Ford's Survival Plan
Research for Online Investors

by John Dalt

5/11/09

Ford is the only major U.S. car company that is not technically or legally bankrupt, although they are carrying a large amount of debt. What does that mean, and how did they do it? The Wall Street Journal has a great article on "How Ford Restructured Without Federal Help”. They sold brands and mortgaged their factories, equipment and real estate. This gave them the resources to revamp and upgrade model offerings.  Ford held 14.7% of the U.S. automarket last year.  How much market share will they fill this year?  My guess is they will surpass G.M. at 18.6% and alot more.  This would be the first time Ford was the largest U.S. auto maker in over 80 years.  This is a truly amazing turn of corporate fortunes.

The secured bondholders of Chrysler Corp. capitulated this weekend. Their action cleared the way for the bankruptcy judge to sell the assets to Fiat and move them back down the food chain. It will be interesting to hear why they backed down, so far all are mum. The attorney for the secured bondholders accused the White House of threatened the plantiffs.  If true, we may have a felony tampering case.  The sadist in me wants to watch.

According to Uncle Sugar’s IRS the top 1% of wage earners in the U.S. made an average of $388,806 in 2006.  There were 1.65 million citizens in this category, paying $488 billion in income taxes.  That is 40% of all income hardly seems fair, OH! Bama wants more, so he can increase “refundable” income taxes.  John Galt, where are you?

On April 22nd we wrote, "You may want to look at opening a position in natural gas, you can use UNG, the natural gas ETF, it tracks the price of domestic natural gas using futures contracts. Summer is traditionally a low use time for gas, but with any increased use in electrical generation and recovery in manufacturing the price will respond. The current price has Armageddon baked into it."  UNG closed up 18% since.  Our SwingTrader subscibers are up 11.6% since our entry, with downside protection.  I have read that natural gas is cheaper than coal to generate power at present prices!  Join SwingTrader, a new trade comes out in the morning!

Official Labor Department Unemployment now stands at 8.9%, but if they included workers that have quite looking for work, or have taken part time jobs that number skyrockets to 15.8%  Nothing like changing the calculation, when you don't like the answer.  That is change we can believe in!

Today's chart presents the Dow divided by the price of one ounce of gold. This results in what is referred to as the Dow / gold ratio or the cost of the Dow in ounces of gold. For example, it currently takes 9.2 ounces of gold to “buy the Dow.” This is considerably less that the 44.8 ounces it took back in 1999. When priced in gold, the Dow is down 79% from its 1999 peak and the scale of the current two-month rally has not distinguished it from the many bear market rallies that have occurred over the past decade.

Does this mean gold must get cheaper or Dow higher?  Neither right now.

The following quote made me think, true and scary:

There are no conditions in life to which a man cannot get accustomed, especially if he sees them accepted by everyone about him

– Leo Tolstoy

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.

MarketWatch Home Page

Back to Top