Bailout for Automakers

Why shouldn't the U.S. automakers get a bailout? They've bigger issues to resolve than cash flow. They have broken systems and higher costs than their competitors. Why should the American taxpayer get stuck with a bill that supplements high priced labor.

Heads of automakers speak in front the House Financial Services Committee.

This post from DownsizeDC.org blog was recently shared with me and I thought it was excellent.

State of the Markets

Resistance and pivotal levels:

• Dow: 8900-8923, then 9275, coinciding with its 50 dma.
• NAZ: 1590, then 1700-1725, coinciding with its 50 dma and incidentally the NASDAQ threw up a Double Top Breakout on November 26 with a price objective of 1720. Needless to say a move through 1720 would be very constructive and clearing 1785 might indicate that the worst is behind us.
• S&P: 915, then 950 and its 50 dma. Confidence may be restored if 1007 is breached and holds. Double Top Breakout on 11/26 indicates a 1020 p.o.

HNZ ($37.81)

The stock is simply broken; it's breaking down and looks horrible. Despite the recent numbers there is very little buying interest and it may be necessary to let it go.

The 'Uber Rich' Like Socialism

The "uber-rich" like government bailouts from CNBC.

Futures indicate a higher open after the last couple of days had produced the worst two day decline in 20 years.

Here is a list of "Blue Chips" for $10 or less.

Profit and sales rise in the quarter for long-standing position Heinz. Probably worth another look.

URBN

I can't resist picking up a spec stake in Urban Outfitters around $13.50. I'm not certain if this is the right price but it qualifies as "some point" and that's good enough for me. It's a new underweight position.

AutoNation (AN)

Another small stake in AutoNation (AN) at $6.25 following Eddie's lead; he's raised his stake to 44.5%.

AutoNation's revenue breakout for the three months ended 9/30/08:

• Domestic (primarily GM, Ford, Chrysler) 33.8%
• Import (primarily Toyota, Honda, Nissan) 39.8%
• Premium Luxury (primarily Mercedes, BMW, Lexus) 25.5%
• Corporate and other .7%

Income excluding Corporate and other:

• Domestic 19.4% of $119.1 million
• Import 44.2%
• Premium Luxury 36.4%

AutoNation has been orchestrating company direction based on their prediction of new vehicle sales in the low-13 million unit level for 2008.

As a sidebar I consider it to be a tremendous year to be down just 5.07% YTD and considering that the Bud liquidation (a monster position) has now increased cash reserves to nearly 45% I'm growing inclined to ratchet up our risk just a tad.

Neither being a quant nor a technical analyst is very helpful in the current investment climate, however, if you've had a successful year and you're flush with cash then you can take a little bit more risk and try to vulture some trades. We're looking at AutoNation, bailout or not.

Hedge Let Go A Little Early

The futures indicate a fair ass kickin' for the markets today so it seems that the RSWs sold at the close yesterday was a bit premature.

According to CNBC the futures are indicating:
DOW -324
S&P -34.7
NAZ -45.50

Closing Out Our Hedge

Put on this hedge at 867. S&P now around 806. Selling RSW.

Budweiser = King of Cash

By now you should see the cash infused for the Budweiser deal and in our case our cash position just went up 11%. It was a wild ride and on October 24th, at $56, I had my doubts.

Happy Days.

Fireworks from Afar

Paulson seems to have switched gears again and there is no end in sight for the seemingly bottomless pit of bailouts. Compound this with the wildcard of a new administation's policies and you have a perfect storm of uncertainty. Interestly, bad news can be just as positive for the markets as good news so long as it's just that - news. Uncertainty, however, is as toxic as the assets we've been hearing so much about.

Just sitting back and watching the fireworks.

URBN ($18.25)

From Briefing.com:
Urban Outfitters Q3 comp sales increase 10%; co reports Q308 net sales (URBN) 20.13 : Reports Q3 (Oct) net sales increased 26% year/year to $477.95 mln vs the $476.42 mln First Call consensus. Co reports comparable store sales increased 10% during the quarter.

Albeit, completely out of Urban it is still a well managed company that executes so at some price point it will warrant another position.

Cash and Paper is King

• Equities 34.2%
• Cash 33.7%
• Treasuries 27.4%
• Hedges 4.7%

URBN ($21.85)

Sell out of position in Urban Outfitters. There is too much risk between the overall market's behavior, the election's result and retail numbers due.

Obama Elected President

"Change" has come to America.
As reported by Fox News Obama has won the election with a 349-161 electoral vote. Perhaps more important is the full Democratic control, albeit short of filibuster-proof, of Senate.
The broadcasts were amazing last night as throngs of people gathered in Chicago and Times Square, shouting, yelling, screaming, and crying. A positive to draw on is the record turnout for the election. The long lines and dedication of voting Americans were simply incredible. At the minimum, you could say that something, someone had finally motivated more voters, both liberals and conservatives, to take action.
I'm very interested to see what man will now show up in the oval office.

Obama Slide?

A capital gains tax increase is weighing on Wall Street. Will equities hit the skids with an Obama victory or is a win already priced into the market? You must think that it's priced in. In fact I would feel pretty confident that we'd get a very healthy bounce up if McCain wins.
When Biden spoke of their new administration getting tested within the first 6 months was he referring to a market selloff rather than an act of terrorism?
It's too risky to hold much more than 30 to 40% in equities. Maintain cash and treasuries and wait for the election to shake out and for the indexes to get healthy.

BUD and BRCM

Lightening up going into tomorrow's elections. Boooooook profits.