Detroit’s Big Three has placed big bets at the recently held New York International Auto Show (NYIAS). This is done to boost its standing in the automotive realm. And the Big Three is starting the change in the Big Apple.

In the said auto show, the Chrysler Group has unveiled its redesigned 2008 Jeep Liberty which comes as a top selling compact SUV. The Ford Motor Co. has also introduced its new Flex vehicle which is a large crossover SUV replacing its minivan. And General Motors Corp. unraveled Buick Super series and concept minicars to reach out to the generation Y.

New York offers a huge potential auto market and the territory can influence the entire nation. This is the reason why Detroit’s Big Three is placing big bets in the Big Apple. “There’s always a chance that someone can create some momentum from the show that can help sales,” said Tom Libby, an industry analyst for the Power Information Network. Erich Merkle, an analyst with IRN Inc. which is an automotive consulting company, added, “There’s a huge amount of media attention in New York and from there, the country is addressed.”

The March sales reports say it all – the Big Three’s sales are rather slumping. Compared with last year’s March reports, Chrysler and GM sales dropped four percent while Ford’s declined by nine percent. Hence, the road to recovery is anchored on building new vehicles that purchasers could not reject.

The Chrysler Group has debuted two models: the redesigned 2008 Jeep Liberty and refreshed 2008 Grand Cherokee and these are the brand’s two hot selling vehicles. “We sell about 20 percent of Jeeps in the Northeast,” said John Plecha, the director of Jeep marketing. Plecha said Jeep does not want to shun the future women buyers, but the brand still hopes that the Liberty appeals to more customers in general.

Jesse Toprak, a senior analyst for Edmunds.com, said that the Liberty may run into some problems. “The compact SUV market is getting much tougher to compete in because so many automakers are providing models.”

Jeep’s other vehicles – such as the Patriot and Compass – may also hurt the new Liberty, said Merkle. It will compete too closely with other Jeeps in the same price range, he said. “It’s not that I don’t like the product,” Merkle said, “but there’s too much internal competition.”

Ford has also introduced a new SUV in Flex. The offering of the automaker is to deliver something original to aficionados. Based on the Ford Fairlane concept, the Flex is a calculated risk, Libby said. “This is a progressive move,” Libby said. “Ford really needs this to work. They believe they can fill that part of the market with a large crossover.”

“That’s one of the most critical launches they’ll have,” added Merkle. “The crossover SUV segment has been growing by leaps and bounds. It’s displaced the SUV as we know it.”

While Chrysler and Ford struggle, GM seems to be successful in stepping on the brakes to stop sales declines. It appears that the automaker is making an obvious progress. GM has released the Super series, performance versions of the Lucerne and redesigned LaCrosse to breathe new life.

“They can’t wait for all of the loyal Buick buyers to die off,” said Toprak. “The Super designation is part of that effort. Will it work? It’s too early too tell.” In regard to the minicars, Toprak hopes the General brings them to the United States.

England v Portugal Preview

Although England don’t have a good record against the Portuguese, Sporting Index have still got them as favourites to win by 0.3 to 0.5 goals on their “Supremacy” market. This is influenced by the fact that Portugal are missing both Deco and Costinha through suspension. However, Big Phil has proven to be Sven’s nemesis twice before in the big competitions. He managed to beat England with 10 men in Shizuoka in 2002 when Ronaldinho was sent off. Two years later he successfully changed formation in Lisbon after Rooney was forced off through injury. With the influential Figo available, and Ronaldo looking likely to figure, Scolari could dash English hopes for a third successive tournament.

On top of this, Scolari has never lost a World Cup match. In fact, the 11 straight victories he has enjoyed with Brazil in 2002 and now Portugal is a record. His current team has also not lost a match (competitive or friendly) since the Euro 2004 final. On the other hand, England are still unbeaten in Germany. Although Sven’s team have only scored five goals so far, Portugal have only managed six. On the back of this, and the other low-scoring matches in this round, Sporting Index predict a total of just 2.1 to 2.3 goals will be scored in 90 minutes.

So in this battle of wits between the Swedish iceman and Big Phil, formation will be key. In the Ecuador match, Carrick made more passes than any other England player, (66 in total, 57 successful). He also spent significantly longer on the ball (196.9 seconds) than anyone else – Ashley Cole is in second place with 156 seconds. However, Carrick didn’t make a single tackle (Terry topped that list, with 5). In fact, England’s three central midfielders only made one between them.

Over the past few days, there have been several stories written about Warren Buffett’s $14 billion bet on global stock markets. I believe these stories are all in reference to this excerpt form Berkshire Hathaway’s annual report:

“Berkshire is also subject to equity price risk with respect to certain long duration equity index put contracts. Berkshire’s maximum exposure with respect to such contracts is approximately $14 billion at December 31, 2005. These contracts generally expire 15 to 20 years from inception. Outstanding contracts at December 31, 2005, have been written on four major equity indexes including three foreign. Berkshire’s potential exposure with respect to these contracts is directly correlated to the movement of the underlying stock index between contract inception date and expiration. Thus, if the overall value at December 31, 2005 of the underlying indices decline 30%, Berkshire would incur a pre-tax loss of approximately $900 million.”

It’s impossible to evaluate what exactly this means for Berkshire or what it tells us about Buffett’s thinking without knowing more details. But, there are a few things I’d suggest you consider when reading the news reports.

First, the $14 billion headline number makes this bet look larger than it really is. According to the above disclosure, a 30% decline in the underlying indices would only create a $900 million pre-tax loss. One article stated that a decline in the indexes to zero was highly unlikely given historical trends. It’s a lot more than highly unlikely. But, since we don’t know the details of Berkshire’s exposure, we can’t evaluate the real risk of a very large loss.

A lot of these news stories have called Berkshire’s “long duration equity index put contracts” a bet on global stock markets. A few individuals have been quoted as saying Buffett has become bullish long-term. Buffett’s always been optimistic about the very long-term insofar as he recognizes how better things are today than they have been at any other time in history, and how that is likely to remain true for some time. Despite Buffett’s concerns about nuclear war, he doesn’t see a return to the Dark Ages and those kinds of anemic returns on capital.

That’s important to keep in mind, because I’m not sure this bet is much more than that. If you assume returns on equity will be similar to those achieved in the years since industrialization began, and you assume central governments will continue to cause inflation, a long duration equity index put contract isn’t much of a stretch.

Equity will earn returns, much of those returns will be retained by the businesses, and inflation will increase (nominal) stock prices regardless of whether the underlying businesses’ assets are increasing or remaining stable.

So, I’m not sure this is a bullish sign. In fact, it may be a bearish sign, because it suggests Buffett can’t find individual equities to buy, three of the four indexes are foreign, and someone wants to be protected against very large losses in a diversified group of holdings.

Remember, someone is paying for this protection. In my opinion, it’s not the kind of protection investors need. It’s long-term protection on an index. I suppose I can see why a pension fund might want this (to increase exposure to equities), but it seems like exactly the sort of thing an insurance company can make money selling. There’s fear of a very large loss, and a lot of factors that are hard to see that will tend to make that loss pretty unlikely.

We don’t know what premiums Berkshire is receiving, so we really can’t evaluate these contracts. If someone writes hurricane insurance it doesn’t mean they think hurricanes are unlikely, it just means they think someone is dumb enough to pay more than the protection is worth. Knowing the odds of a decline in global stock markets isn’t enough to evaluate Berkshire’s contracts, because we don’t know the price.

I’m not enamored with current valuations in the U.S., but looking out a couple decades it’s not all doom and gloom. Markets tend to overshoot in both directions, but there’s usually someone sane enough to buy when stocks get cheap enough.

What’s remarkable about the way investors move stock prices isn’t the magnitude of the truly major moves (up or down); it’s the frequency of meaningful moves when there’s no meaningful changes in underlying values. Think about the price range of an average stock in an average year – that’s the really irrational part of investor behavior. I wouldn’t want to have anything to do with a one-year contract on a single stock. That’s a very different situation.