CNBC’s Fast Money – Playing Fast & Loose With Facts About FED & US Treasuries?

On Thursday, March 26, 2009, Mr. Joe Terranova made an “expert” appearance on CNBC’s Fast Money Show to discuss “Trading China’s Stimulus”. He quickly launched into his favorite topic, US Treasuries. He actually suggested on American National TV that the US Federal Reserve was following the lead of Chinese Government in buying the same maturities of US Treasuries that China is buying.  Don’t just take our word for it. Listen to Mr. Terranova express this opinion at minute 01;01 of the 05:04 minute clip

For our readers, we include relevant quotes from Mr. Terranova’s conversation with his colleagues Karen Finerman and Tim Seymour.

Joe Terranova“Look at the Treasury Market; look at the treasury market; look at the decision of our government to buy 300 billion  dollars worth of Treasuries; Where are they buying them? They are buying them in the same place that the Chinese government buys them; buying them in the front; buying them in the short term maturities..”

After an exchange between the Fast Money traders, Karen Finerman asked Joe Terranova at minute 03:54 of the 05:04 clip.

Karen Finerman
“I thought the Treasury is actually buying not so short term, longer out.”

Joe Terranova
“ the US Government or Chinese Government?”

Karen Finerman“US Government” .

Joe Terranova“US Government is buying basically between 5yr and 10 yr maturities…they are not going beyond 10 year maturities…they are all going short term, they are not going 20 years, they are not going 30 years”.

Tim Seymour interjects – “They are going twos to tens”.

Joe Terranova “Right”.

We were surprised because we remembered Tim Seymour saying something different two days prior to this show. So we went to the Fast Money “Word On The Street” clip of Tuesday, March 24, 2009.

We heard Tim Seymour say in that clip “today they (the Fed) announced 30 year bond will be part of their purchasing program”. Listen to Tim Seymour say this at minute 11:08 of this 20:28 minute clip at

We were confused. CNBC promotes its Fast Money Traders as “Faster than the Ticker”. Was Tim Seymour moving so fast that he forgot on Thursday what he said two days ago on Tuesday?

May be, the Federal Reserve had changed its mind. So, we called the Federal Reserve in Washington DC. A wonderfully helpful gentleman showed us where to find the information on the New York Fed’s website.  There it was –  Official confirmation that the Fed will buy US Treasuries with maturities from 2026 to 2039 on Monday, March 30, 2009 (see for yourselves at  ).

So, Joe Terranova was factually wrong. This was not a simple mistake. His case that the US Fed was following the lead of the Chinese Government was predicated on his erroneous statement about Fed NOT buying 20 year or 30 year Treasuries. 

What about Tim Seymour, a Hedge Fund Manager? How could he make definitive statements on National TV without really knowing his facts? How could he make one statement on Tuesday and then make the completely opposite statement 2 days later on Thursday?

This episode has lent credence to our nagging suspicion that Fast Money Traders do little or no homework before they come on the show and that, on the show, they simply throw their random ideas against the proverbial wall to see what sticks. 

With the evidence of this episode, we reiterate the public appeal we made to CNBC Fast Money on February 21, 2009, to publish the investment performance of all Fast Money Traders on a monthly basis so that, we the viewers, can decide for ourselves which trader to believe and follow. This appeal was made in our article “CNBC’s Fast Money – Practice What Your Anchor Dylan Ratigan Preaches” (–practice-what-your-anchor-dylan-ratigan-preaches.aspx). Our readers seem to agree with this appeal because this article has become the 3rd most read article on this blog during the past month.

What about Karen Finerman, the Chairwoman of a major Hedge Fund according to CNBC promos? Ms. Finerman has, on several occasions, told her Fast Money viewers that she has put on a trade in which she is double-short long maturity treasuries.

We do not know many Hedge Fund Managers. But, the ones we know share some characteristics. They know their trades cold; they know the rationale behind their trades and all the pertinent facts about fundamentals & technicals of their trades.When asked, they are extremely confident and articulate about these facts.

Contrast this with the diffident, almost meek, attitude of Karen Finerman when she asked Joe Terranova her question about the Fed’s plans about long maturity treasuries. She seemed unsure about the plans of the Fed. Watch the clip to judge for yourselves (at 03:54 minute of the clip “Trading China’s Stimulus” –  ).

We find this stunning. Ms. Finerman was unclear that the Federal Reserve was soon going to buy long maturity treasuries in bulk, the very securities that her fund was double short!!  Ms. Finerman is free to do what she likes at her own hedge fund. But, on CNBC’s Fast Money Show, she needs to exercise some caution before recommending such a  trade to her trusting, unsuspecting viewers without doing serious due diligence. The vast majority of viewers are very likely to follow her advise without any doubt and without checking with the Federal Reserve as we did.

Fast Money Traders and other CNBC Anchors need to understand, really and fully understand, that trusting, unsuspecting Americans watch their shows with the hope of doing a better job of managing their retirement portfolios, college funds for their kids and their savings held for a rainy day.
They deserve better than what they got on Fast Money this past week.

We believe and we have written that the vast majority of CNBC people do a thorough, painstaking job of bringing information and expert interviews to viewers like us to help us manage our money.

But CNBC staffers and CNBC Management need to heed the lesson of AIG. The vast majority of AIG employees, we believe, are honest and hardworking. But, their reputations and perhaps their careers have been damaged by the reckless acts of a few people in a few departments of AIG.

CNBC Management should learn this lesson and clean up shows like Fast Money so that CNBC can help Real Money of Real American viewers.

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