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Bubblicious used car prices are rising faster than bitcoin, warns Jim Bianco




Your car can be more valuable than what is in your portfolio.

The prices of used cars are rising faster than bitcoin and other assets, according to market researcher Jim Bianco.

“If you want to know what the best investment you probably had in 2021 is, it’s the car sitting in your driveway or in that garage,” Bianco Research President told CNBC’s “Trading Nation” on Thursday. “It has appreciated faster than the stock market and lately faster than some cryptocurrencies.”[ads1];

He bases his analysis on the Manheim index of used car prices, which is designed to track price trends in the market.

“In the last four months, they have gone up in price by more than 20%. Not only is it more than S&P, but in the last four months it is more than bitcoin itself,” he said. “As of December 15, the last set of data we have, they’re just accelerating higher and higher right now. There’s no peak at least for now.”

Bitcoin has risen around 5% in the last four months based on Thursday’s stock market close. The S&P 500 is up 26% so far this year.

Bianco cites two bullish drivers in the used car market. The first are those that are priced out of new cars due to semiconductor shortages.

Read more about electric vehicles from CNBC Pro

Kelley Blue Book reports that car prices are at a record high. In November, the average price of a new car cost 46,320 dollars and used cars reached 27,569 dollars, an increase of 27% over the same period last year.

The second: Speculators who want to turn vehicles.

“What we see in used cars is a rush for people to buy them, and a rush for people to speculate on them,” he noted. “Buy it now because it’s only going to get more expensive.”

“Current signs of a bubble”

It’s clearly not your parents’ car market.

“It has all the clear signs of a bubble,” he said. “The prices of used cars are meant to be a depreciating asset. They are not meant to go up in price. Still, this year they have gone up in price by 49%, call it 50%.”

Bianco suggests that bumps in car price lists reflect a bigger problem.

“This is exactly what they are [Federal Reserve] do not want to see it happen because this is the self-reinforcing idea of ​​inflation, “he noted.

In December last year on “Trading Nation”, Bianco warned that 2021 could mark the first inflation comeback in a generation.

He believes inflation will decline in 2022, but the decline will be much slower than most people think. When it comes to a peak in car prices, Bianco suggests that it’s someone’s guess.

“This could continue for another year. It could continue for another two weeks,” Bianco said. “The activity you see is probably bubbly.”

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