How can it be that automaker stock prices are tumbling given that auto sales (if one listens to CNBC) are surging [3], that (if one listens to the CEOs) everything is awesome for automakers, and (if one listens to Phil LeBeau) there is no bubble in auto credit? [4] The answer is simple... (you just don't want to admit it)
Two words - channel-stuffing!
[5]
In fact, as IceFarm Capital's Michael Green details, the credit-fueled over-productiuon has historically been disastrous for the global auto sector...
[6]
So once again - a mal-investment boom has pulled forward demand (from who knows where) and signalled entirely incorrect production expectations to executives who can only see 1 quarter ahead and the amount of buybacks they must do in order to maintain their own personal wealth.
