Johnson Control (JCI) said Friday that a boost in auto production and new vehicle launches helped it turn in a profit during the fiscal third quarter. The company reported net income of $418 million, or 61 cents per share, during the quarter. Excluding one-time items, JCI earned 54 cents per share, missing the consensus estimate by a penny. Quarterly revenue came in at $8.54 billion, an increase of 22% and better than the expected $8.48 billion.

The Milwaukee-based company also announced that it has agreed to up its stake in a joint venture with South Korean firm Delkor Corp. to 90%. The higher stake will cost the company $90 million. Delkor Corp. produces automotive batteries.

In this market, you take the good news where you can get it, and Friday's positive data came from the credit markets.

There are signs that U.S. credit markets are loosening as they pertain to the U.S. auto sector.

About $22.9 billion in bonds backed by auto loans, borrowings for dealer inventory, and related debt were issued through April, up 67% from a year ago, according to data compiled by Bloomberg News.

Employers are planning to cut fewer jobs for the third month in a row, according to a new report that Challenger, Gray & Christmas has supplied to BloggingStocks.

The executive outplacement firm says that the number of planned reductions fell 16% in October to 55,679 positions -- from 66,404 in September. Last month's level was the lowest seen since March 2008, when 53,579 layoffs were planned. And, it's 51% lower than October 2008's 112,884 result. Planned staff reductions have fallen in eight of the past 10 months.

A couple of weeks ago, General Motors announced that it was going to release a compact crossover under the Buick name. Yesterday, the company announced that it scrapped the plans. The automaker decided to do away with the vehicle because it received poor reviews from consumers, industry analysts, and automotive journalists.

On GM's blog, the company's Vice Chairman Tom Stephens noted that the company received "great positive feedback" on some of its designs, but that the "Buick crossover we showed received consistent feedback from large parts of all the audiences that it didn't fit the premium characteristics that customers have come to expect from Buick." Translation: the people didn't like the car, it got bad reviews, and it will not be made. Reportedly, one of the consumers invited called the auto "hideous."

The "cash for clunkers" program, once thought to be a minor, symbolic effort to stimulate the U.S. economy, actually may end up being substantive.

The program, which is designed to give rebates to enable citizens to trade in older vehicles for more fuel-efficient models, thus stimulating auto sales and the economy, ran out of its limited $1 billion allocation Congress approved earlier this year. So the U.S. House moved quickly last Friday to approve an additional $2 billion for the popular plan. Look for the Senate to follow, although the new proposal may be modified.

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."

Analyst upgrades:

• Merriman upgraded Dendreon (NASDAQ: DNDN) to Buy from Neutral on expectations shares will react positively to the full IMPACT data release on April 28. The firm thinks Provenge could represent the first cancer immunotherapy approved in the U.S. and raised its valuation range on the stock to $33-$34 from $18-$19.
• Piper Jaffray upgraded Andersons (NASDAQ: ANDE) as it believes the valuation is attractive, investor expectations are low, and the company's fertilizer and rail segments could recovery in FY10. The firm has a $19 target on shares. Goldman upgraded the auto sector to Neutral from Cautious and added Ford (NYSE: F) to its Conviction Buy list. The analyst does not believe Ford will have to declare bankruptcy and sees the company benefiting from Chrysler share declines and GM's (NYSE: GM) reduced product offerings. Ford's price target is $6
• Banc of America/Merrill upgraded U.S. Airways (NYSE: LCC) to Buy from Underperform.
• Broadcom (NASDAQ: BRCM) was upgraded to Equal Weight from Underweight at Morgan Stanley.
• Caterpillar (NYSE: CAT) was raised to Overweight from Neutral at JP Morgan.

The Swedish government said it "is not prepared to own car factories," The New York Times reported Monday -- a stance widely seen as the government's refusal to bail out the iconic Saab Automobile company, which is owned by General Motors.

If the Swedish government's decision does not change, that would mean that mostly-socialist Sweden will not provide loans to a major, domestic automaker, while the mostly-capitalist United States will. General Motor's (NYSE: GM) shares closed Monday up 17 cents to $3.35.

Investors may legitimately ask: how can this be? The answer isn't simple.

The mantra of the day is frugality and cutback. Rightsize and hunker-down, as tougher economic times are ahead.

But graft hunkering-down on to a U.S. auto sector that has accounted for a disproportionate share of lateral innovation, and you have the makings of an U.S. innovation slump, if not a drought.

The Wall Street Journal points out that the U.S. auto sector has had a kind of dual personality with regard to innovation. The Big 3 have failed to roll-out technologies that would have made their cars more competitive on the global stage, while at the same time pushed their suppliers -- including steel makers and auto parts suppliers -- to improve their parts supplied in order to retain the Big 3's business. Further, that high-performance-bar for suppliers has benefited other industries: one example -- metal parts in cars that last longer has led to metal parts in other applications, and for other industries, that do the same.

Ford may have to abandon its plan to skip a federal loan, as slumping sales continue to weigh on company revenues.

Ford (NYSE: F) predicted that U.S. light vehicle sales will total 12.2 million vehicles. General Motors (NYSE: GM) expects to sell 10-11 million vehicles, Chrysler, about 11 million.

Economist Richard Felson told BloggingStocks Monday a 2009 U.S. GDP decline of 2% or more "would make it virtually impossible for Ford to sell 12 million light vehicles."

"A combination of layoffs and still constrained credit markets will continue to hurt the auto sector for most of 2009," Felson said. "An optimistic scenario would be a sector recovery in the second half of 2009."

Ford's shares early Monday fell 2 cents to $2.60, GM's fell 3 cents to $3.99. Chrysler is privately held.

What's another high-end stat, along with a decline in sales of apartments in the heart of New York City -- Manhattan -- that doesn't bode well for the economy? A decline in sales of performance and luxury cars.

Sales of Bavarian Motor Works' namesake brand in the United States plunged 15.2% to a 16-year low in 2008, as the credit crunch and the U.S. recession scared away even buyers for one the world's highest-quality makes, The Associated Press reported Friday.

U.S. sales declined to 249,113 vehicles, The AP reported. Global 2008 sales slumped 5.8% to 1,202,239 vehicles. BMW's shares rose 49 euro cents to 22.39 euros Friday on the Frankfurt exchange.

Economist Richard Felson said BMW's sales decline "is indicative of a pervasive economic slowdown and a loss in confidence, across society and on both sides of the Atlantic."

The United States is preparing for a new year, and a new presidential administration -- one that has the potential to usher-in a rejuvenation of the U.S. economy, society, and culture, after nearly a decade of descent.

Still, that's not to say measures should not be taken to keep the Obama Administration and the Democrats honest. Now yours truly is not talking about the rhetorical observations and critiques of right-wing talk radio, which opposes seemingly everything from an increase in federal student loan programs to the rising of the sun in the east, but rather about techniques investors can use to make sure the Obama Administration remains true to its word -- i.e., to keep Obama and the Democrats honest.

Benchmark 1: The economy and job growth. Obama and the Democrats have promised a large fiscal stimulus package that invests in the nation's infrastructure and public institutions (schools, hospitals, civil administration buildings, parks), and that provides aid to the states, among other benefits. The fiscal stimulus package alone will not guarantee a return to robust economic growth and job creation, but it will point the U.S. economy in the direction of sustainable growth, with hundreds of thousands of jobs that will help 'prime the pump' for additional commercial activity. Hence, the U.S. economy and the stimulus package represent the top priority: any failure to deliver here would be a serious underperformance.

Free markets? Unfettered capitalism? Government getting out of the way so that businesses can operate?

Not exactly. Try mercantilism, national industrial policy, and monetary protectionism.

Japan's finance minister jolted currency markets early Thursday after he signaled that the Japanese government is prepared to intervene in the foreign exchange to support the dollar and euro and drive the yen lower.

The yen Thursday weakened 1.25 yen to 88.39 yen versus the dollar on the news. The yen also weakened 1.5 yen to 128.70 versus the euro. Both pairings had spiked significantly higher immediately after the finance minister's comments were published.

Finance Minister Shoichi Nakagawa said he has "the means" to limit the yen's advance.

In the modern era, Japan has periodically intervened in the market to drive the yen lower and support the dollar to prevent the yen from becoming too strong versus the dollar, and the world's other major currencies. A strong yen hurts Japan's export sales, including cars, by making those cars too expensive for foreign consumers.

Could 10 or 12 economically conservative Republican Senators prevent a Big Three auto rescue and the cessation of domestic auto manufacturing operations?

Indeed they could. Many of the conservative Republicans come from states where General Motors (NYSE: GM), Ford (NYSE: F) and Chrysler do not have a large manufacturing presence. Hence, there's likely to be little home-front pressure.

That fact, combined with the filibuster era - - whereby lawmakers routinely abuse the Senate's unlimited debate power to oppose any legislation that does not have 60 votes - - the total need to invoke 'cloture' or cut-off debate - - means a dedicated cadre of Senators has the political and procedure power to defeat any legislative item below the 'sweet 60.' Hence, in that sense a dedicated, numerical minority can undermine the will of the majority, the will of the people.

Now the real auto rescue debate begins

What's more likely is that the economic conservative Senators will use the filibuster weapon as a means to extract additional concessions from Big Three stakeholders - - primarily the United Auto Workers. And their goal is obvious enough: a UAW defeat will drive labor costs lower and represent another victory for those who believe the lower wages fall for the typical person and worker, the better. In this argument, wages are merely another cost in the production machine, and the less money allocated for this expense category - - as with any expense category - - the better.

Conversely, the UAW will argue that any attempt to weaken them - - or bypass them - - will hurt/eliminate the only organized power that the typical person and worker has at the bargaining table and in the American economic system. They'll also argue that a living and decent wage for all working Americans is the foundation for a strong, stable U.S. economy, with sustainable GDP growth.

Each side is likely to offer exaggerated business and economic statistics in favor of their arguments, in a Washington process known as 'rhetoric for dollars' that frequently accompanies appropriations bills and government loans. The economic conservatives are likely to argue that UAW total compensation costs are 'wildly above' those for auto workers in Japan and Germany. The UAW will likely argue that it's already made 'major concessions' in previous contracts, without noting that work rules haven't changed that much.

Can the U.S. auto sector re-claim technological supremacy in the global auto market?

True, innovation, breakthrough technology, and supremacy are not exactly words that come to mind when one currently hears the corporate names 'General Motors,' 'Ford,' and 'Chrysler.'

The auto sector as an asset, even now?

But Columbia University Prof. Jeffrey Sachs forecasts that the U.S. auto industry can return to greatness, in the nation that's championed innovation and ingenuity during the modern era -- if Congress passes a comprehensive rescue package for the Big Three, C-SPAN reported.

Sachs is doing what academics do best: looking down the field -- to what macroeconomic conditions and global commerce -- and auto demand -- will look like 5, 10, 20 years from now.

General Motors Corporation (NYSE: GM) rose 69 cents to $4.77, while Ford Motor Company (NYSE: F) added 53 cents to $3.25 per share in Monday afternoon trading. Chrysler is privately held.