Again With the Financials - Fast Money Recap (8/29/08)
Recap of CNBC's Fast Money, Friday August 29.
Volatility - Freddie Mac (FRE), Fannie Mae (FNM)
Melissa Lee hosted and said “it has been a very volatile week.” Joe Terranova said the upward revision on GDP was a result of strong exports. He said that “oil at the end of the day was flat,” but the story isn't over until Tuesday next week when we see if Tropical Storm Gustav will become a hurricane and devastate the Gulf Coast. Pete Najarian said when you have “a 2.7% gain on the S&P 500 in the past two days,” it is not surprising to see people take some profits before the long Labor Day weekend. He said that today, investors were simply trying to find an excuse to sell and that is just what they did. Najarian does not feel the market reacted negatively solely on the basis of John McCain picking Sarah Palin as his running mate. He said the market reacted based on other factors such as Freddie Mac (FRE) and Fannie Mae (FNM), oil and the possibility of a hurricane hitting the Gulf Coast played a bigger role in the market's reaction.
Najarian spoke negatively about Dell's recent quarterly results, saying “they hurt themselves” by slashing prices just to gain market share. Najarain said he feels gains in market share for Dell are temporary, since management will have to at one point raise prices again. He recommends sticking with best-of-breed names such as Hewlett-Packard. Terranova said that Dell has “changed their selling strategy” from strictly generating sales online and is now opening stores to reach out to consumers. In addition, he said, “I do think you need a little caution here.”
Google and the Buck - Google (GOOG)
Will the strength in U.S. dollar hurt Google? Terranova said he owned Google but sold it because the stock continued its downward movement. He added, “I am not saying you short Google here,” but said he senses from the way the stock is trading that it wants to move lower from current price levels. Karabell said he remains bullish on Google, stating that the company is “still growing 30%-35% a year.” He said there is “still a lot of advertising going to the Web” and believes Google will benefit the most from it.
Again With the Banks - Financial Sector SPDR (XLF), Capital One (COF), Freddie Mac (FRE), Fannie Mae (FNM), Goldman Sachs (GS), Merrill Lynch (MER), Wells Fargo (WFC)
Finerman said that regarding the financials, she suggests that investors sell into the strength. She said she feels that the factors “plaguing the financials have not gone away,” which is why she has short positions on Financial Sector SPDR and Capital One Financial. Terranova said he is skeptical about Freddie Mac and Fannie Mae since “they have massive debt to roll over.” That debt could be as much as $200 billion. Najarian said if you “take a look at Goldman Sachs and Merrill Lynch,” you'll see that investors are bottom-fishing for financial names. He went on to say that he notices through the large call options in the financials that people seem to be expecting the financials to move up in the short term, especially Wells Fargo.
Stocks with Energy - LDK Solar (LDK), International Business Machines (IBM), Market Vectors Coal (KOL)
Lee said LDK Solar received a seven-year deal in China for $440 million. Najarian said that while he likes the names in the solar sector somewhat, he warns that it is difficult to judge the P/Es for these companies and says he “would be nervous about that.” He went on to say the “solar names are not dead, but I would suggest sticking with tech,” for instance International Business Machines, which has some exposure to solar.
Najarian said that while he likes the coal names, he finds the rails "interesting." He said the rails have outperformed the coal names year-to-date and are all worth some consideration. Terranova mentioned if you want to play into the coal sector, buy some of Market Vectors Coal.
Addison Armstrong, director of market research of Tradition Energy, joined the program to talk about the Tropical Storm Gustav. He said that if it becomes a Category 3 or 4 hurricane when it hits the Gulf coast, he has no doubt in his mind that we will see crude oil as well as natural gas spike tremendously to the upside.
Chris Mutascio, an analyst at Stifel Nicolaus, offering a bearish outlook in the financial sector. He said that he believes “commercial and industrial loans could continue to deteriorate.” Also, he stated that the debt markets are predicting more turmoil, possibly heading to a second phase of the credit crisis. Finerman agreed with the premise that the troubles in the financials have not gone away, stating “I still believe the worst is not over.”
Motion Less - Research In Motion (RIMM), Palm (PALM)
Lee said Research In Motion (RIMM) was down 8% this week and asked the panelists why. When Research In Motion dropped to 121.36 mid-day it past its 50-day moving average. Terranova said “tech does not look good,” especially judging how the tech sector reacted in today's trading. He is bullish on the sector but he is deterred by the way the markets have been performing. Terranova says he would look at RIMM somewhere around $115. Long term I think it’s a $140 stock. Najarian said he owns and likes Research In Motion but he went on to say how he is surprised by Palm's performance. He said Palm's stock appreciation for the past few weeks shows that the company can compete against the BlackBerry and other smart phones.
Infrastructure Trade - Bucyrus International (BUCY), General Electric (GE)
Does the global slowdown imperil the infrastructure trade? Terranova said he does not feel the infrastructure trade is over. In fact, he recommended a stock that he feels has bottomed and that investors should consider buying: Bucyrus International. He feels this is the time you buy in for the long-term infrastructure play. Karabell said the “reports of this slowdown are not accurate,” which is why he remains positive on companies such as General Electric that also stand to benefit from the infrastructure buildup. Finerman mentioned that she is long on General Electric.
Panelists Were Right On - J.C. Penny (JCP), BHP Billiton (BHP), Target (TGT)
Lee mentioned that if you have listened to the panelist recommendations, you would have been up with nice returns. The recommendations were J.C. Penny from Finerman, BHP Billiton from Karabell, and Target.
Final Trade – Your First Move for Tuesday September 2.
Joe Terranova recommends long Excel Maritime Carriers (EXM).Karen Finerman likes long Golar LNG (GLNG).Jon Najarian suggests Wells Fargo (WFC).Zach Karabell likes SPDR Gold Shares (GLD).
Seeking Alpha is not affiliated with CNBC, or Fast Money
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This article has 6 comments:
- Life Saving Beverage Maker
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Aug 30 01:36 PM- Britishsteel
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Aug 30 01:52 PM- User 10755
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Aug 30 03:58 PM- kkin365
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Aug 30 05:04 PMOn another point, the "chairwoman,"... seems to hold short positions on financials continuously. Is this (long-term continuous short) common or uncommon?
- BlueOkie
- 70 Comments
Aug 31 06:23 AM- rdnk
- 3 Comments
Aug 31 11:45 AM