A Continued Short Case for Automobile Finance Companies

Wednesday morning, Bloomberg Television reported that Telecommunications had overtaken Financials for the current year to date "weakness" prize. This does not mean, however, that the crisis in the financials is over, particularly from a fundamental standpoint, and this is especially true for those companies that target individual consumers. In particular, automobile finance companies face a number of continued fundamental challenges.

First, the consumer spending crunch is far from over. This is due to a number of factors including increased unemployment and an increased reticence by many consumers to purchase discretionary items. The unemployment side of the equation was highlighted most recently by Wednesday's jobless claims data, which indicated that the number of US workers filing new claims for unemployment benefits unexpectedly rose last week to a 6 year high.