Washington bows: General Motors (GM) and Ford (F) shares soar
Today's Financial News - Posted November 20, 2008
Our politicians are handing Wall Street a gift today. Shares of General Motors (NYSE:GM) and Ford (NYSE:F) are soaring in price. Will they make good on their word.
By Andrew Snyder
****** Story Update (3:30 PM EST) ****** Congress now tells us that it has put off a vote on any Detroit bailout until after Thanksgiving. It warns the Big Three that it had better come up with a viable plan to use the money to get back on track or the check will not be written.
After surging more than 40% earlier this afternoon, shares of Ford (NYSE:F) are back to where they began the day. General Motors (NYSE:GM) is sitting on a 6% gain on the day.
It looks like it is politics as usual in our nation’s capital.
Baltimore – (TFN): There is big news out of Washington. Congressional insiders are telling us that key senators have reached a compromise that will allow the Big Three to tap into $25 billion in loans originally set aside for the automakers to re-tool their factories.
While this is not the $25 billion grab at TARP money Detroit was on its knees begging for yesterday, it is enough to get investors interested in the industry once again. As I write, Ford (NYSE:F) and General Motors (NYSE:GM) are up by 40% and 25%, respectively. They are pulling the major equity indices with them.
Obviously, there is much more to this story than initial reports indicate. As we get the details, we will pass them on.
For now, continue to hold onto those shares of Ford I recommended buying several weeks ago. If Congress makes good on these rumors, they could be profitable quite soon.
Next Article: This is the time to turn bearish on pharma and healthcare stocks
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3 Responses to “Washington bows: General Motors (GM) and Ford (F) shares soar”
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November 21st, 2008 at 5:03 am
There is a BRILLIANT idea discussed in Seeking Alpha: http://seekingalpha.com/article/107278-gm-buyou...
The key paragraph is as follows:
“At today’s price of $3/share, GM has a market cap of a little under $2 billion. The government should not only provide $25-$50 billion of emergency low-cost loans, but should spend another $4 billion and buy up all of GM’s stock at a 100% premium - $6 a share.”
With this solution the government could hire a crack management team (perhaps a combination of Silicon Valley and Detroit talent) that could “force” the necessary restructuring AND development of fuel-efficient vehicles, instead of the government/people having to “beg” for it every step of the way. Ideally, in the end, GM would become a very competitive, lean automotive company that produces high quality, state-of-the-art, fuel-efficient vehicles for the global market AND, if the stock price reflects this success, the taxpayers money would be returned multiple times over.
November 20th, 2008 at 5:33 pm
We have to look at “the big picture.” The days of tunnel vision are over. Our nation better wake up and smell the coffee. With all our bail outs along with the 168 billion economic stimulus package, that btw did nothing for our economy it is hard to understand why our government can't see the need to bail us out of our dependence on foreign oil. I am appalled at news stories of green technology losing hope of being furthered because of lower gas prices. How long does anyone really think this decline will last? OPEC holds the key and we are at their mercy. They just cut 2 million barrels in production a day and vow to cut more if prices don't rise again. Instead of spending billions upon billions on bailouts, why don't we instead invest in renewable energy. We have GUARANTEED returns if we do this. I just read a fascinating book by Jeff Wilson called The Manhattan Project of 2009 Energy Independence NOW . I highly recommend this book for anyone interested in seeing our country become energy independent. He has a web site he can explain it better than I .. http://www.themanhattanprojectof2009.com
November 20th, 2008 at 4:17 pm
this is not politics as usual, they should have plan