This morning, Goldman Sachs felt it prudent to up its view of the U.S. auto sector to Attractive from Neutral. The brokerage stated that it would use any current weakness as an opportunity to build positions. If, like me, you are questioning Goldman's strategy, the firm explained, "Despite the significant rally in auto shares since the February lows, we think we are still in the middle phase of a cyclical rebound in the auto sector." In its note to clients, Goldman Sachs predicted, "improved affordability, improving confidence and significant pent-up demand as likely to offset the impact from gas prices and deliver significantly more upside in the space as auto sales gain momentum."
For this reason, Goldman upped ArvinMeritor (NYSE: ARM) to Buy from Neutral, assessing the company as "one of the best equity values in this space." The brokerage, however, downgraded BorgWarner (NYSE: BWA) to Neutral from Buy based on valuation.
I'm not completely sold on this move, I just don't think that the auto industry will recover as quickly as Goldman believes. If autos can recover that quickly, great, it really is good for America and the American worker. Unfortunately, I'm not among those who are certain this recession is over. With all of the struggles the auto industry has seen, it is going to take some time to recover -- more time than Goldman Sachs expects I think. Nevertheless, perhaps BWA is a good buy at its current valuation, I just happen to think there is a bit more pain in store for the auto industry.
Happy holidays! Google giving away free Wi-Fi 
Dr. Doom Nouriel Roubini believes the bubble is about to burst
Cramer on BloggingStocks: Investors are rethinking their snap judgments 
