Another big bell weather company came out today and warned that business will be weak throughout 2005. This morning General Motors cut its earnings projections for the first quarter, and the year. GM cited lower North American sales, but the company stopped short of giving reason's for the drop in sales. Ok, I'll the give you the reason..HIGHER OIL PRICES.
General Motors and the rest of the big three have been incredibilty slow to recognize what the Japanize and the American consumer have realized for years. Simply, consumers want fuel efficiency and reliability. The Japanize can see this, why doesn't Detroit? Well, its too late now. You and I both know what follows lower earnings. That's right, production cuts and layoffs.
A little over 13 months ago, I told guests at the World Money Show in Orlando that an energy crisis was looming. Of course, some veteran newsletter writers told me I was wrong, publicly as well as privately. After today's news on GM, I think its safe to say that the economy is going to slow, and the US may even go back into a recession.
At the close, the DJIA closed down 111 points to 10,633. Oil prices continued to climb as professional thieves masquerading as hedge funds continue to manipulate the prices of oil. As oil prices continue to climb, and the economy continues to soften, I have to ask, where is the Bush administration. Why are they not out in force looking into the activity of hedge funds in the oil futures market?
Oh, I have to piggy back on my China comments in the last post. I hope you saw where the Chinese government okayed the use of force in the recaputuring of Taiwan. Regardless of what you are told, remember the goal of communism is world domination. I'll bet the communists could argue that's exactly what the US has been doing.
Inspite of what is said or done, I am sticking with owning defensive sectors of the market in conjunction with selective hedge positions.
