SPCE - Wall Street Breakfast Podcast: Credit Card Debt Hits New Record

2023-11-08 06:43:51 ET

Summary

• American credit card debt reaches record high of $1.08 trillion.
• CarGurus acquires online car dealership CarOffer for $75 million.
• Virgin Galactic announces strategic realignment and layoffs.

Listen below or on the go on Apple Podcasts and Spotify

Credit card debt hits new record , delinquencies rise most among millennials. (00:23) CarGurus ( CARG ) to fully acquire online car dealership CarOffer for $75M. (01:27) Virgin Galactic ( SPCE ) cuts jobs to support Delta spaceship production. (02:04)

This is an abridged transcript of the podcast.

More people are using credit cards just to get by.

Americans' credit card debt swelled to a record $1.08T in Q3, up $154B from Q3 2022.

This marks the largest increase since the NY Fed began tracking household debt in 1999.

Total delinquency rates rose in Q3, with 3% of outstanding debt in some stage of delinquency at the end of September.

Delinquency rates increased the sharpest for millennials (aged 30-39), while credit card delinquencies have surpassed pre-pandemic levels.

An economic research advisor at the NY Fed said, "The continued rise in credit card delinquency rates is broad based across area, income and region, but particularly pronounced among millennials and those with auto loans or student loans."

NY Fed researchers cautioned that since the labor market and the economy have remained resilient, "pinning down the causes of rising delinquency rates is more difficult."

CarGurus (NASDAQ: CARG ) on Tuesday said it would fully acquire online car dealership CarOffer for $75M in an all-cash deal.

CARG had initially acquired a 51% stake in CarOffer in 2021 with the ability to buy the remaining equity interest over the next three years.

When the deal closes, CarOffer's top boss and founder Bruce Thompson will step down and CARG's head of industry transformation Zach Hallowell will lead the business.

CarOffer will continue to operate as a standalone brand at its Addison, Texas location.

Virgin Galactic (NYSE: SPCE ) notified all employees of a strategic realignment of resources and a related workforce reduction to support the production of its Delta Class spaceships.

"The Delta ships are powerful economic engines. To bring them into service, we need to extend our strong financial position and reduce our reliance on unpredictable capital markets. We will accomplish this, but it requires us to redirect our resources toward the Delta ships while streamlining and reducing our work outside of the Delta program," said CEO Michael Colglazier in an email sent to all Virgin Galactic employees.

The company said it was still in the process of personally contacting each employee and that it would offer further information during the Q3 earnings call scheduled for today after the market closes.

No details were given about the number of employees being laid off.

Take a quick look at the Q3 earnings preview here .

Virgin Galactic is up 0.6% premarket.

Other articles to look out for on Seeking Alpha:

Wall Street’s top 10 growth stocks according to SA Quant Ratings

J.M. Smucker forms new strategic business area, makes changes to leadership team

PG&E files for federal extension of Diablo Canyon power plant operations

On our catalyst watch for the day,

• Hersha Hospitality Trust ( HT ) shareholders will vote on the deal for the company to be acquired by KSL Capital Partners.

• Shareholders with Revolution Medicines ( RVMD ) and EQRx ( EQRX ) will vote on the proposed all-stock merger transaction.

• Disney ( DIS ) and Warner Bros Discovery ( WBD ) are two notable companies reporting today.

U.S. stocks on Tuesday ended higher.

The Nasdaq ( COMP.IND ) led Wall Street's major averages, rising 0.90%. The average notched its longest daily winning streak since November 2021..

The S&P 500 ( SP500 ) also posted its longest daily positive run since November 2021. The index gained 0.28%. The Dow ( DJI ) added 0.17%.

Of the 11 S&P sectors, six closed in negative territory, led by Energy and Materials. Consumer Discretionary, Tech and Communication Services topped the gainers.

Energy was the top loser, as WTI crude oil futures ( CL1:COM ) slid to their lowest level since August. The decline was triggered by Chinese trade data that sparked demand concerns.

Treasury yields were lower after jumping in the previous session. The 10-year yield ( US10Y ) was down 9 basis points to 4.57%. The 2-year yield ( US2Y ) was down 3 basis points to 4.91%.

Now let’s take a look at the markets as of 6 am. Ahead of the opening bell today, Dow, S&P and Nasdaq futures are relatively flat. Crude oil is down 1% at more than $76 per barrel.

In the world markets, the FTSE 100 is down 0.05% and the DAX is down 0.1%.

The biggest movers for the day premarket: After posting strong Q3 results, Upwork (NASDAQ: UPWK ) is up 20%. And despite announcing positive Q3 results, Toast (NYSE: TOST ) is down 18% following a change to its previously disclosed revenue outlook for FY2023 .

On today’s economic calendar:

• 9:15 am Fed chair Jerome Powell will give opening remarks at an event in Washington D.C.

• 4:45 pm the Fed’s Philip Jefferson will give the closing remarks at the same event.

For further details see: