Will The Automotive Deadlock Be Broken Next Week?

Over $7 trillion dollars have been made available by the US government to rescue the financial sector and the economy. That’s about $23,000 for every American, and more than half of US GDP. However, not much has been allocated to the beleaguered auto industry and Detroit’s Big Three yearns for a larger piece of the pie to save their hides.

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GM Chrysler Merger Talks Unveiled

It is no secret that General Motors is barely surviving in this economic upheaval. GM share price continue its freefall, reaching an unprecedented trough in over 50 years.

There are bankruptcy fears and the automotive giant looked vulnerable even after insisting that they are not seeking bankruptcy protection.

Fellow car giant, Chrysler, is not having a good time either. In fact, Chrysler could be in worse shape financially. According to the Wall Street Journal, there are merger and acquisition talks involving GM and Chrysler.

Chrysler is owned by Cerberus Capital Management, which controls 80.1% of the company. It also owns 51% of the automotive lending company GMAC, while GM owns the other 49%. Cerberus was reported to have proposed to trade its stake in Chrysler to GM, while Cerebus would receive GM’s stake in GMAC in return.

GM and Chrysler are two of the notorious “Big Three” in the automotive industry. But this industry, like many others in recent months and years, has had its value decrease due to the economic turmoil in the United States. The 100-year-old GM and the 83-year-old Chrysler would shake up the entire industry even more with a merger, though in less than ideal circumstances.

Cerberus is only a year removed from purchasing a controlling interest in Chrysler, and two years removed from buying 51% of GMAC. Yet the private-equity firm is already looking to sell both.

According to sources that talked to the Wall Street Journal, the merger negotiations between GM and Chrysler began over a month ago, before the most recent crashes in the stock market. However, these economic troubles and the falling prices of both GM and Chrysler stock have put talks of a merger on hold. As soon as markets stabilize, however, the merger talks between GM, Chrysler and Cerberus may resume.

GM and Chrysler were close to a possible merger last year until Cerberus bought out most of Chrysler. GM was also in brief talks to merge with Ford in 2005.

Chrysler sales went down 33% in September, while GM sales went down by 16%. Sales of automobiles as a whole in the United States are down 13% this year.

General Motors Unveils Fuel-Efficient 2010 Camaro

This is the car – 2010 Chevrolet Camaro, which General Motors is unveiling as part of its revamp to capture an increasing segment of car buyers who favor fuel-efficient models. No more gas guzzling SUVs and trucks.

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Will Investors Hold The Fort At Dow Jones?

Since opening this Monday, the bulls have taken flight at Dow Jones and the index is descending steadily towards March lows of 11850.

As I mentioned before, if investors can or are willing to hold the fort here, we can look forward to a sustained upswing for the next week or so, barring unforeseen disasters.

Read the full article at http://jeflin.net

Strong Dollar Gives Hope For Recovering Economy

The red ink continues for the second straight day on the Dow Jones, even the sprightly oil sector was not spared.

Oil prices was hit by a strengthening dollar after the Fed chairman, Bernanke said the economy remains under pressure, but he is unlikely to cut interest rates again soon.

Read the full article at http://jeflin.net