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Strategies & Market Trends : The Epic American Credit and Bond Bubble Laboratory
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To: russwinter who wrote (799)9/18/2003 12:36:49 AM
From: ild  Read Replies (1) of 110194
 
From yesterday's ContraryInvestor:

As you might remember, the actual count in unit sales for the same month of August was 18.9 million, a 10% month over month increase. In fact, we have not seen a unit sales month this big since October of 2001. Of course a simplistic question is how can unit volume increase 10% and sales increase 0.5%? Before jumping to any massively negative conclusions, these two numbers are virtually never going to match, but the discrepancy for August data is a bit extreme. Who knows, maybe there are huge revisions to the retail sales data to come. But reading in between the lines at the moment, it's clear as a bell that the auto manufacturers are fighting it out tooth and nail in terms of price. That ought to do wonders for profitability and the notion of fully funded pensions, don't you think?


I think GM and F are fundamental shorts. They are engaged in classical "vendor financing" scheme. I'm not able to find any information on delinquencies in their massive loan portfolios. I'm quite positive one day they will come out with a huge number of bad loans. As of now it's a classical Ponzi scheme because they pile up new loans, so the delinquencies get spread over bigger number of loans.

BWT, what China and Japan are doing is also can be called "vendor financing".
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