Grok is the smartest
6 other interesting charts on AI, consumers, and things
new smartest model
a look at credit card delinquencies
underwater car loans
overwater mortgages
👉👉👉Reminder to sign up for the Weekly Recap only, if daily emails is too much. Find me on twitter, for more fun. It’s Friday, so let’s be brief with some thises and thatses.
Grok is the smartest
In the foundation model wars, we know that Meta makes the dumbest models, well now there’s a new genius in town.
Grok/xAI is once again the smartest model:
Grok was in the Top 3 (and usually #1) in all 8 of the various AI intelligence tests.
Never bet against Elon.
What does that mean? Who knows, but mostly it means that the rate and pace of innovation continues apace, which makes it staggeringly hard to make any predictions about what any of this means.
If the models are going to become commodities, they are some of the most expensive, short-lived commodities that I can think of.
Other good news about the Almighty Consumer
Just two quick tidbits on the Almighty Consumer that didn’t make it into yesterday’s longer piece.
Credit Delinquencies!
Random Walk’s consistent view has been that the Almighty Consumer knows its limits (unlike Uncle Sam).
Unless of course there’s unexpected job loss, consumers have not gotten head over skis. That is also why I tend not to get too worked up when the “delinquencies are rising” klaxons start to blare.
Well, more good news on the consumer credit front.
Credit Card Delinquencies are stable, if not declining:
DQs have been pretty stable for a while now.
To be fair, sometimes the data is a bit wonky, so it’s hard to get the cleanest of pictures, but generally it’s the same picture everywhere: consumers are managing their credit with aplomb.
Negative Equities!
As an aside, long ago there was a big scare on auto delinquencies.
Random Walk wasn’t entirely sure, but speculated that it wasn’t a credit issue, so much as an LTV issue. You see, higher rates brought the value of cars down (because obviously), and so people were defaulting on their loans because they had negative equity, and it made no sense to throw good money after bad.
The auto marks were too damn high.
Well, this doesn’t prove that I’m right, but it shows that perhaps I was on to something.
Check out these estimates for negative equity:
EV equity has been negative for ~2 years, and plug-in equity went negative in May ‘24.
I mean, if the value of your car depreciates enough then yeah, you might not keep paying your loan. And when did the whole auto loan default fracas happen? Back in the Fall of 2024 . . . which is when all the car types had negative equity, if only for a moment.
Never bet against Random Walk, I guess.
In all events, it’s going to be a good time to be buying a used EV soon, of that you can be sure.
Non-negative equities!
And finally, while we’re on the subject of negative equity.
Not that it should be surprising, but it’s still good to see that homeowners are A-OK:
ICE
Nationwide negative mortgage equity is incredibly low, and even a 10% drop in home values values (the grey shaded bars) would be bad, but manageable.
Outside of a few recent vintages from the sunbelt, which were issued at peak prices, there is no housing crisis. Not even close.
Previously, on Random Walk
Private Credit and Insurance, two peas in a pod (reprise), and a chart dump on default rates
five charts on the rise of private credit in life insurance
Energy in 1776
It’s July 4th, so Happy Birthday America, and we’re going to keep it light and only semi-topical.
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