When it comes to Ford Motor Co. (F), a Canadian car dealer bet a month’s sales on that premise.

Rose City Ford dealership owner John Chisholm offered 100 shares of Ford stock to anyone who bought a new or used vehicle from the dealership during the month of November, the Windsor Star newspaper reported. Chisholm, the president and general manager of Rose City, said he got the idea from a General Motors Co. (GM) dealership in Texas that offered GM shares for each vehicle sold. So Chisholm opted to try it in Windsor, the Ontario, Canada city where Ford has both a long history and deep community roots.

“What a great way to show our confidence in the company,” Chisholm, who employs 80 at a dealership that his father founded nearly 30 years ago, said in an interview late last week. “We believe the company is going to be around for a long, long time.”

Chisholm was planning to actually buy the shares Monday for customers who bought a vehicle last month. He expects to extend the promotion, should its popularity continue.

“We want as many people with ownership in the company as we can,” said Chisholm, who owns Ford shares himself. “They’ll be going up. This is an incentive that is going to grow.”

Just how big a payoff the incentive deal provides the dealership’s customers will depend on whether Ford is able to turn itself around in the coming months.

Thanks to the ongoing global financial crisis – and stung by the worst sales slump in 25 years – Ford lost $3 billion in the third quarter and now the Dearborn, Mich.-based company and its two other “Big Three” cohorts are pressing both U.S. and Canadian lawmakers for emergency aid. All three are to submit turnaround plans to Congress this week – a requirement if General Motors, Ford and Chrysler Corp., are to receive $25 billion in U.S. government bailout loans.

Some details began to emerge yesterday (Tuesday), according to a report that runs elsewhere in today’s (Wednesday’s) issue of Money Morning. Among other things, Ford is considering the sale of its stake in Volvo as it seeks to raise cash.

Anthony J. “Tony” Faria, a marketing expert who is the co-director of the University of Windsor/DaimlerChrysler Canada Automotive Research and Development Center (ARDC), told the Windsor Star that the Ford promotion was “interesting” and “attention-getting,” even though the present value to customers was less than $300, a small inducement compared to other incentives and rebates.

“I presume Detroit Three dealers probably will be looking for a lot of creative things they can do to improve traffic through their dealerships,” Faria said.

Promotional flyers for what the dealership portrayed as “confidence sale” exhorted local customers to “be a part of history,” proclaiming that “100 shares is the way forward.” Public interest has already been piqued by the inexpensive promotion, which customers say they like because of the potential for a big payoff, the newspaper reported.

“The 100 shares are an absolute bonus,” customer Tina Reed said, just before she drove away from the dealership in a brand-new charcoal-gray Ford Focus. “I keep an eye on the stock market but now I’ll pay a little more attention.”

JP Morgan Chase & Co. (JPM) credit analysts had rated GM’s distressed debt as a “Buy,” noting that the company – known for such brands as Chevrolet and Buick – was likely going to survive.

Interestingly, Ford has a market cap of $6.09 billion – making the company known for bringing forth such innovations as mass production, the Model T and the assembly line more than twice as valuable as GM, the market-share leader (of the U.S. carmakers). Ford had $172.5 billion in sales last year, and $160.1 billion in 2006.

GM had $181.2 billion in sales last year and $205.6 billion in 2006, according to statistics provided by Google Finance. The company right now has a market value of only $2.8 billion.

Shares in the embattled automaker hovered near $30 in 2001, but have nose-dived since that time. GM’s shares closed Monday at $4.59 each, a decline of 65 cents each, or 12.4%. They have traded as high as $29.95 in the past 12 months.

Ford shares closed Monday at $2.55 each, down 14 cents, or 5.2% per share. They’ve traded as high as $8.79 in the past year.

Whether the price will tank or skyrocket in these uncertain times is anybody’s guess but many, including Faria, the marketing expert, believe the stock is poised for a rebound – especially if the U.S. and Canadian governments can agree on a multibillion-dollar bailout package.

I’ve seriously thought about buying a lot of Ford shares at this price because one of two things is going to happen,” Faria said. “Either Ford is going to fail and you’re going to lose all of it or, if Ford doesn’t fail, the shares, at some point, are going to be worth a lot more.”

Faria said Ford was in better shape financially than GM and Chrysler, but conceded that the fates of all three are intertwined because they share suppliers dependent on business from all three – and because of the need for government aid.

Not everyone sees a bright future for Ford. Indeed, one Web site wag wrote on the Windsor Star Web site that “I have some Penn Central, WorldCom., Enron, Nortel (NT) and Citibank (C) shares if Mr. Chisholm would like to take them in trade for a new car. They are in certificate form, so he can use them to decorate the showroom. Cheaper than buying new wallpaper.”

Source: Hot Stocks: Canadian Ford Dealer Offers Ford Shares to Buyers of Ford Vehicles

Editors Note: “Hot Stocks” is a new Money Morning feature that analyzes the investment outlook of global companies that are in the news. This is the eighth installment of this ongoing investment series.

We think it must be the “better to push on an opening door” syndrome!

The miners are being outshone by the metals themselves. Yet mining shares continue to outperform the general market. The FTSE Global Mining Index was up 10% in the first half, compared to a 13% decline in the FTSE Global All-cap Index.

Miners of gold, however, have not been among the best performers… yet!

Still if these forecasts materialise, the worst could be over for some. Take Randgold Resources (NASDAQ:GOLD), a mid-tier explorer, developer and — importantly — producer in Africa.

Randgold first roused our interest back in July 2007 when the share price hovered around R12. By April 2007 it reached R28 — a gain of more than 130%!

But then, it all started to go wrong…

Then the slide began, as a result of cost and production fears. More than a third of its value was wiped out, along with other mid-tiers.

But Randgold still has all the ingredients for success. Chief executive Mark Bristow is not deterred by a market driven “purely by instant gratification”. He is going for continued “organic” growth. That means Randgold finding its “own gold, so we’re not forced to buy ounces at a premium by the demands of a bull market.”

Hitting its targets by 2011 will increase attributable annual production from Randgold’s West African mines by 50%. The figure will be a whopping 600,000 oz.

Randgold has great key objectives — to make falling output and ore grades a thing of the past and to aggressively tackle soaring costs. It may have raked in higher gold prices this quarter, but cash costs were up 47%.

In spite of that, net profits still rose 42%. And the production pipeline holds promise. Two existing open pit operations have just produced 63,249oz at a cost of $470/oz . They are on target to deliver 265,000oz this year. A new high grade underground mine has started to deliver, too. By 2010 it will be producing 400,000 oz — result! Another is in the final planning stages.

Randgold has its fingers in plenty of pies

Its project in the Ivory Coast is enjoying a “steady improvement in the political climate”. Randgold has also recently announced a 52% increase in the more reliable “probable” reserves category.

In a world where production is falling, new deposits are crucial. Randgold has a good track record here. In Tanzania, it has decided to enter phase two of the 500,000 oz joint venture with AIM-listed African Eagle (LON:AFE). A geological model has given good reason to do so.

All in all, Randgold’s net profits could increase by as much as 70% this year, Bristow reckons. Not bad!

And it is scanning the horizon for more! Africa may be Randgold’s “home-turf”, but it is not averse to taking its skills elsewhere to new and profitable gold targets.

So, keep mining,

Erin and Isabel

Source: Randgold Still Has the Ingredients for Success

“But the big banks are about to get a whole lot cheaper.”

Andrew should know. He’s the CFO of a publicly traded bank. He knows how banks work… He’s the one who decides what the bank does with its money. He explained how it’s feast or famine now in the banking business… It’s feast if you’re a small bank, like his. And it’s famine if you’re a big bank.

Andrew is so optimistic about small banks, he’s just invested a chunk of his own savings in shares of tiny regional banks.

But he won’t touch the big banks like Citibank.

He says beyond the problems you already know about, the big banks have two more crises ahead of them – commercial real estate loans and credit cards. Let’s take a look at both…

When it comes to commercial real estate, banks are about to get hit with defaults here… You see, when a big bank makes a huge construction loan, it gets two years worth of interest payments in advance. Well, for many of those loans made at the top of the market, those two years are coming up.

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As Andrew explained, this could mean trouble… The big construction loan might have been made to build a shopping center to serve a new neighborhood… The problem is, that new neighborhood was either never built or it didn’t sell well. Therefore the shopping center was either never built or it has no tenants. Now, there’s a real chance the developer will walk away from the construction loan.

Andrew figures big banks are in big trouble with their credit cards, too…

That’s because homeowners got used to taking a line of credit out on their home – a home-equity line. But once the real estate market turned, instead of cutting back on spending, homeowners turned to their credit cards.

Andrew told me the big banks moved too slowly here… It took ‘em a while to realize what was happening. Now they’ve pulled in those lines of credit. But Andrew thinks they were a few months too late.

So beyond the liquidity crisis… beyond the subprime crisis… beyond the housing crisis… the big banks have two more crises coming: commercial real estate loans and credit cards.

The opportunity here is in the tiny banks instead.

Andrew says the big banks have tightened up their lending standards so much, they’ll hardly make a loan. So Andrew, with his smaller banks, can make “slam dunk” loans all day… like jumbo loans to people with excellent credit and big down payments.

While it’s a worst-of-all-worlds environment for the big banks, the high-quality small banks – ones that simply stick to taking deposits and making safe loans – are in an ideal situation…

The small banks have less competition (mortgage lenders have disappeared and big banks aren’t taking their customers). Now they can charge higher interest rates – and make bigger profits.

So is it time to buy bank stocks?

According to my banking insider, Andrew, it’s time to avoid the big bank stocks… and back up the truck on the little ones that simply take deposits and make safe local loans.

Good investing,

Steve

Source: Time to Buy These Tiny Stocks?

Retail Sales Take a Dive

Many commentators, looking for a bullish lifeline, have pointed to the fact that retail sales grew in April by 1.8% over this time last year. But that is truly grasping at straws. Just last November they were growing at 6% year over year and have been dropping relentlessly for the last six months. And as good friend and data maven Greg Weldon points out, retail sales last November were 1.3% over inflation and now are a negative 2.1% below inflation. Retail sales are clearly headed down. (www.weldononline.com, a must-read for those who need in-depth analysis of all things and data economic)

But there was growth. Gasoline sales were up 16.3%. And food sales were up 6.1%. 77% of the increase in retail sales this year has been from increases in food and gas sales. If you take out food and gas, retail sales are down by about 2% in the last three months.

The consumer is getting squeezed. Reuters did a rather anecdotal, but revealing survey of Wal-Mart buyers at the beginning of the month. They found a significant increase in store traffic from the end of the month to the first of the month. Surveys showed that shoppers were stretched on their budgets due to rising gas and food costs and simply had to wait until their monthly checks came to go to the store for food. Many indicated they had changed their buying habits, now shopping at lower-cost stores like Wal-Mart.

At the Mauldin household I must admit to a kind of food shock upon my return. I eat a lot of smoked turkey from a local grocery deli. Arriving back from South Africa last night, I sent my oldest son to the store to put in a supply for the next few days. My “regular” turkey that was about $5.99 a pound a few months ago is now selling for $8.99. That is considerably higher than the 5.9% food-at-home inflation rate that the folks who give us the CPI tell us is the case. Next time I will find a less expensive brand, as the Reuters survey suggest shoppers all across the country are doing.

(I do recognize the inconsistency of saving a few dollars at home while I eat out at nice restaurants where the price increases are even greater. It is all about what is in your head. There are books and massive studies devoted to such behavior.)

“Leslie Dach, executive vice president of corporate affairs and government relations at Wal-Mart, said the cycle of shoppers running out of money in between paychecks and then flocking to its stores on payday is ‘more pronounced, more visible.’

While many U.S. retailers are facing waning sales as shoppers cut back on purchases of clothes, jewelry or home furnishings, Wal-Mart’s vast grocery business and its emphasis on low prices is spurring a resurgence at its U.S. stores and in its stock price.” (Reuters)

But prices are actually up at Wal-Mart. And not just from food. Looking at the latest Commerce Department data, we find that US import prices are up 15% year over year. Even taking out gasoline, prices are up 6.2%. And it is somewhat surprising that it is only 6.2%. Why?

Because the dollar has fallen by more than 6%. The Chinese ambassador to the US, Mr. Zhou Wenzhong, recently pointed out that the Chinese renminbi has appreciated almost 19% since July of 2005. I have been writing for years that the Chinese would allow their currency to appreciate slowly and steadily for their own purposes and on their own schedule. They need to do so in order to contain their own rising inflation. Look for it to rise another 10% by the middle of next year.

Consider that because of the rise of the renminbi, the prices for oil and food imports in China have risen 20% less than for US consumers. And the prices they charge us for their goods are only about 4% higher. But that meager growth is up from only 1% last fall. Those (notably economics-challenged Senators Schumer and Graham) who have been pressing for China to allow its currency to rise are going to find that such a rise ultimately means higher prices for US consumers. Be careful what you wish for, Senators. You just might get it.

Lower consumer spending is not just due to gas and food. There is also a psychological component. Frederic Mishkin, one of Ben Bernanke’s colleagues at the Fed, has done research that suggests the “typical American family will cut its spending by up to 7 cents for every dollar in housing wealth it loses. Given a 20% fall in prices, this adds up to a nationwide reduction in consumer spending of about $350 billion a year, or 2.5% of the U.S.’s gross domestic product. That’s a big number – more than enough to tip the economy into recession.” (Conde Nast)

And that’s if the fall in prices is only 20%. I continue to put forth the proposition that we are going to see a slow Muddle Through Recovery, as the boost we got from Mortgage Equity Withdrawals during the last recession will not be available this time.

Accounting for Inflation

If beauty is in the eye of the beholder, inflation is in the eye of the statistician. Because the number you end up with is dependent on the models and assumptions you choose. As the chart below shows, there have been two major revisions to how inflation is figured, one in 1983 and another in 1998. (Thanks to Barry Ritholtz at The Big Picture for this source.)

Note that using the same methodology as was used in 1983, inflation would be around 11.6% today. Before 1983, the BLS used actual home prices to account for inflation. After that time, they used something called Owners Equivalent Rent or OER. This is the theoretical price a home would rent for. There are sound reasons to use OER and equally good reasons to use actual home prices (as is done in Europe). But both methods have flaws. You just have to pick a methodology and stick with it.

And there are reasons to think that OER may not rise as it would normally do in this part of the cycle, because so many homes which cannot sell are being rented out, and rent prices might not rise as much as in past cycles.

With options expiry in progress, and first day notice for silver delivery next week, the boys are shaking this tree as hard as they can to get all the weak longs and tech funds to cough up their positions so they can cover. This bear raid is totally illegal, of course. It’s like a Mafia/Nazi controlled town…there’s nothing that we can do except sit and watch and mutter obscenities at them under our collective breaths. When will this be over? Don’t know. Are they gunning for the 200-day moving averages? Don’t know that either. Only they know, and they aren’t about to tell us. Note the rise in the US$ yesterday…up a bunch. Funny thing is, that gold is never allowed to rise that much when the dollar heads south.

For Tuesday, gold open interest fell another 3,148 contracts, but once again silver o.i headed in the opposite direction…up 2,636 contracts. Like I said yesterday, don’t look to me for why this is so. Volume was reasonably light on Tuesday, as it was yesterday. If the boys have anything to do with it, all these changes in o.i. that we’ve seen in the last couple of days, won’t be showing up in this week’s COT. As I’ve mentioned several times before, they are great at withholding information when they’re in the middle of one of their classic bear raids.

From The King Report last night: “Bennet Seddaca in The Moral Hazard Club writes, When you add up all the Level II assets by just the eight largest holders in the U.S: JP Morgan, Citibank, Bank of America, Merrill Lynch, Goldman Sachs, Bear, Morgan Stanley and Lehman Brothers , it comes to a staggering $5 trillion – nearly half the size of the economy. Level III assets are nearly $600 billion. Is the Fed big enough to bail out all these assets? My best guess is probably not, and more firms will fail.”

A couple of stories today. The first has to do with Dennis Gartman selling out his gold position. This isn’t the first time that his friends in the Cartel have cut him off at the knees. Probably won’t be the last either. Chris Powell, GATA’s secretary treasurer, who is senior editor at the Journal Enquirer in Manchester, Connecticut has a few choice words of his own about Gartman, and the reporter who wrote the Bloomberg story. Click here.

The other story is from The Wall Street Journal and is an oil story from Saudi Arabia. It’s a ‘good news’…’bad news’ story. Yes, it’s more production, but…..! It’s entitled “Saudis Face Hurdle in New Oil Drilling” and it’s linked here.

I see a Costco store in California has advised its shoppers “to follow their regular rice-buying habits” and have also put restrictions on flour purchases. And the Sam’s Club division of Wal-Mart “is restricting purchases of some types of rice to four bags a visit.” Lastly, Government of Singapore Investment Corp (the country’s sovereign wealth fund) said “the world economy may be headed for its worst recession in three decades.” Just three? How about eight!

The boys were everywhere yesterday…the US$, the Dow, gold, silver…I’m sure there was more. It just goes on and on. I don’t expect today to be any different.

Last week, Citibank’s woes inexplicably pushed the buck higher, but that was not the case yesterday. When Bank of America reported that first-quarter profit fell 77% and credit-loss provisions jumped $4.78 billion, the market decided it was hearing bad news.

Are traders coming to terms with reality? Ashraf Laidi, of CMC Markets US, thinks so.

“Last week’s strong earnings were largely a reflection of relatively robust foreign demand and of the weak U.S. dollar. In the event that equities continue to rally simply on the notion that the ‘worst is behind us,’ they will risk diverging with the stark macroeconomic reality that is highlighted by soaring energy costs and rising unemployment,” Laidi wrote.

For its part, the euro got a boost when European Central Bank Governing Council member Axel Weber said that inflation is likely to remain elevated and hinted that the ECB might have to hike rates.

However, with the euro “so far unable to post new record highs, and the market seen as a bit overextended on the long side of the ledger currently, downside potential may be on the rise in the near term,” wrote currency analysts at Action Economics.