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'Fast Money' Recap: Dr. Doom

Stockpickr Staff

12/04/07 - 09:51 PM EST
The stock market put in another luck luster performance on Tuesday. The Dow closed down 65 points and the Nasdaq fell 17 points. The team at CNBC's "Fast Money" talked to Marc Faber, looked at McDonalds and shopped for retail.

Dr. Doom

Marc Faber, managing director of Marc Faber Ltd and publisher of the "Gloom, Boom & Doom Report" joined the "Fast Money" crew to discuss his take on global stock markets. Faber believes the US market isn't that expensive, but it now has an earnings problem. He expects that the US market will rally into January and then selloff again.

Faber also thinks that overseas markets like China and India are in bigger bubbles and those markets could drop 20-30%. Faber went on to explain that if the US has a credit crisis, it will lead to a tightening of global liquidity, which isn't good for asset markets.

(Take a look at a portfolio based on Marc Faber on Stockpickr.comBarron's Roundtable Marc Faber.)

Mickey D's

Investors need to think like consumers to find the winning trades. Just take a look at the stock chart of McDonald's(MCD Quote - Cramer on MCD - Stock Picks) and you will find a company that understands the consumer. Jeff Macke explained that MacDonald's has mastered the concept of "consistency of service" and that experience can be seen in any of their stores. Pete Najarian mentioned that MacDonald's is clean, consistent and you know what you're going to get when you walk into any store. He went on to say that MacDonald's is saying that coffee sales could add $1 billion to the bottom line next year. All of the "Fast Money" traders think MacDonald's is a buy and Macke predicts it can double in the next few years.

Retail Trade

Retail stocks are working ahead of same-store sales, which will be reported later this week. According to Macke, this was a huge bounce because the numbers aren't going to be that bad. He wants to be out of the retail stocks ahead of the Thursday jobs number. are Wal-Mart(WMT Quote - Cramer on WMT - Stock Picks) continues to be Karen Finerman's favorite, as well as Kohl's(KSS Quote - Cramer on KSS - Stock Picks).

Guess(GES Quote - Cramer on GES - Stock Picks) reported a 33% jump in third-quarter profits and boosted guidance. Macke says Guess is one of the retail stories of the year and he continues to like this stock. He mentioned that if investors can get Guess flat or near its Monday closing price it would be a terrific place to buy.

Najarian noted unusual options activity in Safeway(SWY Quote - Cramer on SWY - Stock Picks) with aggressive call buying in the name. Najarian mentioned that gift cards will be a $100 million business this year for Safeway. Macke is long Safeway and he likes the bullish options activity.

Sun Spots

Solar stocks like LDK Solar(LDK Quote - Cramer on LDK - Stock Picks) and Solarfun(SOLF Quote - Cramer on SOLF - Stock Picks) traded higher heading into the ThinkEquity conference set for Wednesday. Najarian took off some of his Trina Solar(TSL Quote - Cramer on TSL - Stock Picks) trade on Tuesday. An energy bill is coming out that could be a catalyst to take solar stocks higher, but he continues to advise selling into strength.

(Here's a solar portfolio on Stockpickr.com Solar.)

Weak Spots

Fannie Mae(FNM Quote - Cramer on FNM - Stock Picks) cut its dividend from $0.50 to $0.35 and the stock fell. Finerman isn't surprised that Fannie is cutting their dividend. However, Najarian and Macke think Fannie Mae is a great buy and would love to get in near the $33 level.

Merck's(MRK Quote - Cramer on MRK - Stock Picks) profit forecast disappoints and the stock gaps lower. Najarian explained that Merck has a strong pipeline and the drug company is known for underestimating profit forecasts. Macke advises using this selloff as an opportunity to accumulate shares in Merck. Adami also likes Merck for its job cutting plans and big stock buyback.

Nokia(NOK Quote - Cramer on NOK - Stock Picks) disappointed the street Tuesday after saying operating margins will be under pressure. Najarian explained that technology stocks like the four horseman were all under pressure on Tuesday. He went on to say that Research In Motion(RIMM Quote - Cramer on RIMM - Stock Picks) is struggling because of what came out of Nokia today on price margins. Nokia can handle the margin pressure and the stock still has plenty of room to the upside.

Delta Air Lines(DAL Quote - Cramer on DAL - Stock Picks) led the airline sector lower after the firm forecast a profit squeeze. For Najarian, until there is some consolidation in this sector he wouldn't own a single airline stock. Macke sees no reason to own airlines stocks when they have no control over their own destiny.

Face2Face

Investors write in with their own topics to be addresses.

Curtis from Louisiana asks, "Karen, are you still long Goldman Sachs Group(GS Quote - Cramer on GS - Stock Picks) and short Lehman Brothers Holdings(LEH Quote - Cramer on LEH - Stock Picks)? Is it too late to make this trade?" Finerman confirmed that she is still long Goldman and short Lehman through put options. She still thinks it's a good trade to have on and her bet is that Lehman will come clean on subprime exposure when they report earnings on December 13th.

Tony from New Jersey writes, "Since your segment on UPS(UPS Quote - Cramer on UPS - Stock Picks) a few weeks back, it appears their drivers have been only making left turns heading south. Will UPS continue delivering down a dead-end?" Adami feels the "tell" for UPS will be Christmas time. HE will be watching to see if Amazon.com(AMZN Quote - Cramer on AMZN - Stock Picks) does well because that will bode well for UPS.

John from California wants to know, "What's up with Vodaphone(VOD Quote - Cramer on VOD - Stock Picks)? Especially while most worldwide cell plays seem quite attractive?" Najarian isn't a fan of Vodaphone instead he prefers China Mobile(CHL Quote - Cramer on CHL - Stock Picks) in the space.

Happy 52-Week High Chiquita Brands International(CQB Quote - Cramer on CQB - Stock Picks)

Pops & Drops

Pops - Verizon(VZ Quote - Cramer on VZ - Stock Picks) traded up 2% on no news. Najarian suggests the climb is tied into the wireless spectrum bidding.

Autozone(AZO Quote - Cramer on AZO - Stock Picks) exploded up 19% after quarter profits beat Wall Street estimates. Macke explained that the do-it-yourself crowd is flocking to Autozone and that crushed the short trade.

Jamba(JMBA Quote - Cramer on JMBA - Stock Picks) traded up 9% after the firm reached a deal to make bottled juice with Nestle. This news doesn't excite Finerman.

Activision(ATVI Quote - Cramer on ATVI - Stock Picks) traded up 7%. Investors are anticipating big sales from video game Guitar Hero II according to Macke.

Drops - Walgreen(WAG Quote - Cramer on WAG - Stock Picks) fell 2% after same-store sales numbers for November disappointed the Street. Adami warns that there may be a negative preannouncement from the drugstore chain on December 21st.

Research In Motion(RIMM Quote - Cramer on RIMM - Stock Picks) fell 3% as analyst downgrades continue to batter the shares. In Najarian's opinion, a lot of fund mangers are taking profits in winners like RIMM.

Echostar(DISH Quote - Cramer on DISH - Stock Picks) fell 5% as market speculators think a deal with AT&T might not come to fruition with Echostar entering the wireless spectrum auction. But Adami advises buying DISH for a trade and stopping out below $38.

Phillips-Van Heusen(PVH Quote - Cramer on PVH - Stock Picks) fell 13% after profit forecasts fell below Wall Street expectations. Macke points out that it's a tough time to be selling to department stores.

XM Satellite Radio(XMSR Quote - Cramer on XMSR - Stock Picks) fell 5% after Goldman Sachs downgraded the stock and slapped an $11 price target on the name. Adami agrees and sees nothing good in this stock.

Final Trade

The team hands out trade ideas at the end of the show for viewers.