GM recently made a number of optimistic comments about its future. These centered on its success in emerging markets such as China and its belief that it can keep 18% of the American market. There is plenty of proof that GM is doing well in Asia. There is almost no proof and there should be a great deal of skepticism about whether it can do well in its home market.
GM management said that its global second quarter sales were down 15% but are recovering. Read More
General Motors is still much of the talk since it exited bankruptcy protection early Friday. This was a quick bankruptcy process and was well ahead of historic bankruptcy timelines, avoiding what many skeptics thought would be a long ugly process. But the questions are still out there over what the situation is for the old GM under the “GMGMQ” ticker on the pink sheets and the new GM that is emerging post-bankruptcy. We did a comparative presentation on each, but keep in mind that these will change daily or weekly and may not remain the case ahead.
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Everyone wants to know when an initial public offering of General Motors (GMGMQ) will occur. Its emergence from bankruptcy has only expedited the curiosity of when the company will be public again. GM’s new CFO Ray Young just gave a rather lengthy CNBC interview and this was among the issues discussed.
The Administration says it wants a “quick exit” from its investment in GM. The taxpayers should not have to own a US auto company any longer than they have to. The problem is that, by most estimates, GM would have to have a market value of $50 billion for the government to recoup its money. That is not likely to happen while GM waits for the US vehicle market to recover.
The federal government could get a great deal of its cash back if GM sold its operations in China. Read More
Toyota (TM) says that the global automotive industry is facing two more lean years. It expects to lose more money this fiscal year than it did last and to run most of its factories at well below their capacity.
Toyota will survive another two years of hard time because of its balance sheet. The same may not be true or Ford (F), GM, and Chrysler, each of which may have to go to the federal government for assistance beyond what has already been given to Detroit. Read More
Reuters: A survey shows the global stimulus spending lacks direction.
Reuters: The race for “green” cars is still wide open.
Reuters: GM (GM) and Chrysler will face Senate scrutiny are dealer closings.
Reuters: Bank of America (BAC) and Citigroup (C) are being left behind by healthy rivals.
Reuters: Obama said it is “make or break” time for healthcare reform. Read More
GM (GM) is supposed to the poorly managed bankrupt car company that has trouble producing vehicles that the domestic market will buy. Toyota (TM) is the nibble competitor with the fuel-efficient and defect-free vehicles that attract buyers in droves.
Somehow the math for car sales in May did not bear out the images that the two companies have. Toyota’s sales fell 41% to 152,583. GM’s sales were only down 29% to 190,881.
Honda (HMC), which also enjoys a reputation for quality and fuel-efficiency, had a 42% drop in domestic sales to 98,344.
Maybe “Buy American” is back in vogue.
Douglas A. McIntyre
There are enough smart financiers and former Wall St. veterans in the Treasury Department so that the staff there should know how to hedge a bet. The Administration has taken the extremely risky position of holding stakes in and loaning money to bankrupt American car companies GM (GM) and Chrysler. The taxpayers will never see a dime of that money back if the two companies cannot keep their costs down and produce cars that can compete with successful vehicles made by firms based outside the US.
GM and Chrysler also have to pray that oil prices will not continue to rise throughout the year, undercutting the ability of consumers and businesses to drive more than they absolutely have to. Read More
Reuters: Global consumer confidence is improving.
Reuters: GM (GM) filed for Chapter 11 and expects a quick exit.
Reuters: Most US retailers probably had sales drop in May.
Reuters: China gave Geithner backing for the US programs to stimulate the economy. Read More
Now that General Motors (NYSE: GM) is bankrupt, the Dow Jones Index Team has decided to announce its DJIA component changes. In this change, there were two components changed rather than just GM. Citigroup, Inc. (NYSE: C) is also getting the boot. Cisco Systems, Inc. (NASDAQ: CSCO) and Travelers Companies, Inc. (NYSE: TRV) are the replacements in the index.
Late Friday we gave our list of single replacement candidates for replacing GM in the DJIA 30, and we even dispelled a few names some were hoping for that did not actually make sense with the DJIA being a price-weighted index. Cisco was our top tech pick for the slot, but Travelers was not in our group. The notion that this was taken out of Citi makes for a slightly ironic index change.
Jon C. Ogg
June 1, 2009
The UAW under Walter Reuther was arguably the most powerful union in the United States negotiating contracts with all of The Big Three on what became a pre-set cycle. Reuther got union members the employer-funded pensions, medical insurance, and supplementary unemployment benefits that are the antecedents of the benefits that the UAW members and retirees enjoyed until the new deals with Chrysler and GM occurred within the last few weeks. Read More
Reuters: GM (GM) will file for Chapter 11 today.
Reuters: Geithner told China its dollar assets are safe.
Reuters: A judge approved the sale of most of Chrysler’s assets to a group led by Fiat.
Reuters: German cut a deal to save Opel.
Reuters: Private equity firm KKR lost $1.8 billion last year.
Reuters: Elan is in talks to sell a stake to Bristol-Myers (BMY).
Reuters: China’s economy is stabilizing and exports moved up slightly.
Reuters: The Fed is puzzled by the steepening of the yield curve.
WSJ: Ford (F) will increase production next quarter in an attempt to take business from its rivals.
WSJ: “Lawmakers are pressing the Treasury Department to close a loophole to protect Social Security and disability benefits deposited in bank accounts from creditors.”
WSJ: Emulux is expanding its push to prevent a takeover by Broadcom (BRCM).
WSJ: Merck (MRK) and AstraZeneca are testing a new experimental cancer drug.
WSJ: Geithner urges China to open its economy.
WSJ: Emerging nations are increasing demand for key resources.
WSJ: The Fed’s attempt to keep mortgage rates low is not working well.
WSJ: The IMF expects jobs to trail GDP growth.
WSJ: The demand for oil is staying low.
WSJ: Weak demand for electricity could help consumers this summer.
WSJ: Foreclosures are having a mixed impact on sales.
WSJ: Temasek Holdings may sell its holding in Chartered Semiconductor.
WSJ: Losses at homebuilders are expected to narrow.
WSJ: International markets are at the center of the new stock rally.
WSJ: The ISM data may not show a sharp recovery in the economy.
WSJ: Improving results at banks are sending them on hiring sprees.
WSJ: Commercial real estate will be a drawn-out problem for banks.
WSJ: Retailers are felling the impact for foreclosures.
NYT: The Big Three are no longer in a position to help bring the economy out of a recession.
NYT: The battle for trading derivatives is at the heart of how much regulation of the banks is too much.
NYT: Google (GOOG) will take on Amazon (AMZN) in the e-book business.
FT: Microsoft (MSFT) and Sony (SNE) are taking aim at the market share of the Nintendo Wii.
FT: A new reports says that the rebound in stocks cannot be sustained.
FT: The US energy markets are bracing for hurricane season.
Bloomberg: Goldman Sachs (GS) says commodity demand will produce a 19% return this year.
Douglas A. McIntyre
Word is out that the Dow Jones Indexes team is set to release the name of the replacement for General Motors (NYSE: GM) in the Dow Jones Industrial Average. We have heard that the new candidate will be announced today and also heard that the change may be announced early Monday. We have a list of stocks we believe are the most likely candidates, and a list of exclusions for several reasons. Again, this pertains to replacing GM, so if there are a series of index changes then some of the others could make it in that we feel are not as likely. Because the index is price-weighted rather than market capitalization-weighted, some of the would-be hopeful stocks are probably not really under consideration as members of the DJIA.
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General Motors Corporation (NYSE: GM) is soon to cease being a public stock for some time, if all the recent reporting and all the jaw-boning is correct. The stock itself is showing fresh evidence of this by doing what previously would have seemed the unthinkable…. GM BROKE THE BUCK! Shares are down at $0.96 and we have already seen 150% of an average day’s trading volume trade hands in just over an hour of trading.
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Chrysler is well on its way through the Chapter 11 process. The media has pointed out that even if everything goes as planned Chrysler has a line of vehicles that desperately needs a face lift. The company will also have to deal with the time difference between where the workers are in Detroit and where the bosses are in Italy. Read More
Reuters: GM (GM) is close to bankruptcy after a deal with bondholders.
Reuters: Banks are lobbying Washington on derivatives rules.
Reuters: Dell’s (DELL) profits fell but beat estimates.
Reuters: Iacocca will lose his car and pension in the Chrysler bankruptcy. Read More
General Motors Corporation (NYSE: GM) is getting closer and closer to what is an obvious bankruptcy with the June 1 deadline looming. This morning came the news that GM’s bondholders were now accepting a new better deal than what had been recently rejected. This had shares trading higher, but the new notion out of the administration is that the common shareholders are likely to have little to no residual value remaining in the New Co.
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Car parts maker Visteon is is going into Chapter 11 and if a number of its peers follow it, there is a chance that the supply of components to US car companies could be interrupted. That would make GM’s (GM) life more difficult as it attempts to go through the Chapter 11 process itself.
In a filing about the action, the company said “Visteon expects to fund its operations with its U.S. cash balance, cash flows from operations and a debtor-in-possession facility. Ford Motor Company has executed a commitment letter to support debtor-in-possession financing for Visteon’s restructuring efforts and to ensure long-term continuity of supply.” Read More
Reuters: Central bankers in the US and Europe are battling deflation and inflation simultaneously.
Reuters: GM (GM) is close to bankruptcy but the fate of Opel is still open.
Reuters: Citigroup (C) and the SEC are working on settling charges on an asset disclosure problem.
Reuters: A US plan to buy bad bank assets is in trouble.
Reuters: Despite the recession there is still a large demand for people in certain sectors. Read More
The bets are on that General Motors Corp. (NYSE: GM) is done as far as the current stock is concerned. While it seems that the equity holders of today will keep 1% of the “New Co.,” this is far from fitting into parameters of being one of the thirty components of the Dow Jones Industrial Average. We have speculated on this with other companies moving in and out, but we have compiled a list of companies which we think could be replacements. We have also listed some of the companies we think will not be included that many traders and investors might be hoping could be up for inclusion.
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