'Fast Money' Recap: Wrigley Deal Could Get Sticky

Mike Taylor

The U.S. stock market didn't quite know where to go Monday as it geared up for a congregation of Federal Reserve officials later this week. The Dow was off 0.2%, the S&P 500 gave up 0.1%, and the Nasdaq climbed 0.1%.

On CNBC's "Fast Money" TV show, Jeff Macke said that today begins a big week. He said that the Fed's release will be the most interesting the market has seen in a while. He predicted the Fed would stop cutting rates. The guidance segment of the report will be the most important. He expects this week's jobs report to "stink," and said today's unchanged market reflects that traders are getting ready for a slew of information in upcoming days. Karen Finerman agreed.

Tim Seymour noted that volume was down 25% and pointed out that GDP numbers will be as an important indicator for investors. He said that a negative print may indicate to the market that the U.S. has seen the worst of the recent economic slump.

3 Stocks I Saw on TV

Guy Adami said that Joy Global (JOYG Quote) and Bucyrus (BUCY Quote) don't appear to be hurting in the weak economy. He said investors should hope that Burlington Northern Santa Fe (BNI Quote) misses when it reports earnings tomorrow, because the stock has been hot.

Macke took a minute to discuss Mars' Berkshire Hathaway (BRK.A Quote) -backed takeout of Wrigley (WWY Quote). Berkshire CEO Warren Buffett's maneuvering was impressive, he said. He recommends Berkshire stock on the deal, he said.

Do not buy Tootsie Roll (TR Quote) on this news, said Adami. Macke said that this acquisition is a one-off deal, and Finerman cautioned viewers that the deal may not be a layup from an antitrust standpoint. She predicted the deal would drag on for a long time.

Car Maneuvers

The traders took a look at billionaire investor Kirk Kerkorian's maneuvers through General Motors' (GM Quote) ups and downs on news that his investment firm Tracinda would increase its stake in Ford (F Quote).

Macke recommended getting long Ford on the news, saying shareholders want Kerkorian on their side. He said the best way to play alongside Kerkorian is to buy the dips.

Seymour said that Kerkorian isn't looking for a management turnaround, and he thinks Ford is an interesting story. He pointed out that GM reports earnings in a couple of days.

Adami recommended that viewers pay attention to Borg Warner (BWA Quote) as an upstream play on the autos.

Visa Approved

After hours, Visa (V Quote) posted an earnings beat, but shares were down on guidance that was below the Street's expectations. Macke said the company crushed on earnings by sandbagging forecasts. He reminded viewers that the stock is up about 80% since the company came public. He said the earnings were fine and the company is just plugging away. Seymour pointed out rest-of-world growth in the earnings statement.

The deadline for a deal between Microsoft (MSFT Quote) and Yahoo! (YHOO Quote) expired today. Finerman predicted Microsoft would do something aggressive at this point, perhaps taking an exchange offer directly to Yahoo! shareholders.

Macke disagreed, saying Microsoft should simply walk away from the Yahoo! deal. He urged CEO Steve Ballmer to walk away from Yahoo!

Continental Airlines (CAL Quote) announced today that it wouldn't be merging. Seymour said to avoid the airlines.

On a strong day for Verizon (VZ Quote), Macke said slow and steady wins the space in telecom. He pointed out that Sprint (S Quote) is still applying pricing pressure, but recommended buying Verizon on dips.

Seymour recommended America Movil (AMX Quote). He said the company is a bellwether for emerging market cellular plays and is overdone to the downside. He said that Sohu (SOHU Quote) is a Chinese online gaming play, and Baidu (BIDU Quote) is outperforming the Chinese market.

The traders talked to Jon Najarian about action in the oil refiners. He said someone bought the equivalent of 1.6 million shares through options of Tesoro (TSO Quote), selling calls against the position. He said this purchase indicates that the stock is setting up for a big move. He noted that sector buddy Valero (VLO Quote) reports earnings tomorrow. He said getting long Tesoro may be a nice play. Seymour said that there may be a short-covering rally in Tesoro.

Najarian also said Motorola (MOT Quote) looks ready for a breakout to the upside. He also recommended that viewers take a look at Masco (MAS Quote). Adami said Masco's earnings will offer a good view into how Home Depot (HD Quote) is doing.

The crew then turned to Frank Aquila, a partner at Sullivan and Cromwell, to discuss merger and acquisition activity. He said that the financing markets are starting to firm up, meaning the market will see more deals like the Mars acquisition of Wrigley. He said low-risk companies that can get equity backing like that offered by Berkshire will see mergers happen. He said private equity will begin to do more deals but will not approach the same levels seen in 2007.

U.S. Steel (X Quote) reports earnings this week. Seymour recommended Posco (PKX Quote), which he said has lagged the rally in steels for the wrong reasons. He recommended buying integrated steel companies.

Adami noted strong pricing power in Arcelor Mittal (MT Quote). He said viewers ought to hope U.S. Steel misses. He also noted Nucor (NUE Quote) hit a 52-week high.

The traders then talked to CNBC TV show host and former Disney (DIS Quote) CEO Michael Eisner about media companies. He predicted softness in advertising and said CBS might be better off rejoining Viacom (VIA Quote). He said the company needs a massive marketplace like others in its sector.

Trader Radar

IHOP (IHP Quote) traded on unusual volume today.

The traders discussed plays on a possible rally in the dollar. Finerman said she thinks the pound is overvalued, and she is short the CurrencyShares British Pound Sterling (FXB Quote).

Seymour said that he doesn't believe the European Central Bank will be easing rates any time soon. He said in the long term he wants to be long the dollar against the euro but he doesn't think there's going to be a stampeding rally in the dollar. He said he'd rather be short commodities as a play on a strengthening dollar.

Macke recommended getting short gold, which he said is "done."

TheStreet.com's Dan Fitzpatrick joined the show to offer some technical analysis of the S&P 500. He said the S&P is meeting resistance at current levels. He said he believes Google (GOOG Quote) is poised for a breakout and recommended buying Research In Motion (RIMM Quote) "right here, right now."

Macke said that a rally on the Federal Reserve's action is likely priced in. Seymour said the S&P may sell off on the Fed news.

Final Trade

Macke selected the U.S. Oil Fund (USO Quote). Adami recommended the Short Dow30 ProShares (DOG Quote) with a tight stop. Finerman picked Kaiser Aluminum (KALU Quote). Seymour said he would be short Petrobras (PBR Quote).

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