Now with the new President-elect firmly entrenched in the picture, there are going to be certain businesses that benefit. In my thinking, the auto industry is one (remember, the government already bailed out Chrysler in the past decades). It isn’t the manufacturing so much as the symbolism of major U.S. Icons going down the tube.
Obama will somehow or another, bail out Detroit.
Shares of General Motors Corp. (NYSE:GM) plummeted to their lowest price in more than 60 years today on increasing worries about accelerating cash burn and mounting losses at the automaker. GM shares dropped 97 cents, or 22.3 percent, to $3.39 in morning trading. They earlier plunged as low as $3.02. That marked the automaker's lowest share price since Dec. 2, 1946 when it hit $3, according to the Center for Research in Security Prices at the University of Chicago. (The price is adjusted for splits and other changes)
Okay, so you’ve got GM at $3, Ford Motors (NYSE:F) at $1.93 and Chrysler LLC (now a private concern after the Daimler divorce -in 2007 Cerberus Capital Management bought Chrysler for about $7.4 billion or about one-fifth of the $37 billion Daimler paid in 1998) burning through cash at a rapid rate and all three are seeking at least $25 billion in immediate federal loans to help them survive.
After last months auto sales drop at Honda Motors (NYSE:HMC) and Toyota Motors (NYSE:TM), yesterday in Seoul, South Korea, shares in Hyundai Motor (005380.KS) fell as investors worried the United States may harden its stance on car trade and on talk, denied by Hyundai, that it may target parts of money-losing Chrysler. Hyundai, the country's 10th biggest company in market value and the world's No. 5 car maker along with affiliate Kia Motors Corp (000270.KS), dived as much as 8.4 percent today before stabilizing a little.
Word around Wall Street is that everyone is looking at Chrysler and its components as possible buy-out opportunities. A Chrysler spokesperson said, "As an independent company, we will continue to explore multiple strategic alliances or partnerships as we investigate growth opportunities around the world that would aid in our return to profitability."
Yep, it’s all in up in the air, but two things: A) Obama will bail out Detroit and B) Ford at $2 and GM at $3; what an investors dream.
Market Man
