'Fast Money' Recap: You Can't Stop Apple
As Congress grilled the Federal Reserve and other major players in the JPMorgan (JPM) - Get Report purchase of Bear Stearns (BSC) Thursday, U.S. stocks saw mixed trading but closed slightly to the upside. The Dow, the S&P 500 and the Nasdaq were up around 0.1% at the close.
On
CNBC's
"Fast Money" TV show, Pete Najarian said investors are waiting for tomorrow's unemployment number. He said that the agriculture sector continued to run today, with bullish action in
Potash
(POT)
,
Deere
(DE) - Get Report
,
Mosaic
(MOS) - Get Report
and
Monsanto
(MON)
. He recommended buying Mosaic on any pullback.
Jeff Macke said the market could have sold off today in the face of bad news but it hung in there. He said that the action in the market ahead of what will probably be a "terrible" jobs report is bullish, "like it or not." Karen Finerman agreed, saying she thought it was mildly positive that the market hung on to its gains today.
Guy Adami said the Fed didn't just bail out Bear Stearns, it bailed out the entire leveraged financial community. He believes the market will go higher from here, he said.
3 Stocks I Saw on TV |
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During testimony before Congress, Bear CEO Alan Schwartz suggested there may have been malicious rumor-mongering that spurred a run on the brokerage. Adami said Schwartz's assessment is probably right. He said that Bear had a "huge bull's-eye on their back" for a long time.
Macke said that people want to make money on puts, so it's natural that rumors spread. He said that a selloff like the one seen in Bear has to have some fact behind it.
Najarian said that investors weren't buying on the long side. He suggested that some of the put-buying may have been a move by long-side investors in Bear to protect themselves against huge losses.
Merrill Lynch
(MER)
CEO John Thain said today that his company doesn't need to refinance. The stock surged on the news. Adami said that when Thain came in, the company threw out the kitchen sink, writing down a great deal off its assets. He said investors can own Merrill, but they should expect big moves up and down in the near term.
Finerman said she owns
Goldman Sachs
(GS) - Get Report
instead but believes the two stocks will trade together.
Macke said he wishes he owned Merrill because the stock reacted well to news about liquidity. Typically, Macke said, investors sell off a stock on any mention of liquidity. He said that a company without credit problems doesn't raise money. He advised
Lehman Brothers
(LEH)
to take note.
Adami said that there are good things happening at
Ameriprise
(AMP) - Get Report
.
In tech,
Apple
undefined
and
Research In Motion
(RIMM)
had great days.
After the other traders ribbed him for liking
Nokia
(NOK) - Get Report
, Najarian said the company is doing fine. Research In Motion knocked its earnings numbers out of the park, he said. He also said Apple continues to impress.
Macke said he wouldn't short Apple. He said it is incredible that the company is out of stock on its main product and shares continue to go higher. It's impossible to stop Apple, he said.
Congress approved tax breaks for the purchase of foreclosed homes. To discuss the aid to the homebuilding sector,
Hovnanian
(HOV) - Get Report
CEO Ara Hovnanian joined the program. He said that the homebuilders have been hurt and that the housing market is an important part of the U.S. economy that is in need of stimulus. He approved of the tax credits.
The traders noted that CEOs of major homebuilding companies, including Hovnanian,
Toll Brothers
(TOL) - Get Report
and
KB Home
(KBH) - Get Report
, have sold stock at its high. Finerman said that the homebuilders are the least sympathetic group around. She said she saw a great deal of moral hazard in Congress' aid of the sector.
Hovnanian said that stock sales are a major part of his compensation. He reiterated the need for stability in the housing sector.
Finerman said she believed it was hypocritical for the homebuilders to say on conference calls that their business is fine and then on the other hand ask for a tax break from Congress. Macke said that the Homebuilding Association is a very effective lobby and that Hovnanian's argument overstates the impact of homebuilders on the broad economy. He said that cyclical businesses are supposed to take pain in difficult times. Finerman said that if the homebuilders need liquidity, they should issue stock.
Macke said he's for stimulus where it's actually needed. He said relief should focus on the people in the houses, not the homebuilders.
Finerman said
Fannie Mae
(FNM)
and
Freddie Mac
(FRE)
are the best plays on housing relief.
Najarian said that investors should take note of insider activity on both the buy and sell side when that news breaks. He said the traders had noted insider selling in
Target
(TGT) - Get Report
that preceded a decline in share price. Macke said that that is true, but no one is discussing a tax break for Target because of weak retail sales.
Zack Karabell, executive vice president and chief economist for Fred Alger Management and the Spectra Funds, joined the show to discuss a bifurcation in the U.S. economy. He argued that on one hand the employment number tomorrow will not be good, but that bullish activity in Research In Motion and Apple indicates there are other markets that are performing fine. He said these pockets of strength should offer hope for investors.
Adami agreed with Karabell, pointing to bullish action in the steel industry, which he said is doing the best business it has done since the 1910s or the 1920s.
Karabell pointed out that banks aren't cutting off consumer credit, meaning that people are still free to spend on gadget devices.
Macke said that
Best Buy
(BBY) - Get Report
, which sells Apple and RIM gadgets, produced fine numbers for the quarter but that its margins are declining. The economy is weak, he said.
Alcoa
(AA) - Get Report
posts earnings Monday.
Adami said it doesn't matter what the company reports. He said that a substantial buyback is one of many things the company is doing right. He also pointed out that Alcoa is a takeover target.
Najarian said there was heavy call-buying in Alcoa. He said that coke and coal are inputs in steel production, so viewers should keep an eye on coal stocks.
Trader Radar
Constellation Brands
(STZ) - Get Report
was one of the most active stocks on the
Big Board
today.
As part of its Subprime Savants series, "Fast Money" featured hedge fund manager John Paulson, who brought in $4 billion in one year by placing large bets against the housing market by finding esoteric plays. Finerman said that Paulson found a wide variety of plays, including shorting equities like
Countrywide
(CFC)
,
MBIA
(MBI) - Get Report
and
Radian
(RDN) - Get Report
. She said Paulson also made other moves such as shorting credit default swaps, which the average investor can't do.
Adami said Paulson believes he has only seen 25% of the gains on his open positions. Macke was skeptical.
Najarian pointed out that three of Paulson's four largest holdings are
Kinross
(KGC) - Get Report
, Alcoa and
Hercules Offshore
(HERO)
. Najarian likes those names, he said, and he pointed out that there are large insider purchases in Hercules.
Fast Messages
A viewer wrote in to agree with Finerman's assessment of Congress' aid for the homebuilders. Finerman thanked her for the kind words. That lobby is awfully powerful, she said.
A second "Fast Money" fan wrote to Guy Adami to ask what to do with his
Visa
(V) - Get Report
position. Adami said he thinks Visa will come down to the mid-$50s, and he doesn't see a lot of upside from here.
Fast Money Madness
The crew pitted stocks against each other once again in its single-elimination NCAA-style tournament.
Microsoft
(MSFT) - Get Report
beat Apple,
Altria
(MO) - Get Report
defeated
Johnson & Johnson
(JNJ) - Get Report
,
Freeport-McMoRan
(FCX) - Get Report
trumped
Caterpillar
(CAT) - Get Report
, and Goldman Sachs vanquished
Berkshire Hathaway
(BRK.A) - Get Report
.
Final Trade
Macke chose Apple. Adami selected
Corning
(GLW) - Get Report
. Finerman picked Microsoft. Najarian said he likes
Walter Industries
(WLT)
.