Posts

May 31, 2018

Global Market Comments
May 31, 2018
Fiat Lux

Featured Trade:
(MONDAY, JUNE 11, 2018, FORT WORTH, TEXAS, GLOBAL STRATEGY LUNCHEON),
(ARE WE SEEING “PEAK AUTO SALES”?),
(GM), (TM), (F), (HMC), (TSLA) (NSANY),
(TESTIMONIAL)

My Personal Leading Economic Indicator

There is no limit to my desire to get an early and accurate read on the US economy, which at the end of the day is what dictates the future of all of our investments.

Honda (HMC) and Nissan (NSANY) import millions of cars each year through their Benicia, California facilities, where they are loaded on to hundreds of rail cars for shipment to points inland as far as Chicago.

In 2009, when the US car market shrank to an annualized 8.5 million units, I flew over the site and it was choked with thousands of cars parked bumper to bumper, rusting in the blazing sun, bereft of buyers.

Then, ?cash for clunkers? hit (remember that?). The lots were emptied in a matter of weeks, with mile long trains lumbering inland, only stopping to add extra engines to get over the Sierras at Donner Pass. The stock market took off like a rocket, with the auto companies leading.

I flew over the site last weekend, and guess what? The lots are full again. During the most recent quarter, demand for new cars raced up to an annual 17 million car rate. Japanese cars are selling so fast in the US that they can?t load them on to trains fast enough.

It is all further evidence that my bullish view on the US economy is correct, that multiple crisis overseas are meaningless, and that the stock market is going to add another 5-10% by the end of the year. The auto industry should lead, especially General Motors (GM) and Ford (F).

As for Tesla (TSLA), better to buy the car than the stock.

Sorry the photo is a little crooked, but it’s tough holding a camera in one hand and a plane’s stick with the other, while flying through the turbulence of the San Francisco Bay’s Carquinez Straight.

Air traffic control at nearby Travis Air Force base usually has a heart attack when I conduct my research in this way, with a few joyriding C-130?s having more than one near miss.

F
GM
HMC

Honda Car Lot

TeslaTesla: Better to Buy the Car than the Stock

Time to Take Another Ride with General Motors

It is safe to say that all of the bad news is finally in the price at General Motors (GM).

In the wake of the latest batch of recalls, the total number of cars slated for mandatory repairs now equals virtually all of the company?s production of the last five years.

Woe to the outside supplier who provided those faulty, but cheap ignition switches to the beleaguered company! Penny wise, but 100 million pounds foolish!

What is more important is that ace mediator, Kenneth Feinberg, has finally come up with a number to offer the grieving families of the 17 who were senselessly killed driving GM?s deathtraps of yore. A fatality is now worth $1 million, and the company is offering as little as $20,000 for lesser accidents.

GM should put these numbers on their new car stickers.

In all honesty, this is just a ?feel good? gesture. The company that is actually responsible for these deaths went bankrupt in 2009, and the management long since sent into retirement to practice their gold swings. The new GM bears no legal liability whatsoever.

However, the company needs to preserve the value of its brand. The GM logo still goes out with every vehicle the firm manufactures. So, it will do the right thing for the victims.

Even if you apply these numbers to the much higher number of deaths claimed by plaintiffs? lawyers, more than 88, the total liability will not be enough to put a substantial dent in GM?s earnings. It is really just sofa change for them.

Many of the higher figures include drunk-driving deaths and fatalities of those driving at high speed without seatbelts. But every law school graduate out there is gunning for a piece of the action.

Don?t you just love America!

So all of this bad news is really good news in disguise. This will enable GM shares to catch up with those at Ford and Toyota, which have been on a tear this year. The industry seems poised to reach annual production of 17 million in 2014, an eight-year high. This will be great for profits for everyone.

I knew as much a few weeks ago, when I learned of massive insider buying of stock at GM all the way down to the middle management level. As has so often been the case this year, I waited for a dip that never came.

Now that the upside breakout is undeniable, I have to jump in. A share price appreciation up into the mid $40?s is in the cards.

The shares are starting from such a low base that even if a 5%-10% correction comes, the August, 2015 $32-$34 in-the-money bull call spread should be able to weather the selling. This strike combination particularly benefits from huge chart support at the 200 day moving average.

It doesn?t hurt that during the entire ignition crisis, GM?s market share actually rose. This was no doubt due to the heavy discount and attractive financing that was offered. What they?re losing in margin, they?re making up on volume.

Things are not so good that I am going to run out and buy a GM tomorrow. I am happy with my Tesla Model S-1, thank you very much.

GM 5-12-15

CorvetteTime to Take Another Ride with GM

2014 Trade Alert Review

When is the Mad Hedge Fund Trader a genius, and when is he a complete moron?

That is the question readers have to ask themselves whenever their smart phones ping, and a new Trade Alert appears on their screens.

I have to confess that I wonder myself sometimes.

So I thought I would run my 2014 numbers to find out when I was a hero, and when I was a goat.

The good news is that I was a hero most of the time, and a goat only occasionally. Here is the cumulative profit and loss for the 75 Trade Alerts that I closed during calendar 2014, listed by asset class.

Profit by Asset Class

Foreign Exchange 15.12%
Equities 12.52%
Fixed Income 7.28%
Energy 1.4%
Volatility -1.68%

Total 37.64%

Foreign exchange trading was my big winner for 2014, accounting for nearly half of my profits. My most successful trade of the year was in my short position in the Euro (FXE), (EUO).

I piled on a double position at the end of July, just as it became apparent that the beleaguered European currency was about to break out of a multi month sideway move into a pronounced new downtrend.

I then kept rolling the strikes down every month. Those who bought the short Euro 2X ETF (EUO) made even more.

The fundamentals for the Euro were bad and steadily worsening. It helped that I was there for two months during the summer and could clearly see how grotesquely overvalued the currency was. $20 for a cappuccino? Mama mia!

Nothing beats on the ground, first hand research.

Stocks generated another third of my profits last year and also accounted for my largest number of Trade Alerts.

I correctly identified technology and biotech as the lead sectors for the year, weaving in and out of Apple (AAPL) and Gilead Sciences (GILD) on many occasions. I also nailed the recovery of the US auto industry (GM), (F).

I safely stayed away from the energy sector until the very end of the year, when oil hit the $50 handle. I also prudently avoided commodities like the plague.

Unfortunately, I was wrong on the bond market for the entire year. That didn?t stop me from making money on the short side on price spikes, with fixed income chipping a healthy 7.28% into the kitty.

It was only at the end of the year, when the prices accelerated their northward trend that they started to cost me money. My saving grace was that I kept positions small throughout, doubling up on a single occasion and then coming right back out.

My one trade in the energy sector for the year was on the short side, in natural gas (UNG), selling the simple molecule at the $5.50 level. With gas now plumbing the depths at $2.90, I should have followed up with more Trade Alerts. But hey, a 1.4% gain is better than a poke in the eye with a sharp stick.

In which asset class was I wrong every single time? Both of the volatility (VIX) trades I did in 2014 lost money, for a total of -1.68%. I got caught in one of many downdrafts that saw volatility hugging the floor for most of the year, giving it to me in the shorts with the (VXX).

All in all, it was a pretty good year.

What was my best trade of 2014? I made 2.75% with a short position in the S&P 500 in July, during one of the market?s periodic 5% corrections.

And my worst trade of 2014? I got hit with a 6.63% speeding ticket with a long position in the same index. But I lived to fight another day.

After a rocky start, 2015 promises to be another great year. That is, provided you ignore my advice on volatility.

FXE 12-31-14

SPY 12-31-14

TLT 12-31-14

WTIC 12-31-14

VIX 12-31-14

Here is a complete list of every trade I closed last year, sorted by asset class, from best to worse.

Date

Position

Asset Class

Long/short

?

?

?

?

?

?

7/25/14

(SPY) 8/$202.50 – $202.50 put spread

equities

long

?

?

?

?

?

2.75%

10/16/14

(GILD) 11/$80-$85 call spread

equities

long

?

?

?

?

?

2.57%

5/19/14

(TLT) 7/$116-$119 put spread

fixed income

long

?

?

?

?

?

2.48%

4/4/14

(IWM) 8/$113 puts

equities

long

?

?

?

?

?

2.38%

7/10/14

(AAPL) 8/$85-$90 call spread

equities

long

?

?

?

?

?

2.30%

2/3/14

(TLT) 6/$106 puts

equities

long

?

?

?

?

?

2.27%

9/19/14

(IWM) 11/$117-$120 put spread

equities

long

?

?

?

?

?

2.26%

10/7/14

(FXE) 11/$127-$129 put spread

foreign exchange

long

?

?

?

?

?

2.22%

9/26/14

(IWM) 11/$116-$119 put spread

equities

long

?

?

?

?

?

2.21%

4/17/14

(TLT) 5/$114-$117 put spread

fixed income

long

?

?

?

?

?

2.10%

8/7/14

(FXE) 9/$133-$135 put spread

foreign exchange

long

?

?

?

?

?

2.07%

10/2/14

(BAC) 11/$15-$16 call spread

equities

long

?

?

?

?

?

2.04%

4/9/14

(SPY) 5/$191-$194 put spread

equities

long

?

?

?

?

?

2.02%

10/15/14

(DAL) 11/$25-$27 call spread

equities

long

?

?

?

?

?

1.89%

9/25/14

(FXE) 11/$128-$130 put spread

foreign exchange

long

?

?

?

?

?

1.86%

6/6/14

(JPM) 7/$52.50-$55.00 call spread

equities

long

?

?

?

?

?

1.81%

4/4/14

(SPY) 5/$193-$196 put spread

equities

long

?

?

?

?

?

1.81%

3/14/14

(TLT) 4/$111-$114 put spread

fixed income

long

?

?

?

?

?

1.68%

10/17/14

(AAPL) 11/$87.50-$92.50 call spread

equities

long

?

?

?

?

?

1.56%

10/15/14

(SPY) 11/$168-$173 call spread

equities

long

?

?

?

?

?

1.51%

7/3/14

(FXE) 8/$138 put spread

foreign exchange

long

?

?

?

?

?

1.51%

10/9/14

(FXE) 11/$128-$130 put spread

foreign exchange

long

?

?

?

?

?

1.48%

9/19/14

(FXE) 10/$128-$130 put spread

foreign exchange

long

?

?

?

?

?

1.45%

10/22/14

(SPY) 11/$179-$183 call spread

equities

long

?

?

?

?

?

1.44%

5/29/14

(TLT) 7/$118-$121 put spread

fixed income

long

?

?

?

?

?

1.44%

2/24/14

(UNG) 7/$26 puts

energy

long

?

?

?

?

?

1.40%

2/24/14

(BAC) 3/$15-$16 call spread

equities

long

?

?

?

?

?

1.39%

6/23/14

(SPY) 7/$202 put spread

equities

long

?

?

?

?

?

1.37%

9/29/14

(SPY) 10/$202-$205 Put spread

equities

long

?

?

?

?

?

1.29%

5/20/14

(AAPL) 7/$540 $570 call spread

equities

long

?

?

?

?

?

1.22%

9/26/14

(SPY) 10/$202-$205 Put spread

equities

long

?

?

?

?

?

1.22%

5/22/14

(GOOGL) 7/$480-$520 call spread

equities

long

?

?

?

?

?

1.16%

5/19/14

(FXY) 7/$98-$101 put spread

foreign exchange

long

?

?

?

?

?

1.14%

1/15/14

(T) 2/$35-$37 put spread

equities

long

?

?

?

?

?

1.08%

3/3/14

(TLT) 3/$111-$114 put spread

fixed income

long

?

?

?

?

?

1.07%

1/28/14

(AAPL) 2/$460-$490 call spread

equities

long

?

?

?

?

?

1.06%

4/24/14

(SPY) 5/$192-$195 put spread

equities

long

?

?

?

?

?

1.05%

6/6/14

(CAT) 7/$97.50-$100 call spread

equities

long

?

?

?

?

?

1.04%

7/23/14

(FXE) 8/$134-$136 put spread

foreign exchange

long

?

?

?

?

?

0.99%

8/18/14

(FXE) 9/$133-$135 put spread

foreign exchange

long

?

?

?

?

?

0.94%

11/4/14

(BAC) 12/$15-$16 call spread

equities

long

?

?

?

?

?

0.88%

4/9/14

(SPY) 6/$193-$196 put spread

equities

long

?

?

?

?

?

0.88%

7/25/14

(SPY) 8/$202.50 -205 put spread

equities

long

?

?

?

?

?

0.88%

6/6/14

(MSFT) 7/$38-$40 call spread

equities

long

?

?

?

?

?

0.87%

10/23/14

(FXY) 11/$92-$95 puts spread

foreign exchange

long

?

?

?

?

?

0.86%

7/23/14

(TLT) 8/$117-$120 put spread

fixed income

long

?

?

?

?

?

0.81%

3/5/14

(DAL) 4/$30-$32 Call spread

equities

long

?

?

?

?

?

0.76%

4/10/14

(VXX) long volatility ETN

equities

long

?

?

?

?

?

0.76%

1/30/14

(UNG) 7/$23 puts

equities

long

?

?

?

?

?

0.66%

4/1/14

(FXY) 5/$96-$99 put spread

foreign currency

long

?

?

?

?

?

0.60%

1/15/14

(TLT) 2/$108-$111 put spread

equities

long

?

?

?

?

?

0.47%

3/6/14

(EBAY) 4/$52.50- $55 call spread

equities

long

?

?

?

?

?

0.24%

10/14/14

(TBT) short Treasury Bond ETF

fixed income

long

?

?

?

?

?

0.22%

3/28/14

(VXX) long volatility ETN

equities

long

?

?

?

?

?

0.20%

7/17/14

(TBT) short Treasury Bond ETF

fixed income

long

?

?

?

?

?

0.08%

3/26/14

(VXX) long volatility ETN

equities

long

?

?

?

?

?

0.06%

7/8/14

(TLT) 8/$115-$118 put spread

fixed income

long

?

?

?

?

?

-0.18%

4/28/14

(SPY) 5/$189-$192 put spread

equities

long

?

?

?

?

?

-0.45%

3/5/14

(GE) 4/$24-$25 call spread

equities

long

?

?

?

?

?

-0.73%

4/28/14

(VXX) long volatility ETN

volatility

long

?

?

?

?

?

-0.81%

4/24/14

(TLT) 5/$113-$116 put spread

fixed income

long

?

?

?

?

?

-0.87%

4/28/14

(VXX) long volatility ETN

volatility

long

?

?

?

?

?

-0.87%

6/6/14

(IBM) 7/$180-$185 call spread

equities

long

?

?

?

?

?

-1.27%

9/30/14

(SPY) 11/$185-$190 call spread

equities

long

?

?

?

?

?

-1.51%

10/9/14

(TLT) 11/$122-$125 put spread

fixed income

long

?

?

?

?

?

-1.55%

9/24/14

(TSLA) 11/$200 call spread

equities

long

?

?

?

?

?

-1.62%

2/27/14

(SPY) 3/$189-$192 put spread

equities

long

?

?

?

?

?

-1.67%

3/6/14

(BAC) 4/$16 calls

equities

long

?

?

?

?

?

-2.01%

10/14/14

(SPY) 10/$180-$184 call spread

equities

short

?

?

?

?

?

-2.13%

11/14/14

(BABA) 12/$100-$105 call spread

equities

short

?

?

?

?

?

-2.38%

10/20/14

(SPY) 11/$197-$202 call spread

equities

short

?

?

?

?

?

-2.72%

7/3/14

(GM) 8/$33-$35 call spread

equities

long

?

?

?

?

?

-2.91%

3/7/14

(GM) 4/$34-$36 call spread

equities

long

?

?

?

?

?

-2.96%

11/25/14

(SCTY) 12/47.50-$52.50 call spread

equities

long

?

?

?

?

?

-3.63%

10/20/14

(SPY) 11/$197-$202 call spread

equities

short

?

?

?

?

?

-4.22%

4/14/14

(SPY) 5/$188-$191 put spread

equities

long

?

?

?

?

?

-6.63%

 

John Thomas - BeachWhat a Year!

Mad Day Trader Jim Parker?s Q1, 2015 Views

Mad Day Trader Jim Parker is expecting the first quarter of 2015 to offer plenty of volatility and loads of great trading opportunities. He thinks the scariest moves may already be behind us.

After a ferocious week of decidedly ?RISK OFF? markets, the sweet spots going forward will be of the ?RISK ON? variety. Sector leadership could change daily, with a brutal rotation, depending on whether the price of oil is up, down, or sideways.

The market is paying the price of having pulled forward too much performance from 2015 back into the final month of 2014, when we all watched the December melt up slack jawed.

Jim is a 40-year veteran of the financial markets and has long made a living as an independent trader in the pits at the Chicago Mercantile Exchange. He worked his way up from a junior floor runner to advisor to some of the world?s largest hedge funds. We are lucky to have him on our team and gain access to his experience, knowledge and expertise.

Jim uses a dozen proprietary short-term technical and momentum indicators to generate buy and sell signals. Below are his specific views for the new quarter according to each asset class.

Stocks

The S&P 500 (SPY) and NASDAQ have met all of Jim?s short-term downside targets, and a sustainable move up from here is in the cards. But if NASDAQ breaks 4,100 to the downside, all bets are off.

His favorite sector is health care (XLV), which seems immune to all troubles, and may have already seen its low for the year. Jim is also enamored with technology stocks (XLK).

The coming year will be a great one for single stock pickers. Priceline (PCLN) is a great short, dragged down by the weak Euro, where they get much of their business. Ford Motors (F) probably bottomed yesterday, and is a good offsetting long.

Bonds

Jim is not inclined to stand in front of a moving train, so he likes the Treasury bond market (TLT), (TBT). He thinks the 30-year yield could reach an eye popping 2.25%. A break there is worth another 10 basis points. Bonds are getting a strong push from a flight to safety, huge US capital inflows, and an endlessly strong dollar.

Foreign Currencies

A short position in the Euro (FXE), (EUO) is the no brainer here. The problem is one of good new entry points. Real traders always have trouble selling into a free fall. But you might see profit taking as we approach $1.16 in the cash market.

The Aussie (FXA) is being dragged down by the commodity collapse and an indifferent government. The British pound (FXB) is has yet to recover from the erosion of confidence ignited by the Scotland independence vote and has further mud splattered upon it by the weak Euro.


Precious Metals

GOLD (GLD) could be in a good range pivoting off of the recent $1,140 bottom. The gold miners (GDX) present the best opportunity at catching some volatility. The barbarous relic is pulling up the price of silver (SLV) as well. Buy the hard breaks, and then take quick profits. In a deflationary world, there is no long-term trade here. It is a real field of broken dreams.

Energy

Jim is not willing to catch a falling knife in the oil space (USO). He has too few fingers as it is. It has become too difficult to trade, as the algorithms are now in charge, and a lot of gap moves take place in the overnight markets. Don?t bother with fundamentals as they are irrelevant. No one really knows where the bottom in oil is.

Agriculturals

Jim is friendly to the ags (CORN), (SOYB), (DBA), but only on sudden pullbacks. However, there are no new immediate signals here. So he is just going to wait. The next directional guidance will come with the big USDA report at the end of January. The ags are further clouded by a murky international picture, with the collapse of the Russian ruble allowing the rogue nation to undercut prices on the international market.

Volatility

Volatility (VIX), (VXX) is probably going to peak out her soon in the $23-$25 range. The next week or so will tell for sure. A lot hangs on Friday?s December nonfarm payroll report. Every trader out there remembers that the last three visits to this level were all great shorts. However, the next bottom will be higher, probably around the $16 handle.

If you are not already getting Jim?s dynamite Mad Day Trader service, please get yourself the unfair advantage you deserve. Just email Nancy in customer support at support@madhedgefundtrader.com and ask for the $1,500 a year upgrade to your existing Global Trading Dispatch service.

 

Volatility WeeklyVolatility Weekly

 

Volatility Monthly (2)Volatility Monthly

 

Euro to the DollarEuro to the Dollar

 

PCLN 1-7-15

F 1-7-15

Jim Parker

Tesla Takes Off the Gloves

Tesla (TSLA) CEO, Elon Musk, has taken off the gloves and is offering an innovative new hybrid lease that promises to bring in thousands of new buyers of his revolutionary, all electric S-1 sedan.

The package eliminates the downside risk that concerned prospective customers about the resale value of their cars down the road. Under the program, Tesla will buy back your car at 50% of the purchase price after 36-39 months. This equates to a rate of depreciation that is on par with other premium, high-end vehicles, like Mercedes, Porsche, and Jaguar.

Assuming that you buy the 85 kWh, 270 miles range S-1 for $79,900, this works out to a monthly payment of $1,025, also in line with the market. Tesla people tell me that since the plan was announced, 90% of the buyers have opted for the lease option. Many are actual cash buyers who are placing the maximum $50,000 down with the intention to pay off the $30,000 balance in six months, just to get the free put option on the vehicle.

Tesla is also moving full steam ahead with its national supercharger network, which will enable electric car owners to drive coast to coast. Only 45 minutes is required to obtain a full charge. Just last night, my S-1 upgraded itself online and I was presented with new superchargers in Gilroy and Bakersfield, California. I can now make it down to San Diego.

Elon has promised to take his family on such an expedition as soon as the infrastructure is in place some time next year. I am considering my own trip from San Francisco to Chicago, which according to MapQuest, I could do in 30 hours. After all, it will be free, less the investment of my own time at the wheel, and the wear and tear on the tires.

When I was a teenager during the 1960?s, I hitchhiked from the West to the East coast more than 30 times. I used to race my younger brother from Los Angeles to New York, who finally won with a record time of 49 hours. I met a lot of strange people in those days. Once, I was picked up in Texas by a nervous, chain-smoking woman driving a souped up Dodge Dart fleeing a violent husband, seeking refuge in California. She drove like a bat out of hell the entire way, and we made the Golden State in record time. It?s funny, the things you remember.

A drive across the Great American Desert can have a cleansing, almost rejuvenating effect, as long as you don?t mind the country western music on the radio. The last time I did this was during the eighties, when I drove my ?sister to graduate school at Texas A&M. That little foray found me line dancing with a bunch of drunken Aggies in a College Station bar. How is it that everything surreal that happens to me always occurs in Texas?

But I digress. Tesla has quit making the 40 kWh, 130-mile range version of the S-1, as virtually all demand was for the long range model. The waiting list is now down to two months, which is why they took the next step on the marketing front. The four-wheel drive Model X is still on schedule for 2014, and I am number 645 on the waiting list for that vehicle. I have already wired my Lake Take house for 220 volt recharging. Who cares what the price is!

When I stop at traffic lights in the city, I still get applause and thumbs up from cheering groups of pedestrians. And then there are those little notes tucked under the windshield wipers from admiring young women asking for rides. That, alone, is worth the $100k. The State of California has already sent me my $2,500 Clean Vehicle Rebate, and I plan to claim my $7,500 Qualified Plug-in Electric Drive Motor Vehicle Credit (form 8936) on my federal tax return this year.

I have received a lot of emails about the weekend Barron?s article panning Tesla. Elon says he can drop the cost of his batteries from $400 to $200 in five years, making his planned mass market $40,000, 200 mile range ?Gen III? Tesla profitable. General Motors (GM) says he can?t. Given the recent track record of the two companies, I am more inclined to back Elon.

Let me tell you what is really going on here. The automobile establishment absolutely hates Tesla, because Musk has proven everything they said was impossible. Tesla doesn?t advertise, as its innovative, low cost business model sells all of its cars online. This is why they are banned in Texas, which hasn?t the slightest interest in seeing non-oil forms of transportation succeed.

Tesla also doesn?t advertise. Open the pages of Barron?s, and you will find ads extolling the virtues of General Motors, Ford, (F), and Chrysler, but not one from the disruptive Tesla. It?s the same with the financial industry. Barron?s often publishes damning expos?s on tiny companies you have never heard of, but extolls the great wisdom and foresight of PIMCO, Fidelity, and Morgan Stanley, their largest advertisers. That is the free market, capitalist world we live in.

Tesla Gen III Tesla

JT with Tesla

Tesla

Tesla Fuel Economy Made in America

Taking Ford Out for a Spin

I have been trying to buy this stock for a month. Not because I like their pedestrian cars (except the new, muscular, retro Mustang), but because it is one of the great turnaround stories in business history.

Today?s earnings announcement gives us that window. It delivered over $3 billion in profits during Q4, 2012. But the market decided to focus instead on the expectation of a loss from European operations of $2 billion in 2013, compared to only $27 million in 2011 and $1.7 billion in 2012. That was enough to drop (F) by 15% from its mid-January high.

Europe has definitely been a nightmare for the entire auto industry. When your economy crashes, your bank goes under, and you lose your job, the last thing you do is run out and buy a new car. Tough union rules prevent carmakers from downsizing to a level appropriate with current demand. Everyone is bleeding on their European operations, not just Ford.

Another problem is the collapsing yen, which is making Japanese vehicles much more cost competitive. Get the beleaguered Japanese currency above ?100 to the dollar and keep it there, and that could erode market share for the American makers.

Dig deeper, and you?ll find there?s more to the story. Half of the European losses come from one time only charges. That is far and away offset by a North American market that is absolutely on fire. Indeed, the total size of the US market could soar from 15 million units last year, to 16 million units this year, up from the 9.5 million nadir we saw in 2009. Ford is successfully cutting costs. The rocketing price of palladium (PALL), a key component of the catalytic converters that go into new cars, is telling you as much.

There is no doubt that Ford CEO, Alan Mulally, is a genius. Ford is also a high yield play, with a dividend of 2.90% off of today?s close, which is set to rise. Yet the shares are trading at a 38% discount to the S&P 500. That sounds like a bargain to me for the only US auto manufacturer to avoid a government bailout.

F 1-30-13

PALL 1-30-13

Mustang

Think I?ll Take Ford Out for a Spin