Need to Know: After GM cuts, Wall Street cheer turns to auto-bubble fear

While the tech sector has gripped us lately, autos are stealing some limelight after GM announced plant closures and job losses on Monday.

Shares initially got a boost on the theory that cost cuts boost profits. But the mood could yet turn less positive for the sector as a whole.

That brings us to our call of the day, from Clarity Financial analyst Jesse Colombo, who sees trouble ahead for the auto sector. “Rising interest rates are threatening U.S. automobile sales and loan bubble and will eventually cause its popping,” he warned in a blog post.

“While GM’s CEO Mary Barra is spinning this move as a positive, I am highly suspicious because it is taking place at the same time that global auto sales are plunging,” explains Colombo, who warned about another bubble-soon-to-burst linked to household wealth and easy Fed policy, in October.

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