Strategy Session with the Fast Money Traders
I’m ridiculously skeptical of the GE dividend, says Jeff Macke. But the market took Guy’s advice and turned that frown upside down. You have to respect good price action.
I thought the move up on Tuesday was fairly impressive, counters Karen Finerman.
There’s been a 50% retracement in the Dow , explains Guy Adami. It happened in a week, but technically the market did everything I’d expect it to do. As a result, I think the market could extend gains higher.
The most impressive part of the rally was the late day turn in Apple, IBM and Hewlett-Packard , adds Pete Najarian.
GM SEEKING $18 BLN. FROM CONGRESS
General Motors asked the U.S. government to save it from failure by extending $12 billion in loans and another $6 billion in credit as part of an unprecedented federal intervention into the struggling auto industry.
Specifically, GM said it needs Congress to extend $4 billion in financing this month and provide the rest of the $12 billion by March. The remaining $6 billion would be available if a year-long recession in U.S. auto sales drops beyond GM's now-lowered expectations. Without the immediate $4 billion cash infusion, the top U.S. automaker faces the risk of failure, a senior executive said.
"The first $4 billion is crucial,'' GM Chief Operating Officer Fritz Henderson said, adding, "There is no Plan B.''
The only trade here is to step aside and watch the drama, bristles Jeff Macke.
If you want a high risk trade, you might want to short GM, muses Guy Adami.
I don’t think GM can go down, counters Karen Finerman. The government will just prop them up. But there’s no way I would buy the equity.
GE LEADS DOW HIGHER
General Electric , the parent company of CNBC, lifted optimism on Tuesday after it pledged to leave its dividend intact in a fragile economy.
The conglomerate also said it plans to scale back its hefty finance arm and cut jobs across its range of businesses as it braces for what it expects to be a worsening economic environment next year, executives said.
GE expects fourth-quarter profit to be at the low end of its prior forecast and said it aims to pull back from riskier finance businesses, such as consumer mortgages and some equipment finance, and reduce its reliance on the troubled commercial-paper market.
Its shares climbed about 9 percent as investors warmed to the idea of restructuring GE Capital, even as GE officials warned they do not expect that business to return to growth until 2010.
SEARS SOARING DESPITE BIG EARNINGS MISS
Shares of Sears soared higher on Tuesday despite a wider than expected loss and word that sales fell for the 7th straight quarter.
They announced intentions to buy back stock, explains Karen Finerman. That’s what lifted Sears. But it makes no sense to me. I don’t understand why they’re not buying back their debt. I can only speculate that they’re trying to manipulate their shares higher.
Sears has a huge short interest and this is a way to force a short squeeze and make them cover, adds Pete Najarian.
COST OF MULALLY CAR TRIP VS COST OF MULALLY PLANE TRIP
As you might have heard, Ford CEO Alan Mullaly has vowed to drive to Washington DC this week, instead of taking a private jet, as all the auto executives did last time they appeared before Congress.
As you can imagine Jeff Macke has more than a little to say about that. He put together this little chart.
How Much Will It Cost Ford's CEO To Drive To Washington?
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
And that's only the beginning. If you'd like to hear everything Macke has to say about the automakers you can find his rant at the end of the Word on the Street video.