Toyota blamed the credit crunch damping consumer confidence for its drop in U.S. sales in August.
Bwahah! Snort!
"I'm concerned about the lack of liquidity in the asset-backed commercial paper market, honey. Let's hold off on buying that new Corolla until next quarter."
Cars are not selling
Oh my--Is this the next leg?
Coin now has two heads
Product portfolio is heavily skewed towards expensive, powered-by-home-equity Expeditions, Navigators and highly options pickup trucks.
Economical cars in the lineup are limited primarily to the horribly dated Ford Focus and the newer, but made-in-Mexico Fusion.
Both Honda, Toyota and Nissan have been new, very appealing economy models into the market. Even GM is in on the game with a very refreshed Saturn (Astra, Aura) lineup.
Ford will be toast in 18 months. They simply will not survive long enough to develop and get to market the products it will take to survive in a tough economy.
The irony being they have a pretty good lineup in Europe that they stubbornly refuse to bring here.
From Chevy: 0% APR for 60 Months
It's the Chevy Model Year End Event! The best offer ever is now available on the all-new Silverado. 0% APR for 60 months1 on all half-ton extended and crew cabs for well qualified buyers. Silverado has the best available highway fuel economy2 and a warranty better than Ford. Better than Toyota. That's 0% APR for 60 months on our most popular Silverado models.
Ford may be down on new model transition, thus their expectation of increased production through 2007.
It is dangerous to extrapolate brand sales from one months' datum.
If I had to guess I would think that strong sales of GM's refreshed large SUV lineup (Tahoe/Suburban) as well as pickups (Sierra/Silverado) factor into decent sales. They are brand new models and truck buyers being what they are, have to have the newest thing. I see these vehicles everywhere now.
I don't think that will last forever as the MEW runs out, however they are working on the rest of the lineup (see my above post) so I do not think it is inconceivable they could stay relatively strong even during the recession. At least compared to other automakers, who are in for a world of hurt (Ford, Chrysler).
Up here in Canada, GM is cutting back significantly on large SUV and pickup truck production: Error page - Yahoo! News . Seems that overall demand (most goes to the States) is down, so production is being decreased. I don't buy the argument about the refreshed line-up - basically this is a supply/demand issue.
I still have yet to see any real capitulation from any of the big 3.
They are all still one trick ponies, and that trick will continue to wear thinner and thinner and thinner. They will all end up going the way of Chrysler on their own time lines.
I think we may be experiencing "housing bubble tunnel vision" and missing the emergence of a potentially much bigger bubble, just as the beginning of the housing bubble was overlooked by many in the face of the dot.com bust.
So what if people and businesses are losing hundreds of billions of dollars on US housing if they're making trillions in global equities and commodities?
Seriously.
I think a lot depends now on whether the US Fed decides to be proactive with respect to asset bubbles or not, but it seems that for over 10 years now people have been seriously underestimating the resilience and tenacity of the speculative mentality.
Until I see evidice to the contrary, I have to assume this is happening again.
"So what if people and businesses are losing hundreds of billions of dollars on US housing if they're making trillions in global equities and commodities?"
But are these the same people?
Equity increases may indeed offset housing declines across the entire economy but it is hard to imagine that a young couple who just bought their first home with a sub-prime mortgage also happen to have several hundred thousand$ in an emerging market mutual fund.
Equity increases may indeed offset housing declines across the entire economy but it is hard to imagine that a young couple who just bought their first home with a sub-prime mortgage also happen to have several hundred thousand$ in an emerging market mutual fund.
Rising stocks in the late 90s seem to have had a very strong stimulant effect on consumer spending, just as housing did after 2001.
The other thing is that real incomes are holding up very well according to the most recent incomes and outlays report. In fact, it seems like the increase in consumer incomes is approaching the point where it can make up for the losses we've experienced in MEW.
If we continue to see strength in asset prices outside of housing prices, I think businesses are going to be hard-pressed to cut back.
I find it very difficult to be bearish in the face of a broad-based rise in asset prices and healty personal income growth, even though I think much of this is being borrowed from the future.
Also, in my personal experience I've seen people who were worried a couple of weeks ago becoming much more optimistic.
And nobody I know seems to care much about their losses in housing because they're getting rich in stocks again.
I see the same cycle being repeated again and again, and I've said I don't see it ending without trauma. My concern has long been that because the US Federal Reserve is so averse to any short-term financial or economic trauma, they would have a very difficult time controlling asset bubbles.
Everything about today's stock market feels manipulated, leveraged and speculative. It has nothing to do any more with individual investors or fundamentals, least of all earnings growth rates and expectations.
The yen and speculative equities keep moving exactly opposite, every hour, every day.
It's pretty frightening to watch because when this era ends, I think attitudes towad the stock market (especially U.S.) will change much as attitudes about housing investments have changed. I think individual investors who enter this market are playing with fire. And I've been a loyal stock market investor for over 30 years.
The PPT probably has something to do with it. But mainly, it's manipulation/speculation by institutional prop trading desks and leveraged hedge funds, I would bet.
Normally, the pump-and-dump is designed to lure individuals into a market just before the flame-out. This time, I actually think it's designed to lure in hedge funds.
The number or wrecked hedge funds is about to soar.
A recruiter friend said most of her employers (non housing high demand function) are only hiring temp or short term contract personnel right now. . . . not a good sign.
Yes they are the same people. The same people that made billions by selling CDOs are now making billions in equity speculation. As long as the wealth keeps getting concentrated, everything is moving along swimmingly.
The monthly divergence between Toyota and GM may be just that, no? Did GM have a horrible month last year...accounting for that bright looking 6% increase? [Were "incentives" part of this picture as they were in the past to clear inventory of cars nobody wanted unless they were discounted?] Isn't this a case of not having a CR-like chart of GM sales over the past couple of years --real "intelligence"?
Overall US auto sales reached their peak in 05, (the start of the recession in my book which looks at this consumer society and not the BEA for the official call) and is not forecast by any of the major auto makers to return in the near future.
So what is the import of this GM news? Assurance that things are improving? That you should take your mind off oil prices, Iraq, home foreclosures and generally feel better?
todays market is profiteering based belief in a cut. If they get it, these longs are early. If not they will spook out fast.
personally I don't think there will be a cut unless more crisis dictates before next mtg. but not cutting may precipitate a broad capitulation...this month tells the tale
x-man ,I agree with you.No rate cut if S&P 500 is closer to 1500 than 1400 and it will be a big disappointment.Investors will realize that " Ben is not our friend".
It seems to me that there is a disconnect in opinion as to the state of personnel income growth. Averages show growth that bulls point to as recession proofing (see ac's post above). Others point to studies that show declining real income in the $100k and below population and foresee economic trouble.
I suggest (but cannot quantify) that the old income distribution which was the familar bell curve with a large middle class has been replaced by a bimodal distribution with an upper income mode rapidly moving up the income scale whereas a smaller middle class is slowly sliding backwards. In a bimodal distribution, measures of central tendency (mean,median) are not useful and can be misleading.
It is more difficult but I suggest that comments about financial status must identify the population under discussion to have any meaning.
This is a weakness in the broad financial press. Averages are so much easier to use.
Volume is low, the big action is on hold until after Sept 18th rate announcement. Makes sense that they create wealth effect using the stock market but they need the FED to cut rates and several times to at least 4% to keep it alive.
NC Jim,
Thank you for making my point far better than I could. Keep in mind that a very decent part of the lower bulge are immigrant on their way thorugh poverty. Most of it, though, is the former middle class getting squeezed into oblivian as we (MMI alert!) use them as our cannon fodder in the war against inflation.
It looks like global equities and commodity prices are rapidly heading for new highs with nothing to stop them:
I agree that few more bubbles are still in the works. But they probably don't have much time left, maybe another 6 months or so. Eventually the american underconsuming consumer will pop those bubbles.
Second Robert's nod to NC Jim and again auto sales reflect this middle class squeeze with hi-end vehicles not suffering nearly as badly.
This bit "use them ("immigrants on their way thorough poverty") as our cannon fodder in the war against inflation." reminds me that 3 of the 6 Utah miners buried in that "retreat mining" were Mexicans.
surprised?
First
Am I crazy to think that the data coming out just doesnt seem bad enough to require a rate cut?
I realize Wall St is screaming for it but they always want easy money.
Toyota blamed the credit crunch damping consumer confidence for its drop in U.S. sales in August.
Bwahah! Snort!
"I'm concerned about the lack of liquidity in the asset-backed commercial paper market, honey. Let's hold off on buying that new Corolla until next quarter."
Cars are not selling
Oh my--Is this the next leg?
Coin now has two heads
Ford.
Product portfolio is heavily skewed towards expensive, powered-by-home-equity Expeditions, Navigators and highly options pickup trucks.
Economical cars in the lineup are limited primarily to the horribly dated Ford Focus and the newer, but made-in-Mexico Fusion.
Both Honda, Toyota and Nissan have been new, very appealing economy models into the market. Even GM is in on the game with a very refreshed Saturn (Astra, Aura) lineup.
Ford will be toast in 18 months. They simply will not survive long enough to develop and get to market the products it will take to survive in a tough economy.
The irony being they have a pretty good lineup in Europe that they stubbornly refuse to bring here.
GM is up but Toyota is down. Huh. Was there any reason given for GM's unusual performance?
From Chevy:
0% APR for 60 Months
It's the Chevy Model Year End Event! The best offer ever is now available on the all-new Silverado. 0% APR for 60 months1 on all half-ton extended and crew cabs for well qualified buyers. Silverado has the best available highway fuel economy2 and a warranty better than Ford. Better than Toyota. That's 0% APR for 60 months on our most popular Silverado models.
Ford may be down on new model transition, thus their expectation of increased production through 2007.
It is dangerous to extrapolate brand sales from one months' datum.
If I had to guess I would think that strong sales of GM's refreshed large SUV lineup (Tahoe/Suburban) as well as pickups (Sierra/Silverado) factor into decent sales. They are brand new models and truck buyers being what they are, have to have the newest thing. I see these vehicles everywhere now.
I don't think that will last forever as the MEW runs out, however they are working on the rest of the lineup (see my above post) so I do not think it is inconceivable they could stay relatively strong even during the recession. At least compared to other automakers, who are in for a world of hurt (Ford, Chrysler).
Cal, I am seeing the same thing. There is no real data to back up a rate cut.
Up here in Canada, GM is cutting back significantly on large SUV and pickup truck production: Error page - Yahoo! News . Seems that overall demand (most goes to the States) is down, so production is being decreased. I don't buy the argument about the refreshed line-up - basically this is a supply/demand issue.
I still have yet to see any real capitulation from any of the big 3.
They are all still one trick ponies, and that trick will continue to wear thinner and thinner and thinner. They will all end up going the way of Chrysler on their own time lines.
It looks like global equities and commodity prices are rapidly heading for new highs with nothing to stop them:
ADRs highest in four weeks, led by mining, energy
I think we may be experiencing "housing bubble tunnel vision" and missing the emergence of a potentially much bigger bubble, just as the beginning of the housing bubble was overlooked by many in the face of the dot.com bust.
So what if people and businesses are losing hundreds of billions of dollars on US housing if they're making trillions in global equities and commodities?
Seriously.
I think a lot depends now on whether the US Fed decides to be proactive with respect to asset bubbles or not, but it seems that for over 10 years now people have been seriously underestimating the resilience and tenacity of the speculative mentality.
Until I see evidice to the contrary, I have to assume this is happening again.
Among other evidence of economic strength, the dry bulk shipping rate is up dramatically today . . .
ac,
"So what if people and businesses are losing hundreds of billions of dollars on US housing if they're making trillions in global equities and commodities?"
But are these the same people?
Equity increases may indeed offset housing declines across the entire economy but it is hard to imagine that a young couple who just bought their first home with a sub-prime mortgage also happen to have several hundred thousand$ in an emerging market mutual fund.
Equity increases may indeed offset housing declines across the entire economy but it is hard to imagine that a young couple who just bought their first home with a sub-prime mortgage also happen to have several hundred thousand$ in an emerging market mutual fund.
Rising stocks in the late 90s seem to have had a very strong stimulant effect on consumer spending, just as housing did after 2001.
The other thing is that real incomes are holding up very well according to the most recent incomes and outlays report. In fact, it seems like the increase in consumer incomes is approaching the point where it can make up for the losses we've experienced in MEW.
If we continue to see strength in asset prices outside of housing prices, I think businesses are going to be hard-pressed to cut back.
I find it very difficult to be bearish in the face of a broad-based rise in asset prices and healty personal income growth, even though I think much of this is being borrowed from the future.
Also, in my personal experience I've seen people who were worried a couple of weeks ago becoming much more optimistic.
And nobody I know seems to care much about their losses in housing because they're getting rich in stocks again.
I see the same cycle being repeated again and again, and I've said I don't see it ending without trauma. My concern has long been that because the US Federal Reserve is so averse to any short-term financial or economic trauma, they would have a very difficult time controlling asset bubbles.
I still hold this view.
Everything about today's stock market feels manipulated, leveraged and speculative. It has nothing to do any more with individual investors or fundamentals, least of all earnings growth rates and expectations.
The yen and speculative equities keep moving exactly opposite, every hour, every day.
It's pretty frightening to watch because when this era ends, I think attitudes towad the stock market (especially U.S.) will change much as attitudes about housing investments have changed. I think individual investors who enter this market are playing with fire. And I've been a loyal stock market investor for over 30 years.
The PPT probably has something to do with it. But mainly, it's manipulation/speculation by institutional prop trading desks and leveraged hedge funds, I would bet.
Normally, the pump-and-dump is designed to lure individuals into a market just before the flame-out. This time, I actually think it's designed to lure in hedge funds.
The number or wrecked hedge funds is about to soar.
Weekend BBQ talk
A recruiter friend said most of her employers (non housing high demand function) are only hiring temp or short term contract personnel right now. . . . not a good sign.
NC Jim,
Yes they are the same people. The same people that made billions by selling CDOs are now making billions in equity speculation. As long as the wealth keeps getting concentrated, everything is moving along swimmingly.
The monthly divergence between Toyota and GM may be just that, no? Did GM have a horrible month last year...accounting for that bright looking 6% increase? [Were "incentives" part of this picture as they were in the past to clear inventory of cars nobody wanted unless they were discounted?] Isn't this a case of not having a CR-like chart of GM sales over the past couple of years --real "intelligence"?
Overall US auto sales reached their peak in 05, (the start of the recession in my book which looks at this consumer society and not the BEA for the official call) and is not forecast by any of the major auto makers to return in the near future.
So what is the import of this GM news? Assurance that things are improving? That you should take your mind off oil prices, Iraq, home foreclosures and generally feel better?
todays market is profiteering based belief in a cut. If they get it, these longs are early. If not they will spook out fast.
personally I don't think there will be a cut unless more crisis dictates before next mtg. but not cutting may precipitate a broad capitulation...this month tells the tale
x-man ,I agree with you.No rate cut if S&P 500 is closer to 1500 than 1400 and it will be a big disappointment.Investors will realize that " Ben is not our friend".
It seems to me that there is a disconnect in opinion as to the state of personnel income growth. Averages show growth that bulls point to as recession proofing (see ac's post above). Others point to studies that show declining real income in the $100k and below population and foresee economic trouble.
I suggest (but cannot quantify) that the old income distribution which was the familar bell curve with a large middle class has been replaced by a bimodal distribution with an upper income mode rapidly moving up the income scale whereas a smaller middle class is slowly sliding backwards. In a bimodal distribution, measures of central tendency (mean,median) are not useful and can be misleading.
It is more difficult but I suggest that comments about financial status must identify the population under discussion to have any meaning.
This is a weakness in the broad financial press. Averages are so much easier to use.
Volume is low, the big action is on hold until after Sept 18th rate announcement. Makes sense that they create wealth effect using the stock market but they need the FED to cut rates and several times to at least 4% to keep it alive.
NC Jim,
Thank you for making my point far better than I could. Keep in mind that a very decent part of the lower bulge are immigrant on their way thorugh poverty. Most of it, though, is the former middle class getting squeezed into oblivian as we (MMI alert!) use them as our cannon fodder in the war against inflation.
I agree that few more bubbles are still in the works. But they probably don't have much time left, maybe another 6 months or so. Eventually the american underconsuming consumer will pop those bubbles.
Second Robert's nod to NC Jim and again auto sales reflect this middle class squeeze with hi-end vehicles not suffering nearly as badly.
This bit "use them ("immigrants on their way thorough poverty") as our cannon fodder in the war against inflation." reminds me that 3 of the 6 Utah miners buried in that "retreat mining" were Mexicans.
ac, let's wait for Wall Street bonuses this year. That will be very important story as those folks are the core of private investment community.
I suspect the upper bulge in NC Jim's bimodal distribution is numerically WAAAAAY smaller than the lower bulge.