How Will It Play Out?
According to CNBC’s Phil LeBeau Congress will probably give the Big 3 the money needed to avoid bankruptcies. “With the economy already weakened and with the bailout of Citigroup earlier, Congressional leaders will feel compelled to approve money for the Big 3. Even critics of Detroit are sending signals that a bailout will eventually pass,” he says.
“Still, the CEOs of the Big 3 know they are going to be grilled about their "business plans". The biggest question: how confident can Congress be that $25 Billion is enough money to rescue Detroit’s auto makers?”
To maker matters worse, automakers are scheduled to report November U.S. auto sales on Tuesday.
JPMorgan analyst Himanshu Patel said although the Detroit Three are reporting inventory levels at historic lows, auto sales have been so weak lately that the companies may still have to reduce them.
Will weak sales and a bleak outlook translate into widespread plant closings? LeBeau doesn’t think so. “Do they need to close at least 3 or 4, absolutely.” But it’s widely believed they will be at 80% - 90% capacity by 2011.”
Is There A Trade?
According to Jon Najarian, there was big options action in Ford on Monday. Meanwhile, Jeff Macke thinks the automakers are heading lower. Phil Lebeau adds that “anyone who thinks the stock is going higher from here is playing a very risky game.”
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Trader disclosure: On Dec. 1st, 2008, the following stocks and commodities mentioned or intended to be mentioned on CNBC’s Fast Money were owned by the Fast Money traders; Adami Owns (AGU), (BTU), (C), (GS), (INTC), (MSFT), (NUE); Macke Owns (WMT), (MSFT), (UUP), (DIS); Macke Is Short (YHOO), (TM); Finerman's Firm Owns (MSFT); Finerman's Firm Is Short (IYR), (IJR), (MDY),(SPY), (IWM), (COF), (BBT), (USO), (VNO), (EQR); Finerman's Firm Owns (DSX) And Is Short (GNK); Seymour Owns (AAPL), (AA), (BAC), (F), (MER); Seygem Asset Management Is Short (EEM); Seygem Asset Management Owns (EEV)
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