In the movie "Trading Places" a wealthy stock broker and a bum trade places.

After underperforming GM’s (GM) stock since May 2006, Ford (F) shares have tracked its larger rival so far in 2007. And, during the last five days, GM is off almost 12% while Ford is down 2% during a 5% correction is the overall market.

Ford only has one piece of news that would account for most of its good fortune. It had a good second quarter in which the company made $750 million compared to a loss of $317 million a year earlier. What Wall St. was watching was the improvement in Ford’s North American operations. Pre-tax loss in that segment fell improved from $789 million last year to $279 million.The company ended that quarter with $37 billion on the balance sheet.

But, Ford’s news is not as good as its looks on the surface. Negotiations with the UAW have just begun, and the union knows that the improvement in North American numbers has been largely due to blue collar job cuts. Now, Ford is doing better and the $37 billion makes it harder for the company to claim that it is in bad shape.

The other news that the earnings mask is the continuing drop in Ford’s market share, which now stands at about 15.6%. If that figure continues to drop, the company will not be able to come back to the market with improved results.

Ford also has a much less robust business in China than GM does. Being able to do well there could be a key to overall corporate performance at US automakers, certainly within the next five year.

Ford may be better off, but it is not better off than GM

Douglas A. McIntyre

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