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Two Ways to Play: $25 Billion Drop in the Bucket for Automakers?


Strengthen your portfolio in good times and bad.


House Financial Services Committee Chairman Barney Frank announced today that the nation's automakers will get a bailout if his plan is approved. Specifically, General Motors (GM), Ford (F), and Chrysler would gain access to $25 billion of the Treasury's $700 billion rescue plan - originally intended for financial services firms.

Frank said legislation is needed to authorize the Treasury to use part of its rescue plan to help the auto industry. "A collapse of the American automobile industry would be the worst possible thing that could happen at a time when we are already weakened," he explained. "We're not asking taxpayers to throw good money after bad."

He plans to unveil the bill on November 18th and hold a hearing the following day.

See Minyan Peter's TARP Club Membership Growing.

From the Bull Pen: Bulls are conscious of a sharp counter-trend rally in the works. One option can be to dip a toe in the Ultra S&P 500 (SSO). Keep an eye on S&P 840 for any signs of a reversal.

From the Bear Cave: According to Minyan Peter, even if the remaining $60 billion of the Troubled Asset Relief Program were applied as equity to GM, the company's net worth would still remain an astounding zero! Nonetheless, bears may see a better downside opportunity in Toyota (TM) if the stock can approach $70.

Is there another Lehman Brothers out there?
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No positions in stocks mentioned.

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