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Thursday, May 03, 2007 1:26 PM

Car Sales & Locusts of Liquidity

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Mlive is reporting GM, Ford, Toyota, Honda report sales declines, Chrysler rises.

April was such a lousy auto sales month that every major manufacturer but Chrysler reported a decrease from the same month last year.

General Motors Corp., Ford Motor Co., Honda Motor Co. and Nissan Motor Corp. all showed declines as automakers released their monthly U.S. sales numbers on Tuesday, but the drop for Toyota Motor Corp. countered a nearly two-year trend of rising sales, sometimes in double digits.

Toyota sales, which include the Toyota, Lexus and Scion brands, dropped 4.3 percent to 210,457 last month from 219,965 in April 2006, the company said Tuesday. It was the first year-over-year monthly decline for Toyota since May of 2005.

"This certainly is uncharacteristic of Toyota," said Joe Barker, senior manager of global sales analysis for CSM Worldwide, an automotive forecasting firm in Northville. "I would expect them to rebound strongly next month."

U.S. light vehicle sales for all automakers declined 7.6 percent last month to 1.34 million from roughly 1.45 million a year ago, according to Autodata Corp.

Industry analysts say the bad month is a harbinger of things to come for the whole industry in the second half of the year with economic uncertainty, high consumer debt, the housing slowdown and rising gasoline prices contributing to a softer automotive market.

Consumers also are waiting for incentives to rise as many manufacturers try to reduce them, said Jesse Toprak, senior analyst for the Edmunds.com auto Web site.

"They're waiting for the next big sale and perhaps postponing their purchases because of this combination of factors," Toprak said. "They don't have a lot of confidence in the housing market, gas prices are higher."
I am more inclined to believe this is more of a harbinger of things to come as opposed to expecting a strong rebound. There is no fundamental reason to expect car sales to do anything more than put in a "dead cat bounce".

Sales Figures
  • Nissan -18.0%
  • Ford -12.9% overall
  • Ford Autos -23.6%
  • Ford Trucks -5.7%
  • Ford F Series Trucks -12.4%
  • GM -9.5% overall
  • GM Autos -10%
  • GM Trucks -9%
  • Honda -9.1% overall
  • Honda Autos -13.7%
  • Honda Trucks -2.6%
  • Mercedes -1.8%
  • Chrysler +1.6%
Only Chrysler sales were up but Chrysler led all manufacturers with $4,000 per vehicle incentives.

Perhaps massively declining car sales are the most bullish thing for automotive companies and tire manufacturers. GM, Ford, Goodyear, and Cooper Tires were all up today. Check out the reaction in Cooper Tires.

Apparently there are some rumors that Cooper Tire is a leverage buyout candidate. Is there any company that is not an LBO candidate?

Cablevision Accepts Dolan Buyout

The WSJ is reporting Cablevision Accepts Dolan Buyout
Cablevision Systems Corp. agreed to be taken private by the founding Dolan family for about $10.6 billion, suggesting the Dolans like the cable industry's chances against increasing competition.

The $36.26-a-share offer for Cablevision, which owns Madison Square Garden, Radio City Music Hall, and the New York Knicks and Rangers, is an 11% premium to the Tuesday closing price of $32.67 a share, and a 52% premium to Cablevision's closing price of $23.93 on Oct. 8, the day before the Dolans' first bid.
Locusts of Liquidity

Jeffrey Cooper on Minyanville is writing about The Locusts of Liquidity
On the heels of the burst of the technology bubble, 9/11, and corporate scandals, interest rates were not so much cut as they were chopped to historic low levels. Then, on the heels of the real estate bubble imploding and the sub-prime mortgage issue, money supply has exploded in recent months. This money creation, this Bernanke Bid, synchronous with the Yen Carry Trade is the wind beneath the wings of the locusts of liquidity. These locusts are feeding on a field of equity dreams where the only P/E that matters is Private Equity.

Socrates said that when the Muses first brought song to the world, the beauty so captivated some that they forgot to eat and drink until they died. The Muses turned these souls into locusts.

From my ledge it looks and sounds like once again the music of momentum for momentum’s sake is being chanted from the caverns of Wall Street by capitalist Hare Krishnas swarming before the sun like locusts of liquidity. Same asylum, different inmates.
The reaction to the auto data and the Cablevision buyout more or less says it all. The LBO locusts continue to swarm even as the real economy sinks. I will have more on the real economy on Friday.

Mike Shedlock / Mish

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