'Fast Money' Recap: FedEx Sends a Warning

Mike Taylor

The U.S. stock market ended Friday's trading to the downside. The Dow sank 0.9%, the S&P 500 lost 0.7%, and the Nasdaq slipped 0.2%. After hours, FedEx (FDX Quote - Cramer on FDX - Stock Picks) warned about its earnings, sending shares lower.

On CNBC's "Fast Money" TV show, Guy Adami apologized for recommending FedEx and said the news doesn't bode well for UPS (UPS Quote - Cramer on UPS - Stock Picks), but it does bode well for the rails.

Jeff Macke said that FedEx committed the cardinal sin by warning on a Friday afternoon, hoping no one would notice. He said the news indicates that retailers are going to complain about high oil prices next week.

Pete Najarian pointed out that FedEx dropped its earnings per share guidance by 20 cents, with oil up $20. He said that if investors see a pullback in oil, they might be able to gauge an improvement in FedEx's earnings, because FedEx blamed its warning on oil.

Macke said it might be time to pare some oil positions. He said it might be time to take an opportunity here and buy UPS (UPS Quote - Cramer on UPS - Stock Picks).

Big Citi

Citigroup (C Quote - Cramer on C - Stock Picks) shares fell today. CEO Vikram Pandit announced plans for the company to unload $400 billion in assets. Finerman said she thought the news wasn't earth-shattering. She said it's difficult to turn a company the size of Citi around quickly. She also said that if viewers believe management, it's possible to come up with a model where the bank earns $3.50 to $4 per share the next year. The stock, therefore, could go to $38, she said. She said she plans to buy more shares for her fund.

Macke said that Citi has pulled back substantially. Because the bank is facing a credit crisis, it doesn't really know what its earnings are going to be, he said.

Najarain recommended American Express (AXP Quote - Cramer on AXP - Stock Picks) off the Citi news. He said it's also a great week to look at Visa (V Quote - Cramer on V - Stock Picks) and MasterCard (MA Quote - Cramer on MA - Stock Picks). American Express is a Warren Buffett name, he said, and its credit exposure might actually be a boon as the crisis eases.

Circuit Breaker

On news that billionaire investor Carl Icahn may buy Circuit City (CC Quote - Cramer on CC - Stock Picks) if Blockbuster (BBI Quote - Cramer on BBI - Stock Picks) can't. Macke said the Blockbuster merger didn't make sense. He said Circuit City might be better off without merging with Blockbuster. He said Icahn is the winner here, because there are no other bidders for Circuit City, meaning Icahn will either "steal" the company or walk away from a deal.

Adami pointed out that Icahn also raised his stake in Motorola (MOT Quote - Cramer on MOT - Stock Picks) to 7.6%. He said that news isn't that good.

Najarian said he doesn't understand Icahn's thinking here.

Yahoo! (YHOO Quote - Cramer on YHOO - Stock Picks) traded lower this week. Najarian said he doesn't think the Yahoo! story is over. He said he owns Yahoo! calls. The stock should be lower if no one is interested in buying the company.

Oil's Demand Story

The traders talked to CNBC contributor Addison Armstrong about oil. Armstrong said he's starting to see energy headwinds. He said the FedEx news isn't good for oil on the demand side. He said that investors should stay with the upward trend in oil until it breaks down, but it may be time to diversify into other areas.

Macke said that in the short term he isn't sure demand is dropping off. Armstrong said that demand erosion will occur over a longer time frame. He said U.S. demand is slackening and predicted a downturn in Chinese demand after the Olympics.

Quicker Than the Ticker

Najarian recommended Energy Conversion Devices (ENER Quote - Cramer on ENER - Stock Picks), which went up 51%. Macke recommended Molson-Coors (TAP Quote - Cramer on TAP - Stock Picks), shares of which rocketed up 7% the day after his recommendation. Finerman chose NYSE Euronext (NYX Quote - Cramer on NYX - Stock Picks), which climbed 7% on earnings. Adami selected BorgWarner (BWA Quote - Cramer on BWA - Stock Picks), which added 16% since his call in early April.

Wal-Mart(WMT Quote - Cramer on WMT - Stock Picks) and Hewlett-Packard (HPQ Quote - Cramer on HPQ - Stock Picks) report earnings next week.

Adami predicted strong earnings from H-P. He said the company is an industry leader and has bought back a lot of stock. The stock is a long-term buy, he said. Najarian pointed out that the company that makes H-P's laptop hinges has said orders are up 26%. He said H-P's price-to-earnings ratio makes it cheap. He's looking forward to an impressive number, he said.

Macke said H-P has been on a tear, and that competition from Dell (DELL Quote - Cramer on DELL - Stock Picks) and Apple (AAPL Quote - Cramer on AAPL - Stock Picks) hasn't been that formidable.

On Wal-Mart, Finerman said she expects profit margins to narrow. Macke said guidance will be key. He said investors will be looking for accelerated spending from consumers on the back of the stimulus package. Najarian said he likes Wal-Mart's direction and its strategy of cashing government rebate checks.

The traders then talked with CNBC senior economics reporter Steve Liesman about the state of the credit crisis. He said he thinks the economy is about halfway between chaos and normal. He said equities are holding up well in the face of bad news from AIG, Fannie Mae (FNM Quote - Cramer on FNM - Stock Picks) and Citi. He predicted that Freddie Mac (FRE Quote - Cramer on FRE - Stock Picks) could raise capital next week.

Liesman said for things to become more comfortable in the credit markets, private capital would have to replace assistance from the Federal Reserve.

Go Global

Zach Karabell, president of River Twice Research, joined the crew to talk about the markets. He said that earnings, bar the financials, are a lot better this quarter, up 10%. He said, factoring out the bad consumer, the economy looks stronger. He said the trade to make is on a weak dollar and strong global growth. He recommended U.S.-listed companies with a lot of global exposure on dips. He included such names as Caterpillar (CAT Quote - Cramer on CAT - Stock Picks) and Manitowoc (MTW Quote - Cramer on MTW - Stock Picks).

Adami recommended IBM (IBM Quote - Cramer on IBM - Stock Picks) as a trade off that theme. The company gets 75% of its revenue from overseas, he said.

Trader Radar

Priceline.com (PCLN Quote - Cramer on PCLN - Stock Picks) traded on extraordinary volume this week.

Najarian pointed out heavy call activity in AES Corp. (AES Quote - Cramer on AES - Stock Picks). He said the options trading was unusual in that it occurred after the company announced earnings.

Fast Fire

Finerman had recommended Kaiser Aluminum (KALU Quote - Cramer on KALU - Stock Picks), a trade that didn't work out. She said the company's quarter was OK, but management did a poor job of expressing that on the conference call. She said she bought more shares on the dip.

Macke suggested WWE (WWE Quote - Cramer on WWE - Stock Picks), which went down 12% this week. He said he thinks the decline is a buying opportunity.

Adami and Najarian both recommended Citigroup, which didn't do so hot. They both said they'd buy it at this level.

To honor the upcoming Mother's Day, the traders spoke with 1-800-Flowers (FLWS Quote - Cramer on FLWS - Stock Picks) CEO James McCann. He said fuel prices were hurting the company but it's using new efficiencies to weather the storm.

Final Trade

Macke recommended UPS on a dip resulting from earnings. Adami picked Tesoro (TSO Quote - Cramer on TSO - Stock Picks). Finerman chose Valero (VLO Quote - Cramer on VLO - Stock Picks) June $45 calls. Najarian selected H-P.

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