Shifting to the retail sector, Lee said Nordstrom (JWN) was down after posting a decent quarter and guidance that was below analyst expectations.
Adami said Nordstrom has had a huge run but may be having troubles with its inventory build. He said a better bet at 10.5 times forward earnings is Macys (M). He also liked JC Penney (JCP), which he said is on the verge or breaking out to $50.
Erika Maschmeyer, an analyst with Robert W. Baird, said Nordstrom's bottom line was disappointing. But she said the retailer is taking steps to drive sales by making investments in ecommerce, managing inventory and getting a nice return on capital.
Meanwhile, Amazon (AMZN) received a downgrade from Morgan Stanley on slowing sales growth.Seymour said Amazon is a very expensive stock, adding investors would be better off in cheaper retailers and other online plays. Lee noted that Baidu (BIDU) was up after its earnings report topped expectations. Seymour said the stock may run into headwinds at $145 because it's hard to maintain growth at this level. Still, he said Baidu continues to grow and be a dominant player in China. Lee brought in Zach Karabell to talk about the trend toward mobile pay. He said China is an untapped market for mobile pay, where only 5% to 10% of the 700 million mobile users use mobile pay. He said the companies that are in position to benefit from this trend are American Express (AXP), Mastercard (MA), eBay (EBAY) and Verifone (PAY). Lee shifted the discussion to a report that Moody's may cut the credit ratings of a number of banks and securities firms, including Morgan Stanley (MS) and Goldman Sachs (GS). Brad Hintz, an analyst with Sanford Bernstein, said the move is based on concerns about large derivative exposure and risk management. He said that while Goldman Sachs and JP Morgan (JPM) could be brought down to single A, they remain among the best derivative players that exist. He said Morgan Stanley may drop three levels on concerns about its fixed income business and its ability to deliver on its retail promise of reaching a 20% pretax margin.
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