Two Ways To Play: GM Gets Totaled
Strengthen your portfolio in good times and bad.
Bloomberg reports General Motors (GM) posted a $15.5 billion loss in the second quarter because of costs from truck leases and labor disputes as well as plunging sales in the U.S. The loss breaks down to a deficit of $27.33 a share for the largest U.S. automaker and marks the company's fourth straight quarterly loss.
CEO Rick Wagner said on television that hopefully the worst is over for the company. It is looking to sell Hummer as soon as possible but feels it may take a while. The cost of protecting GM debt rose after the release by 3% to 43.5%. Todd mentioned GM earlier this week in his Answers I Really Wanna Know.
From the Bull Pen: Bulls can look to Celgene (CELG) for an upside play. Note the double top breakout at $75. Near-term sell-stops can be set below that level.
From the Bear Cave: We've talked about GM and the bearded financials. A better downside play could be in Target (TGT); buy-stops in the near-term can be set above $48.
Bloomberg reports stocks took a dip late afternoon yesterday when Former Fed Chairman Alan Greenspan said that falling home prices in the U.S. are "nowhere near the bottom" and market turmoil is showing no signs of abating. In a television interview, Greenspan said the odds of a recession are 50-50 and achieving stability in the marketplace would take some time. He also said Fannie Mae (FNM) and Freddie Mac (FRE), the largest sources of money for U.S. home loans, are a "major accident waiting to happen" and that nationalization is the likely solution. For more context on the economy, see Professor Kevin Depew's Five Things You Need To Know.
From the Bull Pen: Is the gold ETF (GLD) a good risk/reward play? Professor Lewis pointed out the bullish island reversal pattern yesterday as well. Sell-stops can be set below $87.
From the Bear Cave: Bears can choose to play the downside in Centex Corporation (CTX). Buy-stops can be set above $15.
For more ideas in real time throughout the trading day, check out Minyanville's Buzz & Banter.
Quick Check Around the World
Asian trading closed with the Hang Seng +0.58%, Nikkei -2.11%, Sensex +2.10%, Taiwan -0.31% and Shanghai +0.94%.
Quickly checking Europe, we see the CAC -0.91%, DAX -0.86%, FTSE -0.48%
A Look At Commodities
Commodities are lower. Crude oil is down -0.90 to 123.16. Gold is lower -9.20 to 914.00. Silver is off -0.205 to 17.585, and copper is off -8.45 to 363.20.
The dollar index is higher +0.039 to 73.266.
On the Radar
Change in Nonfarm Payrolls: -51k vs. -75 k cons.
Unemployment rate: 5.7% vs. 5.6% cons.
Change in Mfg. Payrolls: -35 k vs. -40k cons.
Avg Hourly Earnings (m/m): 0.3% vs. 0.3% cons.
Avg. Hourly Earnings (y/y): 3.4% inline.
Avg. Weekly Hours: 33.6 vs. 33.7 cons.
9:00 RPX Composite 28 Day Index
9:00 RPX Composite 28 Day YoY
10:00 ISM Manufacturing
10:00 ISM Prices Paid
10:00 Construction Spending MoM
TGIF! Good luck today and have a great weekend!
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