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Friday, August 21, 2020

The US resale car market is being distorted like the stock market. Who is to blame?

https://www.poynter.org/reporting-editing/2020/used-car-prices-are-spiking-during-the-coronavirus-pandemic/

If you just look at the US July resale car prices, you will be thinking that the US economy is booming because Americans are rushing to buy cars at higher prices as they've made a lot of monies.

However, the US GDP collapsed by 32.9% in Q2 and the resale car prices were crashing in April 2020.

http://sg-stock.blogspot.com/2020/07/red-alert-us-economy-is-going-to.html

http://sg-stock.blogspot.com/2020/05/the-us-debt-market-is-going-to-implode.html

What is happening here?

The US resale car market is being distorted by the US FED and government.  The US FED started buying auto-maker bonds to support the automobiles industry and the government alsstarted giving out US$600 weekly pandemic relief aids to its citizens simultaneously.

http://sg-stock.blogspot.com/2020/06/the-us-debt-market-is-going-to-implode.html

The US FED bond purchases have greatly reduced the vehicles' inventories for the individual buyers which cause the resale prices to spike.  Therefore, the resale car prices are being supported artificially and the resale market prices will return to normalcy when the US FED and government stop providing the stimulus.  I foresee that this will create bubbles in the resale and debt markets and these bubbles will burst in the future since some resale car prices are approaching new car prices.

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