AXP-next earnings report on Apr 19, 2024
Higher for longer, good for AXP the company, bad for everyday individuals trying to survive in this high inflation environment. People usually charge any extra/miscellaneous expense to the cc with a hope it will be paid off later. Paying back credit cards is usually not the highest priority over rent and utilities.
Delinquency rates are starting rise and this is not good for lenders, especially those that lend at a super high interest rate: 20%+ interest.
I think any profits Amex makes from these high rates may be offset from the coming losses and charge offs on the credit card balances.
https://www.newyorkfed.org/newsevents/news/research/2024/20240206
“Credit card and auto loan transitions into delinquency are still rising above pre-pandemic levels,” said Wilbert van der Klaauw, economic research advisor at the New York Fed. “This signals increased financial stress, especially among younger and lower-income households.”
2008 started with sub prime borrowers.
The only things saving the banks and lenders at the moment is the super strong jobs market. If we start to see the unemployment rate rise, watch out. It usually starts slow then rises rapidly.
I'm bearish on all of the credit card companies. CC debt is over $1Trillion dollars at 20%+ interest. This is simply unsustainable. Theres too much credit risk out there between auto loans, CC balances, student loans, and commercial real estate. Oddly this time around residential mortgages are the MVP.
