'Fast Money' Recap: Thumbs Down
Investors couldn't hold onto some of the large gains in the stock market Wednesday after the Federal Reserve announced plans to lend up to $40 billion to a consortium of banks. The Dow finished up 40 points and the Nasdaq ended the day 18 points into positive territory. The crew at CNBC's "Fast Money" shared their views on the plan and looked at the financial sector.
Jeff Macke thinks the Fed plan was not coordinated and was a bad idea. He questioned why the Fed didn't introduce this plan on Tuesday. Macke went on to say that most of the professional traders he knows were selling stocks Wednesday morning. Karen Finerman doesn't like how the Fed leaked the cash injection plan overnight. Pete Najarian believes the Fed made a mistake by reacting to the market on Wednesday.
Dennis Gartman Outlook
Dennis Gartman, author of the Gartman Letter, joined the "Fast Money" crew to discuss his take on oil and the markets. Gartman said he was disgusted by the Fed's actions on Wednesday. He went on to say that Ben Bernanke has lost his confidence and needs to leave.
Gartman predicts that for the balance of the year the market is going down and he would short more if the market takes out recent lows. Gartman expects oil to trade over $100. He disclosed he is long oil equipment stocks because those stocks didn't break down when oil was breaking down. In terms of gold he is long and plans on getting longer.
Bank Reaction
Bank stocks rolled over on Wednesday as investors showed a lack of confidence in the Fed's cash injection plan. Adami declared that market players don't understand the Fed's plan. Najarian disclosed he put a short trade in options on
Goldman Sachs
(GS) - Get Goldman Sachs Group, Inc. Report
Wednesday morning, because the market action just didn't seem right. Macke said he sold every incremental stock position he had on Wednesday morning.
John Merriman's Advice
Morgan Stanley dropped a bombshell on
Citigroup
(C) - Get Citigroup Inc. Report
, calling the banking giant its top short idea for 2008. John Merriman, Chief Executive of Merriman, Curhan Ford & Co. joined the "Fast Money" crew to discuss his opinion on financial stocks.
Merriman expects that money central banks could see as much as 20% to 30% downside. The time to buy these stocks is when the dividends get cut. Merriman recommends shorting
Bank of America
(BAC) - Get Bank of America Corp Report
,
TheStreet Recommends
Citigroup
(C) - Get Citigroup Inc. Report
, and
Wells Fargo
(WFC) - Get Wells Fargo & Company Report
into any rallies.
Brokerage Trade
Brokerage company earnings will kick off Thursday with
Lehman Brothers
(LEH)
reporting before the bell. Investors will hear from Lehman, followed by
Goldman Sachs
,
Bear Stearns
(BSC)
and
Morgan Stanley
(MS) - Get Morgan Stanley Report
. Najarian declares that if you own Lehman and it pops, you should sell it. If Lehman reports bad numbers, you will see Goldman Sachs Group and Morgan Stanley go down with it. Adami is worried about the downside in Lehman.
(Take a look at this portfolio on Stockpickr.com
.)
Sallie Mae
plunged 10% after J.C. Flowers announced he will not make a new offer to buy the company. Finerman wasn't surprised at Flowers move, but it was the forecast guiding lower that was the problem.
Momentum in Wireless
The wireless sector continues to find momentum on the fundamental side. If sales of handheld devices soar in 2008, what is the trade? Najarian tells investors they aren't late to the networkers. He favors
Cisco
(CSCO) - Get Cisco Systems, Inc. Report
and
Juniper
(JNPR) - Get Juniper Networks, Inc. Report
for emerging market growth. He also likes
Research In Motion
(RIMM)
, which is entering the Chinese market.
Finerman mentioned that
FiberTower
(FTWR)
is an option on the wireless sector. She reminded viewers that this could go to zero or it could be a homerun. Macke likes
Intel
(INTC) - Get Intel Corporation Report
for a wireless trade.
(Check out this professional portfolio of wireless stocks on Stockpickr.com
.)
ADC Telecom
(ADCT) - Get ADC Therapeutics Ltd Report
exploded up 10% after hours on a stronger-than-expected sales forecast. Najarian believes the wireless industry has a lot of growth ahead. Macke explained that ADCT has a checkered past and a lot of shorts in the name are now getting crushed.
Word on the Street
Biogen Idec
(BIIB) - Get Biogen Inc. Report
announces that the biotech firm hasn't received any definitive offers to purchase the company. The stock plunged 27% after hours on the news. Finerman was very disappointed on the news and she is currently long BIIB options. In Najarian's opinion, this shows that $25 billion for a biotech company is a price nobody apparently wants to pay.
General Electric
(GE) - Get General Electric Company Report
CEO Jeffrey Immelt says he'll be disappointed if the diagnostics business doesn't double in 3-5 years. Adami thinks GE will need to do some takeovers to grow the diagnostics business. He recommended trades in
Laboratory Corp
(LH) - Get Laboratory Corporation of America Holdings Report
and
Quest Diagnostics
(DGX) - Get Quest Diagnostics Incorporated Report
for potential GE takeover plays. Najarian says watch
Cepheid
(CPHD)
for a GE takeover play.
Pops & Drops
Pops -
ArcelorMittal
(MT) - Get ArcelorMittal SA Report
traded up 4% after the steelmaker announced plans to buyback 44 million shares. Najarian suggests that these buybacks demonstrate that MT thinks its stock is cheap.
Xinuan Real Estate Company
(XIN) - Get Xinyuan Real Estate Co. Ltd. Report
exploded up 20% on the Chinese residential real estate IPO. For Finerman, this feels like
Solarfun
(SOLF)
to her.
Cummins
(CMI) - Get Cummins Inc. Report
traded up 6% after the truck-engine maker announced its second 2-for-1 stock split this year. Adami explained this is a "Jim Cramer favorite" and the story is an international one.
Nextest Systems
(NEXT) - Get NextDecade Corp. Report
exploded up 59% after the semiconductor testing equipment maker was bought out by Teradyne for $325 million. Macke still likes the semiconductor space.
Drops -
AMR
better known as American Airlines
(AMR)
fell 7% after Morgan Stanley downgraded the airline sector. Adami thinks the short interest on AMR is going to go higher, which will take the stock even lower.
Office Depot
(ODP) - Get ODP Corporation Report
fell 11% after the office supply chain said sales and earnings for the fourth-quarter will see continued erosion. Macke advises viewers to get out of ODP.
Schering Plough
(SGP)
fell 4% on news that a congressional panel is launching a probe into the firm's handling of data from a study of its shared cholesterol medicine Vytorin. Najarian points out the downside with the drug companies - they get one piece of bad news and the stock goes down faster then it goes up.
Belden
(BDC) - Get Belden Inc. Report
fell 4% after the company lowered its 2007 profit forecast. Macke tells investors to move along.
Final Trade
The show ended with the best trade ideas from the panel.
- Macke would short the Dow with Short Dow30 Proshares (DOG) - Get ProShares Short Dow30 Report.
- Adami maintains that a buy of Cisco Systems (CSCO) - Get Cisco Systems, Inc. Report still works.
- Finerman advises shorting MBIA (MBI) - Get MBIA Inc. Report.
- Najarian recommends Johnson & Johnson (JNJ) - Get Johnson & Johnson Report for a Thursday morning trade.
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