'Fast Money' Recap: GE Rattles the Market
U.S. stocks fell hard Friday on disappointing earnings from General Electric (GE) - Get Report and weak consumer-confidence data. The Dow and the S&P 500 fell 2%, and the Nasdaq gave up 2.6%.
On
CNBC's
"Fast Money" TV show, Jeff Macke said that GE got pummeled today. He said investors were caught by surprise by the industrial bellwether's miss. For 20 years, Macke said, GE has managed its earnings report very successfully. He said that it was disappointing that the company blamed the bad numbers on the last two weeks in March. The tape tried to shake off the bad news but continued to sell off, he said.
The traders disclosed that GE is the parent company of
CNBC
.
Guy Adami said that GE's problems are both an isolated incident and a reflection of a break in the financial system. He said that the infrastructure and overseas businesses are great, but the medical device business was "shocking." He said the quarter doesn't bode well for
Siemens
(SI) - Get Report
.
Tim Seymour said that GE has identified its infrastructure and international businesses as the future of the company. He said GE's earnings will set the tenor for the remainder of the earnings season.
Jon Najarian said GE CEO Jeff Immelt gets a pass because "Nostradamus couldn't have predicted" the surprise miss. Immelt has to earn back Wall Street's trust, though, he said.
Immelt can do that with time and some very good earnings reports, he said.
Macke said that shaking off weak earnings from
Alcoa
(AA) - Get Report
is one thing, but GE is something else entirely.
Adami said he had liked
Honeywell
(HON) - Get Report
if GE had a good quarter, but the company wasn't very encouraging. He said
United Technologies
undefined
announced its quarter would be good, but investors should take a pause after GE disappointed.
Najarian also pointed out that
Bear Stearns
(BSC)
CEO Alan Schwartz had said the company would be fine two weeks before it imploded. He advised caution.
Seymour said that a weak dollar means the U.S. is importing inflation. He said import price numbers are way up, which indicates that efficiency stories are changing.
Macke said he's not bearish in the wake of GE's earnings. He said to buy the financials on dips, because now there's less room for surprise in the stocks.
Najarian said he's looking to get long on
Apple
(AAPL) - Get Report
, which he would buy ahead of earnings if it goes down to $140.
Seymour said the rest of the market, besides plays tied to GE, didn't show a lot of volume today. People were sitting on the sidelines, he said.
Semiconductor stocks had a good day yesterday, only to give back gains today. Macke said the round-trip will make it look as though nothing has happened in the sector on Monday.
Oil rose toward $112, and the price of crude went up for the third straight week. Seymour said that the International Energy Agency, which typically says we need more oil on the market, cut its demand forecast for the third straight month. He said oil remains high because of a flight to quality from the weak dollar.
Adami said oil has run for the moment, but he likes
Halliburton
(HAL) - Get Report
and
Schlumberger
(SLB) - Get Report
.
Jon Najarian said
Baker Hughes
(BHI)
is still strong, and he agreed with Adami on Schlumberger.
Macke said he'd advised viewers to take half their oil position off when it reached the top of its range at $110. He said he didn't believe the breakout to $112. He said he believes it will go back to $100. He said that he wants to be long the
U.S. Oil Fund
(USO) - Get Report
and the
streetTracks Gold
(GLD) - Get Report
. Avoid the refiners, but buy those ETFs on dips, he said.
Seymour said that the copper sector is bullish, and that bodes well for
Freeport-McMoRan
(FCX) - Get Report
and
Southern Copper
(PCU)
.
In retail, the traders noted great year-to-date performance by
Wal-Mart
(WMT) - Get Report
. Macke said that investors can get long at these levels. He said he wants to be in any stock that performs this well on mediocre news.
Adami said
Home Depot
(HD) - Get Report
performed well despite the tape.
Congress is resisting a free trade deal with Colombia. Seymour said this is disappointing news and that the resistance was not well received in Colombia.
The traders reviewed their best calls for the week.
DuPont
(DD) - Get Report
was up 11% since Adami said to get long the stock.
Amylin
(AMLN)
rose 20% after Jon Najarian suggested it.
China Mobile
(CHL) - Get Report
ticked up 16% after Seymour recommended the stock. Macke made a call on the U.S. Oil Fund, which subsequently added 8%.
Ahead of a big earnings week for the tech sector, the crew welcomed Gene Munster, senior research analyst at Piper Jaffray, to discuss some names. Munster said that it's wise to own tech in late spring and early summer. He said that investors are bracing for
Google's
(GOOG) - Get Report
earnings next week. He said that despite numbers risk, he would be long the stock ahead of earnings.
Jon Najarian said he would buy after earnings. Adami agreed, predicting a selloff on the news.
IBM
(IBM) - Get Report
shares sold off today. Najarian said that volatility is expanding, and investors are anticipating a 4.5% move in the stock. He said he's concerned about the company's exposure to financial services. He predicted the stock would go down below $110 on the report.
Macke said he'd rather own
Intel
(INTC) - Get Report
than Google.
Adami said IBM is up between 17% and 18% lately. He recommended taking profits into earnings and then getting back in if it has good numbers.
The traders spoke with
CNBC
on-air editor Charlie Gasparino about
Merill Lynch's
(MER)
claims that it is not facing liquidity troubles. Gasparino said he doesn't believe CEO John Thain would lie about the company's balance sheet. He said that when Thain took over he instructed traders to raise cash by selling bonds. Gasparino also predicted that Thain may sell a part of the company.
Adami said he likes Merrill and noted that most of the business is doing quite well.
Gasparino said he isn't hearing about potential revaluation of assets the company has written down. He said the writedowns are not confined to subprime paper but are also in commercial real estate, which he said is a negative sign for the company.
The traders each named their favorite and least favorite financial services stocks. Macke said he likes
Morgan Stanley
(MS) - Get Report
the most and
Lehman Brothers
(LEH)
the least. Adami said he prefers
USBancorp
(USB) - Get Report
and dislikes Lehman. Seymour said he likes Merrill's international business and dislikes Lehman. Najarian said he thinks
JPMorgan
(JPM) - Get Report
is the best and
Wachovia
(WB) - Get Report
is the worst.
The "Fast Money" crew discussed the possibility of exploding volatility next week. Najarian said anxiety is returning to the market and predicted the volatility index would rise to the mid-20s next week. Unless a company goes under, which he doesn't expect, the index should return back to 20 after that, he said. He said he'd be short premium going into earnings.
Seymour said that he's selling puts going into earnings. He predicted that the volatility index would go through the mid-20s.
Macke said to make a list of stocks to buy, because the market has been predominantly selling the news. He said he would buy Intel, Wal-Mart and
Microsoft
(MSFT) - Get Report
on sufficient dips.
Trader Radar
Delta Airlines
(DAL) - Get Report
traded on unusual volume.
Fast Fire
The traders went over their bad calls. Adami had said to get long
FedEx
(FDX) - Get Report
, shares of which fell after his call. He said he suffered from "irrational exuberance" but predicted a strong performance from the company in the second half of the year. Macke had said to buy
Cal-Maine
(CALM) - Get Report
. The trade didn't work out. He said to sell the stock because he was wrong. Seymour had urged viewers to bet against
Mechel
(MTL) - Get Report
. The stock rose immediately after his call.
The crew welcomed surprise guest, hall-of-fame golfer and CEO of Great White Shark Enterprises CEO Greg Norman to the show. He said that the economic slowdown is hurting golf courses in the U.S., but that Vietnam, Eastern Europe and other emerging markets are doing well. He predicted an explosion in the Indian golf market.
Final Trade
Macke said "Don't bet against Tiger Woods" as he plays at the Masters. Adami chose Apple. Seymour said to buy the
UltraShort MSCI Emerging Markets ProShares
(EEV) - Get Report
. Najarian advised viewers to short
eBay
(EBAY) - Get Report
ahead of earnings.