Fast Money Recap - Pfizer and Wyeth ... Why? (1/23/09)

Recap of CNBC's Fast Money, Friday January 23.

Pfizer (PFE) and Wyeth (WYE) Merger: Bristol-Myers Squibb (BMY), Amgen (AMGN)

The Street is abuzz with news of the Pfizer and Wyeth’s $60 billion merger, however, Fast Money guest and Natixis Bleichroeder senior analyst Dr. Jon Lecroy thinks the acquisition is much ado about nothing; “I think it could be a desperation move. There’s not much of a pipleline at Wyeth. To me, this is an executive trying to keep his job by just doing something.” Lecroy thinks the companies are doing a deal to bide time. If the deal falls apart, he recommends looking at Bristol-Myers Squibb or Amgen.

Is Obama Spending Enough?

Many people complain that President Obama’s $800 billion stimulus plan is too generous. However, Fast money guest Joe Duran, CEO United Capital Financial Partners, thinks the Obama Administration needs to spend triple that amount. He argues the markets sense that not enough is being spent, so there is little hope for a recovery. Duran noted that the market is mainly psychological and a bolder investment is needed to stimulate the economy. He would put a freeze on capital gains, spend more on infrastructure and avoid tax cuts, which will only encourage people to put money away in banks rather than spending and stimulating the economy.

Earnings Season Stocks to Watch: Caterpillar (CAT), American Express (AXP), AK Steel (AKS)

Earnings season is coming up, and while expectations are low, the Fast Money group discussed stocks to watch for the week ahead. Jon Najarian said, “Puts in CAT are trading 2 to 1. I put on a put spread. That’s because after they announce earnings, I think the stock could whoosh to the downside. If it trades 3-4 dollars lower than where it closed Friday, to me it’s a buy.”

Jon Najarian said of American Express, “I bought the stock and sold the above the market calls and the below the market puts.” While volatility is yielding big rewards, he doesn’t think the shares are really going anywhere. Najarian noted that while AK Steel was dropped from Goldman’s conviction buy list, it finished up. He owns the stock itself as well as calls.

Will General Electric (GE) Keep Its Dividend?

General Electric dragged down the S&P as it reported a 44% drop and predicted 2009 would be “extremely difficult.” Shares fell 11% to their lowest point since 1996, as investors worried about the health of the conglomerate’s dividend. Karen Finerman thinks the dividend will stay intact unless they are getting support from the government and are encouraged to lower it. Guy Adami thinks GE is being unfairly treated like a bank. Pete Najarian observes from options activity that there is a lot of speculation in GE. Macke remarked that the market is uncomfortable with GE’s transparency, and thinks that when or if the company loses its AAA status, it may be a buy.

Cream Is Rising: Google (GOOG), Apple (AAPL), IBM (IBM), Microsoft (MSFT)

With Google’s earnings beat, Pete Najarian says the cream is rising to the top this week with strong performances from Google, Apple and IBM. Najarian sees a potential upside for Microsoft and remarked the company has to do an acquisition.

Jeff Macke Buys Banks: Bank of America (BAC), Citigroup (C), Morgan Stanley (MS)

Financials ended slightly higher and Macke bought Bank of America, Citigroup and Morgan Stanley because “the bad news is out…there is absolutely nothing Citigroup will say that will shock The Street.” While there is still some risk in buying financials, Macke says, “I don’t think the President is going to come in and vaporize equity shareholders…I think the price action is simply great.” However, Macke added this is just a trade.

Strong Yen Bad for Japan, Toyota (TM)

The Yen rose on Friday and Asian shares fell. Macke remarked a strong yen is bad for Japan, especially companies like Toyota. Guy Adami remarked selling the euro or the pound against the yen is a crowded trade.

Oil Rebound? Schlumberger (SLB), Oil Services (OIH), USO (USO)

Oil rose 6% on Friday, and Najarian thinks oil has not bottomed yet, and would take profits in Oil Services. Jeff Macke remarked Schlumberger’s chart is the worst he has seen and would also take profits. Karen Finerman would short USO against the oil services sector.

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