Crypto News: Why the repo man is back

I recently got a glimpse into the state of the US economy in an unusual place: A national convention of repo agents.

At the North American Repossessors Summit in Orlando, the industry convened to swap stories and check out the latest tow trucks. The big takeaway: Boom times are coming for repo agents, as Americans struggle to pay their bills.

One attendee told me: "As the economy curves down, our industry curves up."

Thanks to interest rate hikes, elevated inflation and mounting layoffs, the outlook for many is bleak. There's just not enough money to go around, and when auto loan payments are neglected, the repo man comes calling.

Delinquencies are also becoming more common among credit card users, with the average interest rate at a record high. Total balances rose to a record $986 billion at the end of last year and have likely climbed further since then. There are troubling warning signs like this all across the economy.

This story by my colleagues was another window into these tough economic times, with more people using "buy now, pay later" apps to buy groceries. The services let consumers pay for goods in chunks over the course of several weeks or months, and more than a quarter of users rely on the loans as a bridge to their next paycheck.

This was another story I noticed. It's been a slog, but more than half of millennials are now homeowners. The other half? They say they're getting left behind.

The cash crunch is also hitting older Americans as they prepare for retirement. Nearly one in five people aged 59 and older said in a recent survey they didn't even have a retirement account, and 27% said they haven't saved a cent for their later years.

Recession fears are making the situation even worse. Although some say the risk is overblown, the prospect of more rate hikes is stoking concerns.

That all sounds super depressing. But there are ways to prepare, experts say. If you haven't done so already, be sure to put any extra cash in a high-yield savings account, since the products are offering record yields. Just don't rely on them for your long-term wealth building.

You also might be temped to turn to I bonds, a safety play that surged in popularity last year. But keep in mind that the yields are likely to drop below 4% soon, so options like certificates of deposit might be more suitable for your investment goals. — Claire Ballentine

Send us questions about your own financial dilemmas to bbgwealth@bloomberg.net or fill out this form.

Before this year, the phrase "FDIC insurance" was known to make eyes glaze over (even for personal-finance reporters). But the recent banking crisis is creating a surge of demand for services that spread out cash to ensure more of it is covered.
Donald Trump's Palm Beach mansion is available to rent for $195,000 a month.
Wells Fargo is reviewing its $35 billion portfolio of office loans for ways to decrease risk.
Think you make a lot of mistakes? Well, at least you don't get fined $750,000 when you do. That's how much the Dallas Mavericks, owned by billionaire Mark Cuban, must pay for resting players in an effort to lose and keep their first-round draft pick.
US rents fell last month for the first time since March 2020.
In another casualty of the work-from-home era, Brookfield Corp. funds just defaulted on a $161 million mortgage for a dozen office buildings.

In Bloomberg Opinion this week, Conor Sen says that younger and less experienced workers are coming off the sidelines:

An increase in labor force participation is what the Federal Reserve wanted to see as it aims to balance the tradeoffs between employment and inflation. It also raises the possibility that the economy could shift back toward something like the conditions we had in 2019, when we combined solid job growth and low unemployment with contained inflation. What we've had in recent months is solid job growth with low unemployment, while the bigger workforce has kept wage growth under control, which in turn helps moderate inflation.
By easing inflation pressures, it also should mean the Fed doesn't need to raise interest rates as much, reducing the odds for a significant recession.
Read his full argument here.

What are the best ways for me to add bond exposure to my portfolio?

For many of my clients, I am recommending Invesco's BulletShares ETF bond funds. They offer funds maturing in each of the next 10 years in three categories: investment-grade corporates, high-yield corporates, and municipal bonds. These funds offer the convenience and liquidity of ETFs, but because they do not have to maintain a constant maturity, they are generally less interest-rate sensitive than normal bond ETFs. That gives them some of the stability and predictability of CDs. They distribute income monthly, an improvement over buying individual bonds, which pay semi-annually.

If your marginal income tax rate (federal plus state and local) is going to be above 28%, you are probably better off with munis — but always consult your tax professional to be sure. If you can tolerate some credit risk, you can use the high-yield funds in place of some or even all of the investment-grade funds. — Gordon Achtermann, financial planner at Your Best Path Financial Planning in Virginia

Send us questions about your own financial dilemmas to bbgwealth@bloomberg.net or fill out this form.

The Bloomberg Wealth Asia Summit returns on May 9. Join us in Hong Kong or online as we sit down with the region's leading investors, economists and money managers to discuss investing in art, the mindset of next gen investors, wealth and Web3, and more. Speakers include top executives from Amundi, Hong Kong Monetary Authority, and Sotheby's. Register now to secure your spot.