September 2, 2010

Bad News Out of GM Is Not News at AP

APheartsGM081210The news out of Government/General Motors the past couple of days hasn’t been particularly good.

First, August sales results were disappointing. Second, it become known today that GM will attempt to go public on November 18, a later than originally hoped post-election date chosen to hopefully allow for another reported quarterly profit to boost investors’ appetite for its shares.

As so often has been the case during Democratic administrations when unfavorable developments arise, the UK press has seen potential problems with the IPO, while the Associated Press has been acting as if all is well.

In two separate items, AP reporters couldn’t even bring themselves to tell readers what the company’s real August sales decline was.

In a report yesterday on the industry’s awful August, reporters Dee-Ann Durbin and Tom Krisher were appropriately gloomy overall, but they massaged GM’s reported result (bolds are mine throughout this post):

Americans nervous about the drumbeat of bad economic news stayed away from auto showrooms. Automakers nervous about their bottom lines didn’t offer deals to lure them in.

As a result, it was the worst August for U.S. auto sales since 1983, when the country was at the end of a double-dip recession. General Motors, Toyota, Honda and Ford all reported declines from the month before and from a year earlier.

The bleak results were a reminder that, for all the good news about the turnaround of the Detroit automakers, the market for cars and trucks in the United States remains frail. Initial data showed sales came in at about 997,000, down 5 percent from July, according to AutoData Corp.

“Coming in below a million units is eye-opening for August,” said Paul Ballew, a former chief economist for GM. “I never thought I’d see that. That’s a tepid month for August, which is supposed to be one of the top months of the year.”

“We know it’s going to be a modest recovery. It’s going to be bumpy,” said Don Johnson, GM’s vice president of U.S. sales. “What we don’t want to do is get back to putting incentives in the marketplace to keep the plants running.”

… Overall, sales at Ford were down 5 percent from July and 11 percent from last August. At GM, sales of its four remaining brands were down 7 percent from a month ago and 11 percent from a year ago.

For the year so far, sales are up 5 percent at GM, which is preparing for an initial public offering of its stock that could come as early as next month.

We learned today that the “next month” part concerning the IPO isn’t going to happen. In her report today, Durbin’s massage was more thorough:

Analyst: GM plans to sell shares on Nov. 18

General Motors plans to start trading shares again on Nov. 18, timing that allows the company one more quarter of earnings to build its case to investors, a firm that researches initial public offerings said Thursday.

Scott Sweet, the managing partner of IPO Boutique, said GM plans to price the shares on Nov. 17 and begin selling them the next day. He said the automaker wants to start a two-week a road show to drum up investor interest on Nov. 3, the day after the midterm congressional elections.

It’s unclear if the IPO dates have been finalized. Two people with knowledge of the process say the automaker’s board hasn’t approved a date for the IPO but is expected to meet next week to discuss the issue. GM is in a “quiet period” before an IPO, so no one is authorized to discuss the process publicly.

… Sweet said his information comes from multiple people on Wall Street but declined to name them. He says the company hasn’t yet established a price for the shares, but hopes to raise $15 to $20 billion with the initial public offering.

The timing could disappoint some Democrats who supported the government’s $50 billion bailout of GM last year and wanted to point to a successful IPO before the elections.

… But one more quarter of earnings could help the automaker establish that it is healthy and capable of making sustained profits. GM earned $2.2 billion in the first half of 2010 despite depressed U.S. auto sales, but it lost $3.4 billion in the fourth quarter of last year.

GM also hopes the U.S. auto market sees some modest improvement this fall. On Wednesday it said its U.S. sales fell 5 percent from July and 11 percent from last August, when they were boosted by the Cash for Clunkers program.

The fact is, as seen in this Wall Street Journal compilation, that GM’s August 2010 sales were 24.5% lower than August 2009. For Dee-Ann Durbin’s and Tom Krisher’s benefit, that’s the result you get when you go to the WSJ link and compare the 185,105 vehicles sold in August 2010 to the 245,066 sold in 2009, and divide the difference (59,961) by 245,066. Yes, according to the company, sales of the company’s four remaining brands were down “only” 11% from a year ago. But it’s your job to report the full story, not merely to parrot the company’s press release.

The folks at the Financial Times understand that, and also see how a company reporting declining sales in its largest market might encounter a bit of difficulty foisting its shares on the investing public. Reporter Bernard Simon also managed to find space for the actual year-over-year sales decline in yesterday’s coverage (link requires free registration):

GM Sales Dip Casts Shadow Over IPO

General Motors’ sales in its core US market sagged in August, potentially complicating its bid to drum up investor support for its forthcoming public share issue.

Sales were a quarter lower than in August 2009, when demand was bolstered by the Obama administration’s cash-for-clunkers scrappage incentives. GM has also eliminated four brands since then.

More worrying, however, was a 7.2 per cent decline from July. Low-margin sales to car rental operators and other fleet owners climbed to 28 per cent of the total, from 25 per cent in July. “August was definitely what we call ‘one of those months’,” said Don Johnson, GM’s head of US sales operations.

Mr Johnson said that consumers remained cautious amid an unexpectedly slow revival in employment. In the longer term, however, he forecast that there was “pent-up demand building” that would “eventually be released when the economy gets a firmer footing”.

… GM filed a bulky draft prospectus for an initial public offering with US and Canadian regulators last month. The US and Canadian governments hold 72 per cent of GM’s equity.

The document warns that in spite of a pick-up in demand since late last year, “many of the economic and market conditions that drove the [earlier] drop in vehicle sales, including declines in real estate and equity values, increases in unemployment, tightened credit markets, depressed consumer confidence and weak housing markets, continue to impact sales”.

If the recent revival falters, the prospectus warns, “our results of operations and financial condition will be materially adversely affected”.

It’s hard to fault Mr. Johnson for his optimism, but if he thinks the revival in employment has been “unexpectedly slow,” he’s been reading too many happy-talk missives from Team Obama.

Durbin at the AP and an unbylined Reuters article both report that GM will conduct its IPO “road show” during the two weeks after the November elections. Reuters says that “The final value of the IPO has not been set but one source said early plans for the IPO envisioned selling $12 billion to $16 billion in common stock and $3 billion to $4 billion in preferred stock that would convert to common stock under a mandatory provision.” That’s $15-$20 billion of the $50 billion (really more) the government “invested” in return for a 61% stake during the company’s emergence from bankruptcy. Even if the IPO flies, it will still be Government Motors.

Both Reuters and the New York Times correctly noted GMs 25% year-over-year August sale decline. Since AP couldn’t bring itself to do so, the graphic at the top right of this post, which may have seemed a bit over-the-top when it appeared a few weeks ago, is more appropriate than ever.

Cross-posted at NewsBusters.org.

AP Howler of the Day: Kasich ‘Keeping Pace’ With Strickland in OH Guv Race

KasichAndStrickland0910Talk about an in-kind contribution.

In a short item about a Democratic Governors Association election complaint about Ohio GOP gubernatorial candidate John Kasich, the Associated Press’s Julie Carr Smyth showed that she is willfully ignoring Buckeye State reality, or has been living a hermit’s existence for the past few months.

In describing Kasich’s standing against Democratic incumbent governor Ted Strickland, Smyth claimed that Kasich “is keeping pace with Strickland in polls and fundraising” (a picture of the relevant paragraph is here).

As you can see, that’s sort of like a baseball writer claiming that “The Cincinnati Reds are keeping pace with the Chicago Cubs this year”:

RCPonKasichStrickland090210

For those who aren’t following baseball closely, the Reds have a 21-1/2 game lead on the Cubs with less than 30 games remaining.

Who do you think you’re foolin’, babe?

(Answer: Relatively disengaged voters who need to given the impression that the sinking Strickland campaign is really on track to victory, instead of heading towards the first defeat of an incumbent governor in the Buckeye State in 36 years.)

Democrats are upset that Kasich appeared on Fox News and was able to give out the name of his web site and encourage viewers to donate to his campaign during Bill O’Reilly’s show on August 18. Awwww.

The election complaint is carried at a Huffington Post item courtesy of Sam Stein, a former NewsWeak (spelled that way on purpose) reporter. Two years ago, Stein claimed that Republican presidential nominee John McCain couldn’t possibly have vetted VP pick Sarah Palin because no one had visited her town’s local newspaper and looked through its archives. Well Sam, that just might be because the paper’s archives going back a decade were available online, and contained hundreds of entries. This Internet thing is pretty cool when you have a clue about how to use it.

Ben Smith at Politico, who is not being linked because of his outfit’s outrageous attempt to shut down the College Politico, seems to think that this complaint has as much validity as Stein’s unproven claim against Team McCain two years ago:

It seems to hinge on a chyron and, to my eye, is more in the great tradition of thin, high-profile election-year litigation than about winning in court.

Speaking of “in-kind contributions,” maybe Julie Carr Smyth can estimate how much value favoring Strickland we should place on her demonstrably false claim in a national news story that Kasich is only “keeping” pace with him, when the fact is that Kasich has an averaged-out double-digit lead.

Cross-posted at NewsBusters.org.

A Mixed Bag, Halfway Through the Big Econ Reports

Filed under: Business Moves,Economy,Taxes & Government — Tom @ 12:31 pm

I say we’re “halfway” because the two big ones coming in tomorrow (Uncle Sam’s Employment Situation Report and the Institute for Supply Management’s Non Manufacturing Survey) will have about that much relative impact.

Here are quick looks and quick takes on what’s come in thus far.

ISM Manufacturing

As announced yesterday, it went up to 56.3 in August from 55.5 in July, indicating very strong expansion (any reading above 50% indicates expansion). The stock market really liked it.

This is at least the third month in a row where purchasing manager optimism as expressed in the ISM report is out of sync with hard manufacturing data originating elsewhere, which has been mostly flat and sometimes declining. I don’t think that any of the data from any source is necessarily “wrong”; it’s just that ISM appears to have a large-company and surviving-company bias that has never really been important until the full weight of the POR Economy was felt. I think what’s happening is that those who are still around are pretty fired up and have picked up market share from others who were either not surveyed or who, having given up, have dropped out of the survey.

Update: Giving equal time to the doubters, David Rosenberg calls the ISM’s report “likely a huge headfake,” and predicts that it will drop into contraction within three months. If it turns out this way, it’s going to make the questions raised here (especially Question 4) seem more legitimate, whether or not there really is any conflict of interest.

ADP Employment

The payroll and employee benefits giant’s Wednesday report went negative for the first time in six months:

Private sector employment decreased by 10,000 from July to August on a seasonally adjusted basis, according to the latest ADP National Employment Report® released today. The estimated change of employment from June to July was revised down slightly, from the previously reported increase of 42,000 to an increase of 37,000. The decline in private employment in August confirms a pause in the recovery already evident in other economic data. The deceleration in employment was evident in the major sectors and by size of business. This month’s decline in employment followed six monthly increases from February through July. Over those six months the average monthly gain in employment was 37,000 with no evidence of acceleration.

This would appear not to bode well for Friday’s Employment Situtation Report.

Vehicle Sales

Ouch: Overall sales were less than a million, the worst performance since 1983, down 21% from a year ago and 5% from July. The fact that last year had Cash For Clunkers doesn’t come close to excusing away the extent of the drop.

Specifically:

  • Government/General Motors was down 24.5% from a year ago (11% in surviving brands), and down 7.2% from July. FT.com legitimately writes that this weak performance is “potentially complicating its bid to drum up investor support for its forthcoming public share issue.” Well, at least an IPO that doesn’t involve coercing Wall Street into swallowing stuff it doesn’t want.
  • Ford was down 11%, Chrysler was up 6%, and the dips at the three major Japanese makers averaged over 30%.

Weekly Initial Unemployment Claims

They came down 6,000 on a seasonally adjusted basis, a few thousand more than expected.

*  *  *  *

The Wall Street Journal is carrying a prediction that the unemployment rate is “expected to creep up to 9.6% as U.S. employers drop another 110,000 people off the payrolls.” Just in time for the disengaged to start paying attention.

Lucid Links (090210, Morning)

Filed under: Lucid Links — Tom @ 9:29 am

Do you remember during the final months of the 2008 presidential campaign when candidate Barack Obama petulantly a crowd that he wouldn’t take their guns away, because “Even if I want to take them away, I don’t have the votes in Congress”?

The implication that Obama and his administration would be have no ability to curb gun rights once in power has been proven false in the past few weeks.

First, there was the proposed ban on lead ammunition that floated out of the EPA. Yes, it was hooted down by public comment (a proposed ban on fishing sinkers is still possible), but it’s evidence that “creative” types in federal agencies and gun-grabbing groups are lying awake at night thinking about what they and cooperative bureaucrats can do to make gun ownership more expensive and impractical.

Second, there’s this (HT Volokh):

Obama Administration Reverses Course, Forbids Sale of 850,000 Antique Rifles

The South Korean government, in an effort to raise money for its military, wants to sell nearly a million antique M1 rifles that were used by U.S. soldiers in the Korean War to gun collectors in America.

The Obama administration approved the sale of the American-made rifles last year. But it reversed course and banned the sale in March – a decision that went largely unnoticed at the time but that is now sparking opposition from gun rights advocates.

A State Department spokesman said the administration’s decision was based on concerns that the guns could fall into the wrong hands.

… But gun rights advocates point out that possessing M1 rifles is legal in the United States — M1s are semi-automatics, not machine guns, meaning the trigger has to be pulled every time a shot is fired — and anyone who would buy a gun from South Korea would have to go through the standard background check.

… According to the ATF Guidebook on Firearms Importation, it would normally be legal to import the M1s because they are more than 50 years old, meaning they qualify as “curios or relics.” But because the guns were given to South Korea by the U.S. government, they fall under a special category that requires permission from the State Department before any sale.

… The White House referred questions on the issue to the Pentagon, which referred questions to the U.S. Embassy in South Korea, which deferred back to the State Department.

Episodes such as these show why the NRA and Buckeye Firearms Association endorsements of Ohio Governor Ted Strickland are complete betrayals of their memberships, and of the Constitution itself.

Strickland at first vigorously supported State Department head Hillary Clinton for President in 2007 and early 2008. He then switched to vocal support of Barack Obama for President when it became clear that he would win the nomination. He lodged no objections that I am aware of or could find to Obama’s Supreme Court nominations of Sonia Sotomayor or Elena Kagan, even though each has a history of hostility to Second Amendment rights.

How could the NRA or the BFA not realize the obvious fact that Strickland, who also as I understand it has an at-home track record of appointing gun-grabbing judges, cannot possibly be a strong or even legitimate supporter of Second Amendment rights while vigorously backing two of the most rabid gun control advocates ever to hold political office — people who are now working hard to curb those rights by any means necessary?

Update: According to Wiki, Strickland-appointed Ohio Chief Justice Eric Brown “served 11 years as an Assistant Attorney General for Ohio Attorneys General Lee Fisher and Betty Montgomery, where he worked as both a lawyer and as a manager.” Both Fisher and Montgomery are not big fans of the Constitution’s self-evident Second Amendment rights. Any info on Brown’s Second Amendment positions would be welcome.

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I meant to note Major Garrett’s departure from Fox News for a print journalism gig when it was announced a week ago:

Fox News Channel chief White House correspondent Major Garrett said Wednesday he’s leaving the network after eight years to join the National Journal as a congressional correspondent.

Garrett, who worked at the Washington Times, U.S. News & World Report and CNN before joining Fox in 2002, said it was a return to his roots in print journalism.

“All I ever tried to do, whether I was at CNN or U.S. News or Fox, was to do the best reporting I can and let that speak for itself.”

What one can say about Garrett is really what one can say about Fox’s hard-news team: He and they only appear to lean right because their contemporaries at the other networks are soooo far to the left.

My best memory of Garrett is how he pushed candidate Barack Obama on Jeremiah Wright in March 2008. Read the transcript. He allowed Obama to hang himself with open-ended questions, and then zoomed in with “yes or nos” to highlight obvious inconsistencies. Fair, balanced, and persistent. Well done, sir.

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From Rasmussen (HT Ace):

The number of Republicans in the United States grew in August while the number of Democrats slipped a bit and the gap between the parties fell to the smallest advantage for Democrats in five years.

In August, 35.0% of American Adults identified themselves as Democrats. That’s down nearly half a percentage point from a month ago and is the smallest percentage of Democrats ever recorded in nearly eight years of monthly tracking.

Imagine how much better the situation would be if the GOP, especially in Ohio, were running more sensible, Constitution-based conservatives.

Which reminds me … I suspect that the folks at ORPINO (the Ohio Republican Party In Name Only) are really impressed with themselves right now, given that their coasting candidates are in the lead in most if not all statewide races.

Just imagine where they’d be if they had actually tried to do something about this (from Gallup on July 26):

GallupOnPartyAdvantage0710

Ohio’s 7-point Dem advantage in July was the same as Pennsylvania, one point greater than Wisconsin’s 6-point advantage, and three points more than Minnesota’s 4 points (!). Bashing Ted and screaming about jobs lost will probably work this time — but that will be in spite of ORPINO, not because of it.

For decades, Ohio voters who are relatively disengaged, the large majority of whom are instinctively sensible conservatives, haven’t been offered any kind of meaningful philosophical alternative. What you see above is the result of a moribund, hidebound, go-along get-along party that has consciously chosen to stand for nothing.

Positivity: Knights of Columbus support Mexican bishops’ freedom of expression

Filed under: Positivity — Tom @ 7:51 am

From Mexico City:

Aug 31, 2010 / 11:57 am

The Knights of Columbus in Mexico have expressed their solidarity with the country’s bishops for their courageous, firm and respectful opposition to the Mexican Supreme Court’s recent rulings on abortion, same-sex “marriage” and adoption by gay couples.

“Mexico is a free, plural and democratic country where persons and institutions have the right and duty to express their opinions on issues that have to do with national public life,” the Knights said in a statement.

They noted that the Catholic laity make up the vast majority of the Mexican people and that they enjoy civil rights such as freedom of expression.

They also reaffirmed their defense of religious freedom, the unborn, the family based on traditional marriage and the right of adopted children to have a father and a mother. …

Go here for the rest of the story.