The Trading Day Ahead - 12/19/08

Friday December 19, 2008
Navivest

There are murmurings that we may get news today that the Whitehouse is providing temporary aid to General Motors (GM) and Chrysler to help the companies stay out of what the president termed “disorderly bankruptcy.”

Should we get such news today and assuming it comes early in the trading day, that could possibly help put a floor under stocks, which broke down in late trading yesterday after being just barely negative for most of the early going.

On the other hand, there is a downside risk. The Whitehouse is now referring to what it terms “managed bankruptcy”, meaning that the government will basically be partners in running the company so to speak.

Obviously, the automakers have gotten themselves into this mess, the economy aside and if they are asking for taxpayer money, then there should be strict accountability. But how would Wall Street view this? The idea of government playing CEO may not sit too well with investors and that could help negate the news if it comes and send stocks lower.

Tags: Stock Market  Quadruple Witching  Auto Bailout  Managed Bankruptcy  Disorderly Bankruptcy