Fast Money Recap -Will This Be GM's Last Quarter? (5/6/09)

Recap of CNBC's Fast Money. Wednesday May 6

GM (GM), Ford (F)

While Guy Adami thinks bankruptcy for GM is almost inevitable. CEO Fritz Henderson thinks there may be some hope to save the company in the form of a deal with bondholders to exchange roughly $27 billion in debt for 10 percent of GM's stock. The government would have 50% stake in GM, the United Autoworkers 39%, bondholders 10% and stockholders 1%. GM also plans to reduce dealers and cut back on some of its brands such as Pontiac, Hummer and Saturn. Meanwhile Ford is speeding ahead with its electric cars.

Bank of America (BAC), Wells Fargo (WFC), Citigroup (C)

The financial sector saw an upside in spite of news that Bank of America, Wells Fargo and Citigroup need to raise capital. Karen Finerman says the action is puzzling; the same news a few weeks ago would have brought down the sector. Pete Najarian thinks it was SEC Chairwoman Sheila Bair that set the tone for the rally by saying the results would be positive. Tim Seymour thinks people are buying financials because it is the only sector people can buy into with confidence and Jeff Macke would take profits.

Cisco (CSCO)

Although the company's profit and revenue fell from last year, Cisco beat expectations. Tim Seymour thinks the third quarter was priced in but CEO John Chambers made some bullish forecasts. Pete Najarian thinks Cisco is getting ahead of itself.

Transocean (RIG), Baker Hughes (BHI), Agrium (AGU), Braskem (BAK)

Oil rose to its highest level in six months. Karen Finerman is bullish on the oil services sector, even though it has already seen an upswing. She likes Transocean. Najarian picks Baker Hughes which has underperformed but has potential. In the commodities space, Agrium is reacting well to bad news, and Tim Seymour likes BAK as an emerging markets play.

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Comments

[epeon:]

Just out of curiousity, why would the bondholders exchange $27 billion for 10% of the company and the union gets 39% for half of the Veba payment ($10 billion)? I mean, they would have to be braindead to accept that deal (or on TARP which is pretty much the same thing). Secondly, some of the bondholders have CDS on the debt, so they get repaid in the event of a GM bankruptcy. Bankruptcy is inevitable.

May 07 09:51 AM