Fast Money Recap - Goodbye to the Goldman Standard? (12/2/08)

Recap of CNBC's Fast Money program, Monday December 2.

General Electric (GE), Exxon Mobil (XOM), Chevron (CVX), Apple (AAPL), Hewlett-Packard (HPQ), IBM (IBM)

The S&P moved 4% higher following Monday's drop on news GE is not lowering its dividend and Ben Bernanke made a commitment to aid faltering financials. Exxon and Chevron led the energy sector upward. Jeff Macke said he was skeptical of GE's dividend, but Karen Finerman said she was impressed by the announcement. Guy Adami commented on the 50% retracement of the Dow and thinks the market could see more gains. Pete Najarian remarked on the late day rally in HPQ, Apple and IBM

GM Begs for its Bread

GM asked the government for $18 billion in loans and in credit. Jeff Macke said the only trade involves sitting and watching the drama. Guy Adami says a high risk trade may be to short GM. Karen Finerman said while the government won't let GM fall, she would not buy its equity.

Sears (SHLD) Unexpected Rise

Shares of Sears rose in spite of its slow sales for the 7th straight quarter. Finerman remarked that while the company is buying back stock, it really needs to take care of its debt, and she suspects Sears is trying to manipulate its stock price higher. Since there is such a large short interest on Sears, he thinks the tactic might cause a short squeeze and force the shorts to cover.

How Much Will it Cost Mulally to Drive to Washington?

Ford CEO Alan Mulally said he would drive to Washington to meet with Congress rather than taking a plane. Jeff Macke calculated the cost of the trip:

Gas: $30.42
Pit stop at McDonald's: $5
Dunkin' Donuts: $4
Tolls: $21.25 (source: AAA estimate)
Lost wages: $2602.74/hour x 9-hour trip = $23,424.66

Goodbye Goldman (GS) Standard

While almost every financial institution is expected to decline in the current market, many believed Goldman was in a league of its own. Goldman Sach's share price declined on analysts' predictions that it will report a loss for the first time in its history. Not only that, Bernstein Research analyst Brad Hintz predicts the loss could be as much as 53 cents a share, much greater than expected. "“There’s almost no business that Goldman has other than government trading that’s going to be performing well right now.” Hintz recommends Morgan Stanley (MS) for its greater revenue diversification, lower reliance on trading revenues and because of the stability of its earnings.

Are Stocks Cheap?

In a volatile market, how does an investor gauge whether a stock is cheap or not. PIMCO’s Bill Gross says stocks are not as cheap as they appear and it is a better idea to invest in corporate bonds. He added, "I believe in stocks for the long run -- but only if purchased at the right price," or "from a starting price that correctly anticipates the economy's growth and its share of after-tax corporate profits within it," Karen Finerman agrees, but says to find the mean for a given stock, it may be necessary to go back 10 or 20 years, since so many influences in the past 5 years were artificial.

Is DryShips Sinking (DRYS)?

DryShips' stock price has declined from $116 to $4. Is this the Titanic or a great buying opportunity? First of all, the shipping industry is facing a crisis with falling rates and sinking steel prices which lower the rate further. In addition, DryShips has an oversupply of ships, is selling its stock and might not meet its loan obligations. Finerman would stay away from DryShips and prefers Diana (DSX), which has a clean balance sheet.

Comments

[helplessobs...:]

Miriam,
Hope you will make the Fast Money Recap a daily feature for this page.

2008 Dec 03 09:42 AM

[long_on_oil:]

The SEC needs to check out the relationship between Cardiff and DRYS. There appears to be something fishy there. Is Cardiff ( a privately owned company owned by George E) off loading Cardiffs debt to drys by selling drys surplus ships? Since Cardiff controls the direction of DRYS, have the recent stock transactions of DRYS benefited Cardiff?

2008 Dec 04 08:37 AM

[Chris B:]

ESEA is using the surpluses of cash they built up earlier in the year to buy ships at distressed prices. Check out today's announcement.

2008 Dec 05 03:02 PM