'Fast Money' Recap: Bernanke Talks Us Down
Back-and-forth trading in the U.S. stock market ended slightly to the downside Wednesday as traders digested testimony by Federal Reserve Chairman Ben Bernanke before Congress. The Dow lost 0.4%, the S&P 500 slipped 0.2%, and the Nasdaq fell 0.1%.
On
CNBC's
"Fast Money" TV show, Pete Najarian said that oil ripped today, closing on a high. He said that solar stocks like
SunPower
(SPWR) - Get Report
and
Suntech
(STP)
are back. He observed that at a big energy conference in Germany it was estimated that solar, which currently costs three times the amount of coal and natural gas, may be just as cheap as those other energy sources as early as next year.
He said he likes
Energy Conversion Devices
(ENER)
, but he doesn't want to chase the solar names higher. He also noted bullish activity in
First Solar
(FSLR) - Get Report
.
3 Stocks I Saw on TV |
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Guy Adami said he liked oil services names like
Schlumberger
(SLB) - Get Report
and
Baker Hughes
(BHI)
as energy plays.
On Bernanke's testimony, Jeff Macke said Bernanke's testimony can only hurt the markets. He said Treasury Secretary Hank Paulson's testimony tomorrow will be more important. Karen Finerman disagreed, saying that Bernanke has his "hands on the rudder" and that the chairman has done a lot this year.
Research In Motion
(RIMM)
announced earnings after the market close today. Najarian said he did not buy the stock outright but orchestrated a complex options trade to bet on an upswing. He said the bullish news from RIM should get investors looking at other names such as
China Mobile
(CHL) - Get Report
. Macke said not to chase RIM up from these levels.
Crude oil went higher today. Guy Adami said that crude oil is still trading in a range, but he would rather play oil services and natural gas.
Macke said that the spike in oil marks a trend. News always comes when oil trades off support, he said. He pointed out that the
U.S. Oil Fund
(USO) - Get Report
ETF was up 3% today. He said he thinks there's room for oil to go up to $110. He moved his stopout up to $99, he said. It had previously been at $95.
Najarian said that
Holly
(HOC)
, which refines oil that's more difficult to refine, raised estimates, and because it gets "sour" crude at a discount, he recommended keeping an eye on Holly.
Bernanke said during his testimony today that
Bear Stearns
(BSC)
would have gone bankrupt if
JPMorgan
(JPM) - Get Report
hadn't bought the broker with help from the Fed.
Merrill Lynch
(MER)
also announced it plans on cutting its workforce by 10% to 15%.
Finerman said that owners of Manhattan real estate should be nervous. She said the layoffs in the financials are going to be huge.
Najarian pointed out heavy put activity in
Thornburg Mortgage
(TMA)
. He said the puts are not completely a bearish signal.
Best Buy
(BBY) - Get Report
stock didn't hang on to a positive response to its earnings. Jeff Macke said that the store is best of breed in a tough sector, but the tough sector is winning out right now. Adami said that
Corning
(GLW) - Get Report
is the best way to play the electronics sphere. He said the stock should trade with a 30 handle.
Najarian pointed out high laptop sales for Best Buy. He said that news is good for
Apple
(AAPL) - Get Report
. Macke said that the news isn't great for Best Buy because its laptop margins are low. The company needs to sell higher-margin software, he said.
The chart of the day showed a double bottom in the Dow. Adami said that he believes the Bear Stearns fire sale put in a bottom in the market. He said that the next big move in the market will be a move higher.
Najarian said investors don't know what to do with
Monsanto
(MON)
. He said they're not sure whether the company is a seed or a fertilizer company. It's both, he said. He said that of the agriculture plays his favorite is
DuPont
(DD) - Get Report
.
Adami said that Monsanto was unduly punished for failing to raise guidance when it issued earnings. He said the company raised guidance a week ago.
Shares of theft-device maker
LoJack
(LOJN)
plummeted today on lowered 2008 guidance. The traders speculated that perhaps no one wants to steal cars in the U.S. anymore.
Some believe that U.S. may have already entered and exited a recession. To discuss the idea, the crew welcomed Jon Najarian. He pointed out early-cycle names. The trucking sector offers two possibilities, including
LandStar
(LSTR) - Get Report
, which has risen recently.
YRC Worldwide
(YRCW) - Get Report
, on the other hand, is down. He said he liked the stocks as a pair trade.
He also said that aerospace and defense names may do well for the next 12 to 18 months. He said
Northrop Grumman
(NOC) - Get Report
and
Lockheed Martin
(LMT) - Get Report
offer good opportunities in that space.
Adami said that certain stocks do very well in recessions. He pointed to bullish action today in DuPont,
Home Depot
(HD) - Get Report
and
FedEx
(FDX) - Get Report
.
Jon Najarian said that certain sin stocks like
Anheuser-Busch
(BUD) - Get Report
perform very well, but nonalcoholic-beverage stocks tend to do better as the country exits the recession.
On the mysterious disappearance of iPhones from store shelves, the traders speculated that Apple may be gearing up to release a 3G phone. They welcomed Piper Jaffray analyst Gene Munster to discuss Apple's possible moves. He said that the U.S. is essentially sold out of iPhones. He said that for a well-run company like Apple to let its supply diminish, something must be going on. He said that Apple dictates what
AT&T
(T) - Get Report
does, and that there won't be much of a flap over this from AT&T.
Pete Najarian said that
Nokia
(NOK) - Get Report
is still the greatest story never told.
Macke said it was still odd for Apple to run out of iPhones without an explanation. The company had better come out with a 3G phone in may, he said.
Auto credit numbers reached a 10-year high for late payments. The traders discussed whether there may be an auto credit crunch in the works. Finerman said that investors can expect the number of delinquencies to rise, and she said that in light of this she's short
Capital One
(COF) - Get Report
. She said that
AutoNation
(AN) - Get Report
,
Penske
(PAG) - Get Report
and
CarMax
(KMX) - Get Report
don't carry as much risk.
Adami said that Capital One is one Meredith Whitney downgrade away from being $5 lower. Meredith Whitney is an Oppenheimer analyst who covers the financials.
Macke said that CarMax behaved well on bad earnings. He predicted a tough slog for any company that requires credit.
Harley-Davidson
(HOG) - Get Report
is another example, he said.
Trader Radar
Expedia
(EXPE) - Get Report
shares were among the most active on the Nasdaq today.
In after-hours trading, Najarian noted that
Micron Technologies
(MU) - Get Report
traded up after hours. He said the company's trump card is the Korean and Asian markets. He observed heavy call buying in Micron.
Ruby Tuesday
(RT)
traded down on a revenue miss. Adami said he has been to the restaurant and ordered chicken fingers. Macke said the stock is way off its high and that casual dining has been in the weeds and will likely remain there.
As part of a section on "Subprime Savants," the crew took a look at Bill Ackman, who shorted bond insurers
MBIA
(MBI) - Get Report
and
Ambac
(ABK)
. The insurers were pushed near collapse, netting Ackman's hedge fund a whopping 22% return for 2007. The crew observed that Ackman is now long
Target
(TGT) - Get Report
.
Finerman said Ackman is a smart guy with a big following, which may create self-fulfilling prophecies for his calls. She said she's long
Wal-Mart
(WMT) - Get Report
and hasn't followed Ackman into Target.
Macke said that Ackman has potential to guy big shares of companies and force results out of them. He pointed to Ackman's stakes in
Borders
(BGP)
and
Barnes & Noble
(BKS) - Get Report
as examples. He said that Wal-Mart is working much better than Target right now.
Fast Money Madness
In another installment of the "Fast Money Madness" single elimination NCAA-esque tournament,
Freeport-McMoRan
(FCS)
defeated
Valero
(VLO) - Get Report
,
Goldman Sachs
(GS) - Get Report
beat JPMorgan,
Caterpillar
(CAT) - Get Report
vanquished
Alcoa
(AA) - Get Report
, and
Berkshire Hathaway
(BRK.A) - Get Report
upended
MasterCard
(MA) - Get Report
.
Final Trade
Macke chose Apple. Adami selected
Western Digital
(WDC) - Get Report
. Finerman said she was short Capital One. Najarian picked Nokia.