Wall Street Analyst Afraids the Big Short Movie Has Discouraged Investors From Buying Risky Auto Loans

Morgan Stanley Analyst fears that people might be worried about subprime auto bonds because of the Big Short movie. The risky auto loans bring profits to Wall Street by selling to naive borrowers then bundling into bonds and sold to investors. The analysis reads: “However, concerns about growing recessionary risks – and perhaps even the popularity of the recent movie The Big Short – have motivated investors to investigate any potential source of weakness. Consumer sectors that involve large initial outlays, such as housing and autos, provide a natural place to start. Combine that with recent headlines from Fitch suggesting that delinquencies in some sectors of the auto ABS market have reached 20- year highs, and you get a target sector for investors’ concerns. Those concerns are not without merit, at least as far as delinquencies are concerned. It is interesting to highlight that as the housing market continues to heal from its post-crisis depths, mortgage delinquencies have been on a steady decline while auto delinquencies have been going in the opposite direction.” (bloomberg.com)