GO
Loading...

Halftime: Bullish GM IPO; Then Play Autos With ‘This’

Wednesday, 3 Nov 2010 | 1:03 PM ET

On Wednesday the traders were looking at opportunities in the auto space after the latest GM sales data sparked optimism about the company's approaching IPO.

With sales up 3.5%, October's results suggest consumers have grown more willing to open their wallets again and make big ticket purchases - in this case cars.

“The consumer is starting to feel that the worst is over and they’re growing more confident,” says GM VP of US Sales Operation Don Johnson in a live interview with the Fast Money.

GM Sales Rise
GMC U.S. sales rise 3.5 percent, with CNBC's Phil Lebeau, and John Johnson, GM's VP of sales.

Looking at the numbers GM sold 183,392 core brand units during October of this year, compared to 162,514 at the same time in 2009. GM's core brands include Buick, Cadillac, Chevrolet and GMC.

”The story in sales has been good – it shows that our strategy is working focusing on our 4 core brands,” adds Johnson. The economy is showing "signs of a steady recovery, and we do believe they will bode well for the auto industry."

That may bode well for the upcoming IPO. According to published reports, GM is expected to raise about $13 billion in its IPO by selling 365 million common shares for $26 to $29 each sometime this month.

How should you position now?

Instant Insights with the Fast Money trader

Ahead of the IPO, I’d sell out of Ford and into GM, says Brian Kelly. Not only are they showing better than expected sales, a recent filing showed GM would not have to pay federal taxes on up to $45 billion in profits.

However, a better play may be long platinum, adds Kelly. It’s used heavily in catalytic converters. For a bullish bet I’d go long PPLT .

I would not play GM, counters Patty Edwards. Maybe I’ll miss something big but I’m willing to take that risk. However I agree that platinum is a good way to play autos if you’re bullish. However, I’d do it long PGM.

--------

GOLD TRYING TO TELL YOU SOMETHING

The big market tell on Wednesday may be gold , which traded lower ahead of the Fed announcement.

What should you make of it?

Gold trading lower, suggests to me the Street doesn’t expect QE to be that large, says Jon Najarian. Talk of $500 billion over 6 months is probably too big.

If you're looking at gold as a sign of future dollar strength or weakness - one thing the market is forgetting is monetary retaliation, says Brian Kelly. What if other nations make counters moves in the wake of the Fed’s QE2 announcement. That could be bullish for the dollar.

--------

HISTORY LESSON

If you believe that history repeats itself, then you might want to take a bullish position into the close.

According to Birinyi, on Fed decision day the S&P has closed higher 4 out of the last 5 times, with an average gain of about half a percent since March 2009, remarks host Melissa Lee.




______________________________________________________
Got something to to say? Send us an e-mail at fastmoney-web@cnbc.com and your comment might be posted on the Rapid Recap. If you'd prefer to make a comment, but not have it published on our Web site, send those e-mails to fastmoney@cnbc.com.

Trader disclosure: On November 3rd, 2010, the following stocks and commodities mentioned or intended to be mentioned on CNBC’s Fast Money were owned by the Fast Money traders; Cortes is short (AAPL); Cortes owns (GOOG); Cortes is short (RSX); Cortes is long S&P 500; Cortes owns (K); Cortes owns (TSN); Cortes owns (CLX); Cortes is short crude oil; Cortes is short gold; Cortes owns U.S. Treasuries; Jon Najarian owns (BP) short calls; Jon Najarian owns (LEN) short calls; Jon Najarian owns (WYNN) short calls; Jon Najarian owns (LVS) short calls; Jon Najarian owns (MGM) short calls; Jon Najarian owns (NTRI)

For Patty Edwards
Edwards owns (V) for clients
Edwards owns (F) for clients
Edwards owns (GS) for clients
Edwards owns (AAPL) for clients
Edwards owns (GOOG) for clients
Edwards owns (GLD) for clients
Edwards owns (PGM) for clients
Edwards owns (HLF) for clients
Edwards owns (JNK) for clients
Edwards owns (XOM) for clients
Edwards owns (CVX) for clients
Edwards owns (PFE) for clients
Edwards owns (WFMI) for clients
Edwards owns (KMB) for clients
Edwards owns (EXC) for clients
Edwards owns (DUK) for clients
Edwards owns (AEP) for clients

For Brian Kelly
Accounts managed by Kanundrum Capital own (GLD)
Accounts managed by Kanundrum Capital own (GDXJ)
Accounts managed by Kanundrum Capital own (TLT)
Accounts managed by Kanundrum Capital own (TIP)
Accounts managed by Kanundrum Capital own (SLV)
Accounts managed by Kanundrum Capital own (CLF)
Accounts managed by Kanundrum Capital own (ANDE)
Accounts managed by Kanundrum Capital own (GPRE)
Accounts managed by Kanundrum Capital own (JJG)
Accounts managed by Kanundrum Capital own Euros
Accounts managed by Kanundrum Capital are short Japanese Yen

For Ed Mills
***No Disclosures***

CNBC.com with wires.

  Price   Change %Change
F
---
SWC
---
ETFS PHY PLAT
---

Featured

Contact Halftime Report

  • Showtimes

    Halftime Report - Weekdays 12p ET
    Fast Money - Weekdays 5p ET
  • Scott Wapner is host of the "Fast Money Halftime Report," which airs weekdays from 12 p.m. to 1 p.m. ET.