In the last two months, automakers are outperforming the broad market.
How is it possible that this beleaguered segment of the market can possibly be doing better than the broader market? After all, the news in the auto space continues to be ugly.
- Ford (F) just reported that unit sales are down 5.8 percent. That sounds like bad news, but sentiment on automakers is so terrible, that's actual almost a 1 percent beat on analyst expectations.
- While General Motors (GM) has had a nearly comical level of recalls and not-funny-at-all issues of endangering its customers, analysts expect the actual impact on the firm's bottom line (in terms of compensation to victims) to be quite small.
- Sales at GM remain surprisingly strong, despite terrible PR problems.
- The cleanest play here, the First Trust Nasdaq Global Auto ETF (CARZ | C-41), holds not just the few shaky-looking U.S. manufacturers, but effectively the entire global industry, which is benefiting from a generally benign global economic outlook and low-cost financing for the indefinite future.
- Just released June auto sales numbers show broad support.
It's often easy to get overwhelmed by stock-specific headlines. Here's one case where keeping the big picture in mind is incredibly important.