Money Talk: Global CapEx spending to decline 5% in 2016

Editor’s note: Each Monday, Talk Business & Politics provides “Money Talk,” a wrap-up of banking and financial news. 

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GLOBAL CAPEX SPENDING TO DECLINE 5% IN 2016 AFTER 15 YEARS OF OVERSPENDING

Fifteen years of over-investment in capital-intensive industries has led to overcapacity in many markets. Daniela Costa, senior analyst for Goldman Sachs Research, forecasts a 5% global capex decline in 2016 that will kick off the first multi-year downturn since the early 1990s.

“As we enter this period of decline in capex … management teams will need to be a lot more focused in identifying what are their competitive advantages versus their peers because they will need to grab share of a shrinking pie,” Costa says in a 4-minute video on the Wall Street investment giant’s website here.

RETAIL EXECS EXPECT ONLINE SHOPPING SALES TO MAINTAIN ‘BLAZING PACE’ IN 2016

According to the tenth annual BDO Retail Compass Survey of CFOs, retail CFOs expect online sales to grow nearly 10% this year, and none expect to see a decline.

Despite CFOs’ optimistic projections, however, they are focusing fewer dollars on building out their online presence following several years of ramped-up investment. Only 9% of CFOs say they will invest the most capital in their e-commerce channels, down from 22% last year.

Mobile appears to remain somewhat of a priority, with 41% planning to increase their spending on mobile platforms, though this is a significant decline from last year when 68% of CFOs planned to grow their spend.

SUBPRIME AUTO DELINQUENCIES AT HIGHEST LEVEL IN 20 YEARS

Delinquencies on U.S. subprime auto asset-back securities (ABS) have eclipsed 2009 recessionary levels and are now at a level not seen in nearly two decades, according to Fitch Ratings. Subprime delinquencies of 60 days or more hit 5.16% for February reporting, marking the highest level observed since October 1996 (5.96%).

During the most recent recession, delinquencies peaked at 5.04% in January 1999.

February’s delinquencies are increased 11.63% year-over-year and 3.63% month-over-month. Fitch expects both prime and subprime auto loan ABS asset performance to improve over the spring months with the onset of tax refunds. That said, typical seasonal benefits are likely to be more muted this year versus recent years given rising pressures on the aforementioned asset performance as well as anticipated weakness in the wholesale market.