Fast Money - The Great TARP Debate (12/9/08)

Recap of CNBC's Fast Money, Tuesday December 9.

Anything Goes: Hewlett Packard (HPQ), IBM (IBM)

The group was not surprised to see the Dow fall 3% after a two-day rally since “anything goes” in this market. Dylan Ratigan said the move down was “anticipatable” and a case of “markets behaving the way markets do.” Pete Najarian said it was natural that investors were taking profits and noted HPQ and IBM were on a “tear” since the S&P was up 10%. Najarian declared we are in a “comfort zone” with the volatility index around 59.

T-Bills Go Negative

Treasury Bills went negative on Tuesday. Dylan Ratigan blamed big banks that "get some taxpayer money, bring that in and then jam it back into the Treasury market.” Jeff Macke wonders if the government has overextended itself with bailouts and whether it will be able to invest substantially in future; he adds the U.S went from feeling stronger than the Japanese to "aspiring to be the Japanese, because it actually costs us money to give it to people." Tim Seymour is not bothered by the news, and says it is just another way to raise cash at the end of the year. He noted those selling were not primary dealers, but there were a "bigger percentage of non-primaries." Karen Finerman said it was “eminent domain” in the financial world and thinks some contract laws may have been violated. But she sighed, “The old rules are gone.”

The Great TARP Debate

A report criticizing the lack of transparency in TARP is due to be released on Wednesday and Seymour commented the report is a big “no kidding.” Macke said he would sell equities, since the market seems to have no idea how to value them. Najarian was alone in thinking TARP has done some good, particularly for Citigroup which has moved up. He would give TARP some time and thinks it will be make long-term improvements. Finerman said many companies, like McDonalds, are doing very well without needing handouts. “Those are equities that are good to own,” she said. Ratigan said he would like to see several CEOs of major banks step forward, admit their mistakes in taking such huge risks and return money to the banks.

Wal-Mart (WMT)’s Buyback Suspended

Macke welcomed news that Wal-Mart is suspending its stock buyback program, and said the strategy doesn’t work so well anyway for the company. A Wal-Mart shareholder, Macke thinks the retailer should preserve capital because of the problematic environment. Karen Finerman wondered why Sears (SHLD) is still buying back stock even though its performance is much worse than Wal-Mart’s. Maybe CEO Eddie Lampert is trying to "talk the debt down, so he can buy it cheaper," said Finerman.

Electronic Arts (ERTS) Drops

Electronic Arts fell 7% in after hours trading and said the forecast they gave in late October was “no longer relevant.” The company said it is “unclear where things are going.” Jeff Macke said if there is going to be another video game cycle, who ever is king at the beginning of it will no longer be leading at the end of it.

Apple (AAPL)’s iPhone at Wal-Mart

Apple has been up it's up 9% for the past three sessions on rumors its iPhone may be available at Wal-Mart ahead of the holidays. Gene Munster, Senior Analyst and Piper Jaffray, says the rumor is 85% likely to be true. He added this may be a “major channel” for Apple which might double its current sales at its regular stores. Concerning other Apple products, Munster noted Mac computer growth is at 30% for the last quarter, and while the iPod has come and gone, the Macs will be “carrying the story for the December quarter.” Concerning Apple’s earnings, while Munster says his firm has lowered their numbers for the company, Apple has “weathered the storm really well.”

Obama and Broadband: Cisco (CSCO), Juniper (JNPR), Akamai (AKAM), EMC (EMC), Ciena (CIEN)

Obama has already mentioned the need for infrastructure, and now his vision is to build out broadband. Najarian would look at Cisco, Juniper, Akamai, EMC and Ciena on the announcement, but Macke thinks Obama’s plans are too indefinite and would “wait for the news.”