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Debt Seizure

We asked Friday: Why do you think people, knowing the risks and pitfalls, misuse debt?

A reader says: “On the subject of borrowing… Gone are the days when people actually SAVED for items before purchasing them.

“People borrow money because they want what they want TODAY and are willing to defer the cost. This mindset has been passed down to younger generations.

“To keep up the illusion of prosperity and growth, governments encourage debt. But, eventually, the credit will run out and everything will painfully seize up.”

But here’s someone bucking the trend: “In 2015, I bought my first ‘pre-owned’ car — a 2013 Honda Accord Sport sedan — and had it paid off in three years. Now I’m saving that monthly payment so I can buy another pre-owned car when the time comes… with NO loan (if I’m alive, that is; I’m 81 now).”

Cheers, sir, and many happy returns.

As for auto loans, the average car note is now almost $38,000, and, according to an article at NPR: “Americans are buying bigger, pricier cars with more options… one thing driving this trend is dealers offering car loans with seven-year terms.”

In fact, credit-report company Experian finds about one-third of all U.S. auto loans come with terms of 6 years or longer.

What’s next? Fifteen or 30-year terms?

Your Rundown for Monday, November 4, 2019:

Under Armour… Under Investigation

Yesterday, we learned Baltimore-based Under Armour is the target of a criminal investigation headed by the Justice Department and a civil investigation by the SEC.

At issue is the company’s accounting practices. Little wonder — the athletic apparel company churned through three CFOs in 2016 and 2017.

There’s further shuffling at the c-suite level: Founder and current CEO Kevin Plank plans to leave his post Jan. 1 replaced by current COO Patrik Frisk.

As for Under Armour’s performance, we take an historic look at the stock compared to Nike, one of its closest competitors…

On the news of the federal investigations, UAA shares are down 14% this morning. As for Nike? Agora analyst Greg Guenthner says: “I’m not exactly thrilled with how Nike stock has behaved over the past two weeks.

“At first, it looked like a run-of-the-mill pullback,” Greg says. “But shares have now finished lower eight of the last nine trading days — all while the major averages have continued to strengthen near their highs.”

We’ll keep you up-to-date as the Under Armour story unfolds; for now, several athletic retailers are feeling the pinch — Nasdaq-listed company Lululemon (LULU) included.

Next, we take a look at the markets…

Market Rundown for Mon. Nov. 4, 2019

S&P 500 futures are up 15 points to 3,081.

Oil is up 92 cents to $57.12 for a barrel of West Texas crude.

Gold’s added 90 cents to its price at $1,512.30 per ounce.

Bitcoin’s up $71.57 to $9,305.09.

Have a great day. We’ll talk tomorrow.

For the Rundown,

Aaron Gentzler

Aaron Gentzler

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Aaron Gentzler

Aaron Gentzler is the publisher of Seven Figure Publishing. He is also the editor of The Rundown and has been with Agora Financial / Seven Figure Publishing since 2005. He's been covering technology and markets for over a decade.

View More By Aaron Gentzler