Car Sales Melting Up
Research for Online Investors

by John Dalt

8/03/10

Automakers reported July sales today, GM sales were up 5.4% over July last year.  Ford reported a 3.1% sales increase and Chrysler’s sales were up 5%.   Foreign manufactures were up varying amounts except for Honda (down 2%) and Toyota fell 3.2%.

Beneath the numbers, GM is the big winner.  Last July they were just coming out of bankruptcy so their sales were soft as consumers avoided the company.  Sales for their remaining brands; Chevrolet, Buick, Cadillac and GMC were up over 24%.  Hummer, Pontiac, Saturn, and Saab sold some vehicles last July but have since been discontinued or sold.

Toyota and Honda posted good numbers last July so their lack of growth is explained by how they capitalized on the "cash for clunkers" rebate program last year during a time of turmoil in the domestic auto market.

You can read a full story about July auto sales in the New York Times.

Fortune Magazine reports that U.S. exports to China held steady in 2009 while dropping to the rest of the world.  U.S. exports to China rose 39% in the first five months of 2010 to $38.5 billion.  The US-China Business Council expects exports to top $90 billion in 2010, up from $69.6 billion in 2009.  The top export items were computers and electronic equipment, farm commodities, and chemicals.

China is now a net importer of Corn and Soybeans.  Just a few years ago they exported these farm commodities.  China is now the third largest export market for the U.S.  Don't beat your chest, the U.S. trade deficit (imports minus exports) with China was $227 billion in the first quarter of 2010!

It looks like the week is building towards the employment numbers release on Friday.  The Bureau of Labor Statistics (BLS) will give us their best guess at the monthly jobs report.  This report is adjusted for births and deaths, seasonal workers, and a sundry of inputs.

Bottom line, they can adjust the report to say almost anything, but can they adjust it enough to actually show job growth?  Probably not.

Yesterday’s Institute for Supply Management (ISM) numbers came out and beat the street's expectations.  This combined with increased construction spending gave the market an excuse to rally.  Was the ISM report really that good?  New orders declined by 5%, the lowest in a year, and imports slowed.

To the mailbag:
Based on yesterday's move…looks like the big bank gamblers are already counting on the QE money print.  Buy those treasuries--Help those Democratic spenders get in again in November!---paid up subscriber T.M.

John’s reply:  It concerns me that the market may change to bullish just because of additional money printed.  We are analyzing, I don’t think the economy justifies a bullish stance.

Your comments about returning to Free Markets…Amen.----paid up subscriber D.F.

The information presented in this newsletter is based on generally available news releases, corporate filings, current events, interviews and the editor’s opinions.  It may contain errors and you should not make investment decisions based solely on what you believe you have read here.  Do your own research, it is your money.  If you lose it, it is your responsibility, not ours or your grandmothers!  The editor may or may not have a position in any securities discussed.  The editor may have held a position in a security earlier, or in the future.

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