gotten ahead of the curve; they are playing catch up with rates.

It may be that LC literally can't play catch up. For the sake of argument let's say there are now enough sources of unsecured personal  loans such that competition between these sources forces rates to be what they are. LC raises rates too high and they lose borrowers to their competition. To go one step further, we can put the cart before the horse. LC knows their revenues required from loan originations to break even or make a profit. They have to set interest rates low enough to attract enough borrowers for revenues from originations to keep the company going. Of course if rates are too low LC loses lenders but that takes a while. They're between a rock and a hard place. Maybe they should think about some major cost cutting. Low cost suppliers are usually winners and LC doesn't strike me as a low cost operation (my speculation only).

You might be right here Rob. But I feel that rates could be hiked without killing demand for installment loans on the platform. It might very well be the case that demand would drop off, but I don't feel like we've gotten to that point yet. In the meantime, it seems like LC's problem is more on the demand side for note purchasing, which is tangentially related to risk-adjusted yield, which is related to rates and underwriting. So we've come full circle. You get rates right, and a lot of other things will fall into place.

In my mind, it makes sense to shore up investor returns (both retail and institutional, but especially "sticky" retail) by getting ahead of any credit cycle by raising rates sooner rather than later. I don't see why LC has to lag the Fed decision to raise rates; they could move first! I've always seen this as a virtuous cycle of sorts: perform good underwriting (e.g., low defaults) at attractive rates for investors -> investors get good returns -> investors reinvest more money and bring more investors to the table. Of course, the cycle works in reverse too.
Title: Re: consumer distress
Post by: rawraw on August 04, 2017, 01:29:20 AM
You can't avoid credit cycles. If you are in this thinking you can, you need to be investing in US Treasuries

Sent from my SAMSUNG-SM-G935A using Tapatalk

Title: Re: consumer distress
Post by: SLCPaladin on August 04, 2017, 01:24:16 PM
You can't avoid credit cycles. If you are in this thinking you can, you need to be investing in US Treasuries

Sent from my SAMSUNG-SM-G935A using Tapatalk

I've never stated that credit cycles can be avoided. But rates can be counter cyclical.
Title: Re: consumer distress
Post by: rawraw on August 04, 2017, 01:37:19 PM
You can't avoid credit cycles. If you are in this thinking you can, you need to be investing in US Treasuries

Sent from my SAMSUNG-SM-G935A using Tapatalk

I've never stated that credit cycles can be avoided. But rates can be counter cyclical.
If you raise rates, you not only impact the volume of borrowers but the type as well. LC does not exist in a bubble. They are a price taker, not a price setter. They have a narrow band the market allows to charge people interest. That's just how mass forms of  lending works. All of us would love higher rates, but I do not want the borrowers that would come from that.

Sent from my SAMSUNG-SM-G935A using Tapatalk

Title: Re: consumer distress
Post by: nonattender on August 14, 2017, 09:49:03 PM
My thesis:  "normal" people just waking up to uptick in defaults of last 2 years (really a renormalization), and credit expansion is just about to kick back in (tax cuts, new FICO, +NIM due to rate increases) which will propel us into the next part of the growth (credit and real) cycle = no problem.

Anyway, I just bought some DFS and some SYF - and if I'm wrong, don't you worry, the market will punish me for being so uncivil here.

Apparently, this guy reads like I do:  https://www.reuters.com/article/us-investment-funds-buffett-idUSKCN1AU2B1