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Ticker Shock: GM Gets Another Stay of Execution; Ford Will Park Your Car For You


Tuesday's top stories and stocks with potential to move.


I've been taking it pretty easy this past week with the holidays, and I have to tell you: I love it. I sense I'm going to be pretty good at retirement.

Which is a long way off.

Getting down to business, Asian markets were a mixed bag. The Hang Seng was down less than 1%, while the Nikkei was up over 1%. Europe, however, was flashing me some green earlier this morning. And here in the US, we're up a smidge.

Here's what has my interest this fine morning:

General Motors (GM)
According to Reuters, the Bush administration "expanded its bailout of the US auto industry, saying it was buying $5 billion in equity in auto and mortgage finance company GMAC and increasing a loan to General Motors by $1 billion."

It's obvious at this point that the government isn't likely to let these guys just roll over and die, and I have a sense that GM's stock could have a decent little run on this news. So, am I climbing on the bandwagon?

Absolutely not.

It's like an episode of ER. The doctors may frantically administer all sorts of life-saving treatment. Maybe they'll even use those shock paddles. But sometimes, regardless of how much treatment they receive, the patient doesn't do so well.

My point: GM is getting life support and still breathing heavy. I'm taking a pass given what I perceive as the patient's uncertain outcome.

Ford (F)
News is circulating that the company's going to offer up self-parking technology on some of its Lincoln vehicles. I actually like the Lincoln line. I think its sharp. And, heck, that sounds like a pretty cool idea.

But I want to make clear I think Ford should be looking to seriously differentiate itself at the mid-grade level. (Note to Ford: For Pete's sake, make a bunch of good-looking, economical cars that average people want to buy and maybe you'd be better off.)

Finally, I want to point out that if billionaire investor Kirk Kerkorian saw fit to sell his shares, I see no reason to get involved at this point.

Dow Chemical (DOW)
Since Kuwait reportedly nixed a joint venture with the company, there have been concerns that a marriage between Dow and Rohm & Haas (ROH) may not happen. I touched on this in yesterday's piece.

But a Reuters article today sugegsted that "unidentified people close to the situation told the Financial Times that Dow could still tap a $13 billion bridge loan to pay for the takeover."
I don't doubt that a combination could still happen. The same report said Dow would probably try to renegotiate the deal "to reflect the recent drop in Rohm's share price."

In the mid-$50 range, I think there could be trading opportunity in the stock. But I'm not willing to bet the ranch that a deal gets completed in the upper-$70 level as had been planned.

Have a great day!

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No positions in stocks mentioned.

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