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General Motors Gets the Memo


Too little, too late for carmaker.


Greetings from New York, where I'm sympathetic to the problems facing corporate America with this double-whammy of high fuel prices and a revitalizing credit crisis. Still, General Motors (GM) pondering dumping the Hummer division because of high gas prices seems to be absurdly little and wildly late, in terms of plans to fix the company. It seems somewhat akin to Aesop's grasshopper announcing a plan to plant crops in November, timing-wise.

If my home network running an Energy Crisis Special Report wasn't a perfect ironic top for crude oil, GM vowing to throw in the towel on its life-blood division in favor of selling a still-fictional "Volt" product is as good a reason as any to let crude oil chill for a while on the long side. Here's the other stuff I'm watching as I try to imagine a world in which we're all happy to drive around in souped-up golf carts:

  • One other problem with the Volt and other electric car movements: they don't run on pixie dust. You have to plug them in, eventually. Since we lack the societal won-tons to build new power plants or go nuclear, that means a swap-out for coal over crude. Six of one, half dozen of another. Regardless how you count it, different kinds of cars aren't the solution to the crisis.

  • Last night we spoke of waiting for a "high volume washout" moment to start long positions in the banks. Lehman Brothers (LEH) is down 5% and on pace to do four or five times normal volume on word that it "may or may not" do a capital raise with a common stock offering. For whatever it may be worth, Lehman et al are trading lousy but they don't feel like panic bottoms to me.

  • Boeing (BA) is being beaten yet again today. The stock hasn't been able to find a footing all year as the prospect of building a much-needed - but very expensive - more fuel efficient plane is facing the reality of an airline industry customer base in big, big trouble. Boeing just finished a high-falootin' tour of the Dreamliner for reporters and analysts last week meaning the radar screen for Positive Boeing Catalysts shows nary a blip.

  • Wal-Mart (WMT) is looking and feeling pretty good ahead of the retailers coming out with Same Store Sales later this week. I've got an off-stated "sidelines ex. WMT" position in the retailers, for good and bad. In terms of news items for Thursday, the biggest question is whether consumers spent their refund checks on gas or goods.

  • Ironically, it probably would have been much less expensive for Lululemon (LULU) to actually use seaweed in their clothing rather than cotton. I may be uninformed about the ripping prices of seaweed but it's gotta be cheaper than shipping cotton wear from China these days.

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Position in WMT.

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