Wall Street Greek: In the Pre-Market - GM Bankruptcy & GDP Revision

Visit the front pages of Wall Street Greek and Market Moving News to see our current coverage of economic reports and financial markets.

(Tickers: GM, F, TM, HMC, TIF, GSK, DIA, SPY, QQQQ, NYX, DOG, SDS, QLD, XLF, IWM, TWM, IWD, SDK)

GM Bankruptcy & GDP Revision

Today's market news wire offers opportunity to put the dead to rest. Today, the market digests the realization of a GM bankruptcy. At the same time, we received the revision of first quarter GDP, which offers contemplation over the worst six-month economic period in sixty years. Will the market look ahead or grow anxious over the many pitfalls that may lie ahead... Futures are higher for starters.

GM Bankruptcy

General Motors will file for bankruptcy on June 1st. The unimaginable has occurred, as the behemoth of American industry (and history) goes under. Yet, "going under" no longer carries the same distasteful connotation it once did. It once meant failure after all. In this new millennium of change, bankruptcy has been rebranded by the Obama Administration. Bankruptcy is cool now... it's jazzy (he sooths in dramatic tone)... it's like a day at the spa... it's a form of renewal.

Guess what though, Obama is not offering up false advertising; bankruptcy really is the best long-term option for GM. Consider the fact that our nation will not lose its auto industry. The only change that will occur is in the ownership of GM and Chrysler. Okay, sure, shareholders lost everything, but misery loves company.

You, the American taxpayer, will shortly own 72.5% of GM. Still, that does not mean you can walk into the corporate headquarters or kick the tires around in one of GM's surviving plants. Nada! We're sorry to inform you that you will still be arrested for that... Not only do you own GM outright, but the US government will also provide debtor-in-possession financing of another $50+ billion. This comes after the $19.4 billion in aid we have already served up to GM. And in some corner of the most remote Mormon Temple, Mitt Romney is smiling...

Q1 GDP Revision

Before the GM news broke, the first quarter GDP revision was expected to key Friday morning's wire. Reported at 8:30, GDP contraction was revised to a better state, to -5.7%, from -6.1% at first look. Economists had forecast a better rate of GDP contraction of 5.5%, and this revised result matches with Q4 2008 GDP contraction of 6.3%. That's the economy's worst six month performance in 60 years. It's really no matter though, as green shoots seem to be sprouting the world over this spring (summer starts on June 21st, not Memorial Day). The market cares more about the next two quarters than the first.

Most every component of GDP weighed against it, but personal consumption expenditures offered positive contribution. Real personal consumption expenditures increased 1.5% in Q1, versus a 4.3% decrease in Q4. The price index for gross domestic purchases increased 1.4% when excluding food and energy, so a portion of the contribution of PCE came from price increase.

While we may take a closer look at the report later, generally speaking we can say there was a crescendo-type contraction over the last six months. It included great cut-back in import activity and inventory reduction, and should lead to the leaner start every economic cycle incorporates.

ISM-Chicago Business Barometer

At 9:45, the Institute for Supply Management-Chicago will report its Business Barometer Index. The Chicago area measure is expected to show modest improvement to 42.0, from 40.1 in April. A reading below 50 still signifies economic contraction, but before we heal, we must stop the bleeding.

Consumer Sentiment

Look for the Reuters/University of Michigan Consumer Sentiment reading at 9:55. Economists showed a lack of trust in the economy heading into this week, forecasting a modest improvement for most economic metrics, the confidence measure included. The gurus see sentiment moving to 68.0, from 67.9 at last check.

Jean-Claude & Pork Bellies

European Central Bank President (ECB) Jean-Claude Trichet will discuss the role of central banks in times of economic crisis. Farm Prices are due for report at 3:00 p.m.

Corporate News Drivers

See GM above! An FDA panel will review GlaxoSmithKline's (NYSE: GSK) leukemia drug Arzerra. Friday's EPS schedule includes news from Tiffany (NYSE: TIF), Graham (AMEX: GHM), Madeco S.A. (NYSE: MAD), National Bank of Greece (NYSE: NBG), Royal Bank of Canada (NYSE: RY) and a few more.