Well, you knew it had to happen since Uncle Sam effectively owns Chrysler and General Motors. The U.S. House of Representatives is trying to pass a bill that would mandate the large automakers honor existing franchise agreements and put off dealer closures. The Dow Jones Newswire article quoted Bailey Wood, a lobbyist for the National Automobile Dealers Association, with the following doozy: "Closing dealerships will not make either Chrysler or GM any more viable, and Congress is realizing that," Wood said.

That the politicians are getting involved in operational decisions is clear evidence of the impending doom for the large auto companies. It's hard enough to exit bankruptcy and restart a business. It's far harder to do so while carrying political agendas on your back.

Ed Begley, Jr. will soon have more options should he be in need of a new electric car. Daimler AG has announced the acquisition of an equity stake of nearly 10% in Tesla Motors (not to be confused with these guys -- five man electrical band, indeed).

The German-based automaker is teaming up with the California company to work on making electric cars "a reality." Tesla is a visionary on the electric-car front; its Roadster, which runs on battery power, is the only electric vehicle approved for highway use in both Europe and North America. (Of course, it also comes with a price tag of $101,500 -- you'd have to save a lot on gas to make up for not buying a Taurus).

DaimlerChrysler AG(NYSE: DAI) shares are doing well today after Goldman Sachs lifted the European auto sector from neutral to attractive today. If you think that the company won't fall by too much in the coming months after this news, then now could be a good time to look at a bullish hedged trade on DAI.

After hitting a previous one-year high of $96.12 in July, the stock dipped in August, but is making its way back toward previous highs, topping its 52-week best today. DAI opened this morning at $95.93. So far today the stock has hit a low of $95.72 and a high of $96.27. As of 10:45, DAI is trading at $95.94, up $2.11 (2.2%). The chart for DAI looks bullish and steady, while S&P gives the stock a neutral 3 STARS (out of 5) hold rating.

For a bullish hedged play on this stock, I would consider a January bull-put credit spread below the $75 range. A bull-put credit spread is an options position that combines the purchase and sale of put options to hedge risk in case the stock doesn't do what you think but still leverage nice returns. For this particular trade, we will make a 5.3% return in just 4 months as long as DAI is above $75 at January expiration. XM would have to fall by more than 21% before we would start to lose money.

DAI hasn't been below $75 since March and has shown support around $90 recently. This trade could be risky if the company's earnings (due out 10/25) disappoint, but even if that happens, this position could be protected by the strong support the stock formed around $80 over the past five months..

Brent Archer is an options analyst and writer at Investors Observer.

MOST NOTEWORTHY: Quicksilver Gas Services, Hireright, DaimlerChrysler and Masimo were today's noteworthy initiations:

• AG Edwards initiated Quicksilver Gas Services (NYSE: KGS) with a Buy rating and $26 target as the firm believes the company's distribution growth has high visibility, based on its current asset base and the possibility of third-party acquisitions. UBS initiated shares with a Buy rating and $34 target.
  
• Hireright (NASDAQ: HIRE) was initiated with a Market Perform rating and $13 target at Piper Jaffray, as the firm believes the company's distribution growth has high visibility, based on its current asset base and the possibility of third-party acquisitions. CIBC is positive on Hireright's extensive solution set and strategic alliances and initiated shares with a Sector Outperformer rating.
  
• DaimlerChrysler (NYSE: DAI) was started at Bear Stearns with an Outperform rating. Following the Chrysler transaction, Bear expects Daimler to raise its margin guidance now that the company can focus on its truck platform.
  
• Masimo Corporation (NASDAQ: MASI) was initiated with an Outperform rating at Piper Jaffray, as the firm believes the company's "best in class" technology will drive continued pulse oximetry share gains. Cowen initiated shares with a Neutral rating on valuation and Deutsche Bank started shares with a Buy rating and $30 target..

OTHER INITIATIONS:

• TD Newcrest started shares of Vitran Corporation (NASDAQ: VTNC) with a Hold rating.
  
• Lazard started shares of E-House China Holdings (NYSE: EJ) with a Buy rating; CIBC initiated shares with a Sector Outperformer rating and $25 target.
  
• Rodman & Renshaw initiated shares of Iomai Corporation (NASDAQ: IOMI) with a Market Outperform rating and $4.25 target.

Cerberus Capital Management may sell some of Chrysler's non-automotive units, according to Bloomberg. The units in question are Mopar, Chrysler's famous service and parts producer, and Chrysler Transport, which manages deliveries to the automaker's plants.

Cerberus assumed 80% ownership of Chrysler from DaimlerChrysler (NYSE: DAI) on August 3. Cerberus is now engaged in contract talks with the United Auto Workers as it looks for ways to cut costs. The union is reportedly opposed to the sales for fear of job losses; the units employ roughly 1,300 unionized workers. Chrysler's four-year contract with the UAW expires on September 14.

Analysts are saying that the sale of the units would allow Cerberus to focus on Chrysler's core business of making cars and trucks, and help raise much-needed cash. But Mopar is hardly a peripheral unit. Chrysler has been using the term to refer to its parts since the 1920s, and Mopar has long been virtually synonymous with the automaker. This is especially true when it comes to high performance cars, including the famous muscle cars of the 1960s and 1970s -- the Barracuda, the Super Bee, the Road Runner -- that Chrysler is trying to revive. So you have to wonder if this is a good move in the long run. Let's hope that Chrysler doesn't lose what makes it unique and desirable to car lovers as it works to return to profitability.

As painful at it may be to accept, July auto sales numbers are in, and for the first time ever, U.S. automakers captured less than 50% of market share last month. This afternoon July sales figures were posted, and in a harsh reality of the hard time American automakers are going through, the figures point to America's Big Three manufacturers accounting for only 49.7 percent of sales last month.

The "Big Three" American manufacturers are DaimlerChrysler (NYSE: DCX), Ford Motor Co. (NYSE: F), and General Motors (NYSE: GM). While today's numbers really shouldn't surprise too many people, it should serve as a nice wake-up call to all the above companies which have been struggling to keep up with their foreign rivals.

General Motors posted strong earnings yesterday, but as we pointed out, the one big area of weakness remains its sales in North America, where it once again posted another loss last quarter.

The only bright side is that American manufacturers were not the only companies that suffered from poor sales last month. Even the red hot Toyota Motor Corp. (NYSE: TM) saw a year-over-year decline of 7.4%.

MAJOR PAPERS:

• The FDA said no to Pristiq, an experimental Wyeth (NYSE: WYE) drug to treat the symptoms of menopause, reported the Wall Street Journal.
• The $3.1B sale of General Motors Corporation's (NYSE: GM) Allison Transmission to Carlyle Group and Onex has stalled in the debt financing market, thanks to difficulties raising debt from investors, reported the Wall Street Journal's "Heard on the Street" column.
• LVMH Moet Hennessy Louis Vuitton (OTC: LVMUY) is expected to acquire Les Echos from Pearson (NYSE: PSO) for $331.9M, reported the Wall Street Journal.

OTHER PAPERS:

• Time Warner Inc's (NYSE: TWX) AOL is entering the behavioral-targeting ad market by purchasing Tacoda, which uses "behavioral targeting" techniques to track Web surfers' habits, reported the New York Post.
• Cerberus Capital Management's acquisition of DaimlerChrysler AG's (NYSE: DCX) Chrysler unit could be completed on Monday or Tuesday of next week, reported the Detroit Free Press.

Ford (NYSE: F) kept is crown as the NYSE short interest king in June with 214.1 million shares sold short.

The high figure should really be no surprise. Ford's stock has underperformed GM (NYSE: GM), DaimlerChrysler (NYSE: DCX), and Toyota (NYSE: TM) over the last month.

A week ago, Ford said that it was falling behind its cost-cutting goals. Most analysts thing it will take a long time for the car company to sell its Jaguar and Land Rover units.

But, the major knock against Ford is that it has had less success than its competition coming to market with cars that US buyers want to own. In May, both GM and Toyota had increases in sales compared to the same month last year. But, Ford's sales fell despite its own forecasts for a small increase. Consumers bought new models like the Escape, but sales of big profit vehicles like the Explorer and the F-series pick-up are in multi-month declines.

There is little proof that Ford's cost cuts are keeping up with falling sales. With negotiations with the UAW beginning in September, the company must depend on a good outcome to keep its very modest recovery on track. And, that outcome is hardly assured.

Douglas A. McIntyre is a partner at 24/7 Wall St.

When the old, conservative Harley-Davidson Inc. (NYSE: HOG) set out to build a three-wheeled version of the iconic American motorcycle, they would have followed the standard, two-rear, one-front wheel design. Judging from their recently filed patent application, though, the company is showing a new boldness by setting off in a different, cutting-edge direction with a cool two-front, one-rear wheel, high performance design.

Last fall, the company announced an agreement with Lehman Trikes U.S.A. to cooperatively develop a three-wheeled motorcycle. For many years, Lehman has been the industry leader in converting motorcycles such as Harleys and Honda's Gold Wing to three-wheelers. The manufacturers have not been particularly supportive, though. Those who also manufacture all-terrain vehicles (ATVs), such as Honda (NYSE: HMC), are still gun-shy of the configuration in the aftermath of the 3-wheel ATV controversy, in which the industry was forced to accept a consent decree to discontinue building what proved to be an unstable 3-wheeled design.

The industry expected that Harley's design would be an extrapolation of Lehman's standard two-rear-wheel, one-front-wheel design. However, according to patent applications filed by H-D recently, they are taking a much more interesting and groundbreaking approach by pushing a two-front, one-rear-wheel design along the lines of the prototypes popular among performance aficionados made by Piaggio and DaimlerChrysler, among others. This configuration allows much improved cornering, but requires a much more technologically advanced design.

Airbus has 13 orders for its new A350. The competing product from Boeing (NYSE: BA), the 787, has over 600. The Boeing lead has forced Airbus to offer large discounts on its plane

The A350 has had plenty of problems which include fuel efficiency and ease of maintenance complaints. Airbus has tried to address these, but without much success.

The troubles with its new plane fall on the heels of delays in delivery of its larger super-jumbo A380 which competes with the new Boeing 747-8. The problems with both planes may make it difficult for the Airbus parent, EADS, to turn itself around. The holding company has changed its top management is the hope of addressing troubles with new product development, but so far this has not worked.

EADS is owned by arms of the French and Spanish governments and DaimlerChrysler (NYSE: DCX). The owners have fought over which country's unions should bear the majority of cost cuts as EADS and Airbus attempt to save money.

EADS may be an example of the problems that a commercial enterprise has when governments have large interests. Management has to answer to a small number of powerful shareholders who often have different agendas and this can prevent executives from addressing the business problems at hand.

And EADS and Airbus certainly have plenty of problems.

Douglas A. McIntyre is a partner at 24/7 Wall St.

It's been said that many superior investment ideas can be found by simply reading a daily newspaper.

Well, sector and stock analysts may argue that the above may be an overstatement or represent a simplification, but a careful, regular review of your local newspaper can nevertheless provide the investor/reader with societal and consumer behavior trends that can alert one to an investment opportunity.

Case in point: The New York Times recently published a Page 1 news story regarding how many Americans, due to the elevated price of gasoline and their unwillingness to part with their gas-guzzling SUV's, are choosing buy a higher-mileage, more-efficient vehicle to give them a budget-cutting option in the that event the price of gasoline moves to even higher levels.

In essence, the tactic is a classic American response combining preparation, compromise, and hedging. SUVs are popular for justifiable reasons, but it's difficult for the typical consumer/family to drive two 18-mile-per-gallon vehicles and not be aware of the impact on their budget, should the price of gasoline continue to increase at unacceptable rates. However, it's also difficult - in some cases impractical - for a consumer/family to abandon SUVs completely and switch to higher mileage cars.

Their solution? As The Times discovered, consumers have opted to hedge: they're buying a higher mileage car -- in many cases a third vehicle -- as a sort of hedge against the volatile world of oil and gasoline prices. If the price of gasoline retreats to the now-nostalgic levels of $2 per gallon [note: don't count on this any time soon], they'll drive their SUVs. If gasoline continues to arc upward, they're substitute the higher-mileage vehicle, when and where possible.

There's a great book -- called Taken for a Ride: How Daimler-Benz Drove Off With Chrysler -- that covers the behind-the-scenes details of the 1998 merger that created DaimlerChrysler (NYSE: DCX). On its face, it looked like a smart deal; that is, the auto industry needed consolidation to get economies of scale. Yet, how can you do that with a premium brand and a low-cost brand?

Of course, it didn't work out. Besides the mismatch in target markets, both companies had major struggles with different corporate cultures. There was also a big deterioration in quality (which is fatal for premium brands).

Now Chrysler is going to be owned by a private equity firm, Cerberus Capital Management.

Interestingly enough, according to a piece in Barron's [a paid service], the deal may be very good news for Daimler. While the stock has rallied over the past year, some people think it could reach $100 or more.

Why? First of all, Daimler no longer has the burden of Chrysler's $18 billion in unfunded health care benefits. In fact, that's a key reason why Daimler essentially paid Cerberus about $650 million to take Chrysler.

What's more, Daimler is a much more focused organization. Over the years, Daimler has also instituted a variety of process and efficiency improvements. Thus, these should ultimately help pad the bottom line.

Oh, and Daimler still owns about 20% of Chrysler. So if Cerberus works its private equity magic effectively, Daimler could get a boost from that too.

Tom Taulli is the author of various books, including the Complete M&A Handbook and the EDGAR-Online Guide to Decoding Financial Statements.

Only the hearty -- and the high risk-tolerant -- venture forth and invest in a U.S. auto manufacturer at this juncture of the nearly 6-year bull market.

The last few years for General Motors (NYSE: GM), Ford (NYSE: F), and DaimlerChrysler (NYSE: DCX) have not been the best of times, to put in diplomatically. Given intense competition from high-quality and often lower-cost competitors, the 3 U.S. automakers, in reality, are in a category that's best labeled "not for the squeamish" as opposed to high risk.

That disclaimer articulated, on the bright side General Motors, Ford and Chrysler have made strides: They've reduced legacy and operating costs, eliminated production redundancies, phased-out vehicle models that are not likely to be in demand in the immediate years ahead, and placed a priority on designing and manufacturing innovative, purposeful vehicles. On Wednesday GM was down 44 cents to $31.53, Ford was down 11 cents to $8.80, while DaimlerChrysler was up $1.65 to $86.45 in afternoon trading.

Cerberus reportedly has bought 80.1% of Chrysler from parent DaimlerChrysler (NYSE: DCX). Some thought that the UAW's greatest fears have come true. It was believed that the union hoped the car company would fall into friendly hands, perhaps Canadian parts company Magna International Inc. (NYSE: MGA). The heads of the UAW, however, said that the deal was in the best interests of the company.

Ron Gettelfinger, President of the United Autoworkers (UAW), said: "The transaction with Cerberus is in the best interests of our UAW members, the Chrysler Group and Daimler. We are pleased that this decision has been made, because our members and the management can now focus entirely on the development and manufacture of quality products for the future of the Chrysler Group."

Cerberus will contribute $7.4 billion to the venture but all obligations for pensions and benefits will go to the new company.

What continues to puzzle observers is why Daimler would not have done the work to fix Chryler itself.

But, that is academic now.

Douglas A. McIntyre is a partner at 24/7 Wall St.

DaimlerChrysler (NYSE: DCX) will shorten its name back to Daimler after this week as it appears Cerberus Capital Management is about to be the winner for the Chrysler unit. The reported price tag is $7+ billion for what Daimler paid $36 billion back in 1998. Looks like Daimler will retain some ownership of Chrysler post-deal to the tune of 19%.

The good news for Daimler shareholders is that the stock is up over $85 in pre-market trading, gaining some 3.8%. Obviously, the investing world is thrilled with the divestiture of Chrysler. The two companies never quited jelled with cultural and engineering differences dominating the nearly nine-year relationship.

Daimler shareholders are happy also because the earnings power and leverage will be present once again. With the sale of Chrysler goes the $19 billion pension and health care insurance albatross that Daimler was carrying for the Chrysler retirees.

As I have written before, even though Daimler is looking at quite a loss for its nine-year affair, the shareholders are quite forgiving. Forgiveness has been seen in the share action ever since Daimler said back in February that all options are on the table regarding Chrysler. The shares were trading at $63-64. Today, they are at $85.

Ah, forgiveness is divine...

Georges Yared is the CIO of Yared Investment Research where he explores more growth stock ideas.