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Friday, December 19, 2008

A Tale Of Two Auto Industries

Mr. Flip-flop has changed his mind about an "orderly" bankruptcy for U.S. automakers, and instead is authorizing a $17.4 billion rescue package. Why, if I didn't know any better, I would say that someone at the White House was short GM yesterday, covered, then went long today, but that's my cynical, paranoid streak coming out. It seems that U.S. automakers are not the only ones in trouble. In Japan, Honda is struggling. Here is what their CEO had to say: "Every day, the hardships we face are getting worse and worse. And there are no signs of recovery". Wow, he sounds pessimistic. Maybe he should talk to Kudlow. And here is what Honda is doing:1) Reducing production by 78,000 units; 2) Laying of 500 temporary workers (as opposed to the thousands that get laid off here); 3) And the best quote of all: "To take responsibility for the faltering results, Honda directors will take a 10 percent pay cut and further bonus reductions are likely, he said." Holy crap, can you believe that? Directors taking responsibility for the performance of the company? Amazing.

The market is rallying, although today it's technology that is the strong sector, followed closely by consumer discretionary. Basic materials are lagging. Energy and finacials have barely budged. There are no breakouts so far, but several new highs. Two I am watching are ALK, which is close to breaking out, and CSKI, which pulled back after an earlier breakout and is now screaming higher.

Nothing on the earnings sheet has reported. There is no news on RICK, so apparently the report date I had was incorrect.

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