By forcing a health-care inflation cap for salaried workers, GM is bringing forth the issue of similar caps for hourly workers, which our talks with (GM) management suggest is a top priority.
It should not be difficult to agree on the bargaining points.
We still see more downside than upside risk to 2007 consensus earnings.
One of the likely sticking points in the pending sale of GMAC may well be resolution on Delphi, further emphasizing GM's interest in avoiding a labor dispute.
While fundamentals are admittedly weak, given the stock's weak recent performance, we are reluctant to get incrementally bearish, particularly ahead of a potential restructuring announcement.
While tire pricing remains strong, high raw material prices and potentially weak high-margin markets (North American and European replacement truck tire markets) could provide offsets.
The market is likely to be reassured that management is now putting firmer parameters around 2006 performance.
We are expecting PSA to beat their forecasts and to reaffirm fairly upbeat guidance for 2003. Their key markets of Britain and France are holding up well and their market share is reasonably healthy.
We're expecting both of them to do well. The French carmakers are safer than the Germans, partly because they have limited U.S. exposure and partly thanks to a fairly robust home market.
We continue to believe TRW should benefit from growth in safety content per vehicle, its diverse content profile, and aggressive cost management.
