Auto Sales Crash

by Larry Levin

Today was a bit of an odd day: although we had greater volume, the action stunk like the South end of a North-bound mule. We caught what action there was, which occurred early, but the remainder of the day was quite range-bound. All three major indices closed slightly lower by the close.

Today's main economic news was the dismal auto sales from the Big-3. GM's sales, for example, plummeted to a 49-year low. However, GM did not suffer the worst percentage drop in December YoYo:

1) Chrysler, -53%

2) Toyota, -37%

3) Honda, -35%

4) Ford, -32%

5) GM, -31%

6) Nissan, -31%

As a whole, it should shake out as the worst annual result for the entire industry sine 1992.

Last week I wrote about the government's latest mugging of the US taxpayer to handout GMAC $6-billion, and then how GMAC planned on lending its newfound booty to GM customers for subprime auto-loans at 0% interest. Will it work? It's doubtful since people are worried about paying for their homes, credit card debt, and holding on to their jobs. I just don't believe there is much, if any, pent up demand at the moment. Moreover, I doubt it will pull much demand forward either.

Without massive changes in the automakers basic structure including; new management, selling off weak model lines or shuttering them, new management, new labor agreements, less plants, selling only to qualified customers, close dealerships, and (did I mention?) new management --- none of this bailout money will help.

Previous Day's Trading Room Results:

Trade Date: 1/5/09

E-Mini S&P Trades*
(before fees and commissions):

1) PP buy @ 9:00am at 917.50 = +2.00 (1 lot)

2) OTF buy @ 10:30am at 924.75 = +2.25 (1 lot)

3) TP buy @ 12:00pm at 928.00 = -1.00 (1 lot)

4) Algorithm positions (17)...combined daily total...+7.75

ZB (30 Year Bond) Trades*
(before fees and commissions):


1) No trades today.



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