Fast Money Recap - Banks: Don't Lend TARP Funds (1/21/09)

Recap of CNBC's Fast Money, Wednesday January 21.

Citigroup (C), Bank of America (BAC), Goldman Sachs (GS), Wells Fargo (WFC), JP Morgan (JPM), Morgan Stanley (MS)

The list of TARP recipients reads like a “Who’s-Who” in American banking. Treasury is asking the banks to give details about lending activity. Fast Money guest Robert Albertson, chief strategist at Sandler O'Neill says banks should not be allowed to lend TARP money and government funds should be invested not given away. Lending does not breed capital. Karen Finerman believes that Albertson was being too hard on TARP. If it hadn’t been for the program, “the circumstances we’d be in would be so far beyond where we are right now,” and she added, “It’s really easy in hindsight to say here are 8 things they should have done better,” Albertson and Ratigan agreed that “We need to re-invent and re-invigorate Wall Street.”

Analyst Forecast: Google (GOOG)

There may be low expectations for Google’s upcoming report, given a reduction in advertising revenues and fewer online shoppers. Google has been aggressively cutting costs, getting rid of contracts and laying off staff. Citigroup analyst Mark Mahaney says he doesn’t have high expectations ahead of Google’s report, but he is bullish long-term. “The bear case is that we see high single-digit to low double-digit growth year over year… that’s pretty significant out-performance.”

Will Microsoft (MSFT) Pop?

Microsoft has not been moving very much since November, although many are bullish because of the company’s clean balance sheet. UBS Heather Bellini says Microsoft is a trading buy ahead of earnings; “It’s a better house in a bad neighborhood” she says, “but I do think you could get some alpha if you’re long it for the print.” She also has a buy on the stock long-term with a price target of $30. Bellini would like it to do a deal with Yahoo. Not every analyst is bullish; some worry that Microsoft’s clients may have made spending cuts.

What Will Geithner Do?

As the Senate considers Tim Geithner’s nomination for the position of Treasury Secretary amid a tax scandal, Geithner gave a few brief glimpses into his economic plan. He would like banks to keep better tabs on where government funds are going and to document lending. He also pledges to ensure credit reaches the consumer. Geithner also suggested a “bad bank” could be establish to buy up toxic assets, “But Geithner talked more negatively about the bad bank than I thought he would,” said CNBC’s Steve Liesman.

Out of Government Debt, Into Stocks: iShares Barclays 20 Yr. Treasury (TLT), S&P 500 SPDR ETF (SPY)

There was a big drop in TLT and a jump in SPY, indicating that investors were trading Treasuries for stocks. Karen Finerman thinks remarks from Geithner might be the cause.

Apple (AAPL) Surprises The Street

Apple surprised The Street by beating expectations and the stock rose 8% after hours. Pete Najarian said he was pleased he bought calls in Apple before the announcement. He added the numbers are impressive. Jeff Macke thinks Apple sandbagged its numbers again.

IBM (IBM) Impresses

IBM beat The Street’s expectations with its 2009 outlook. Najarian says he is impressed by IBM’s consistently strong outlook and might also keep an eye on Ericsson (ERIC).

Oil Rises: BP (BP)

As oil was up above $43 on Wednesday, many were optimistic that the general economic downturn would not affect oil severely. Tim Seymour thinks oil will stabilize and would watch BP. Gold finished lower, but did not go below $850 an ounce. Jeff Macke says he will stay away from metals and materials; “Just because they look better today doesn’t mean they are better.”

Will GE (GE) Cut Its Dividend?

GE fell to a 13 year low over worries it might cut its dividend. Karen Finerman says if GE does cut, it will be very embarrassing since the company said earlier it would keep the dividend uncut. Jeff Macke commented GE’s balance sheet is a big black box.

Will Roche Pay Up for Genentech (DNA)?

With news that results for Genentech's Avastin drug could be out in early spring, Roche may hurry up with its bid to avoid paying a premium if drug results are strong. Karen Finerman expects to see a bid soon.

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