'Fast Money' Recap: Does Disney Bode Well for the Market?
The markets retreated Tuesday on profit taking.
The
Dow Jones
Industrial Average fell 16.09, or 0.19%, to 8,410.65, while the
S&P 500
dropped 3.44, or 0.38%, to 903.80. The
Nasdaq
lost 9.44, or 0.54%, to 1,754.12.
Melissa Lee, the moderator of
CNBC
's "Fast Money" TV show, asked the panel if the 4% uptick in after-hours trading in the shares of
Walt Disney
(DIS) - Get Walt Disney Company Report
, whose second-quarter earnings beat expectations, will set the tone for the market on Wednesday.
Guy Adami said he didn't find Disney's earnings that compelling, noting the stock didn't deserve more than a 10 multiple. He said he would take profits here.
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Jeff Macke felt Disney turned in a "nice quarter" with very impressive theme park numbers. Pete Najarian agreed, saying that the company performed well with its cable, media networks and theme parks.
Joe Terranova, who listened in on the conference call, said he was impressed with what he heard from CEO Bob Iger. Terranova said the company is focused on monetizing the online experience.
Lee asked the panel for comments on another stock moving in after-hours trading:
Dow Chemical
, which was down 3.25%.
Adami said Dow Chemical's $1.63 billion stock offering is huge, adding he would be interested to see when and where it will price it. Historically, sizable offerings offer investors a "monster" opportunity to buy shares, he said.
Najarian said it would be a bullish sign for Dow Chemical, which was up 20% for the past five days, to hold on to a 3%-to-4% drop in after-hours trading.
But Macke wasn't impressed at all with the company, saying it wasn't acting from a position of strength by dumping billions of dollars of stock.
Lee shifted the discussion to
Fed
Chairman Ben Bernanke's comments earlier in the day that he's seeing a bottom in the housing market.
Adami said his comments were "benign" if anything and wouldn't make too much from it. Tim Seymour said the "shoes that haven't fallen yet" on commercial real estate and regional banks.
Najarian said part of the reason why there wasn't a sell-off in today's market is that there is protection in place to maintain some order in the market.
Aubrey McClendon, CEO of
Chesapeake Energy
(CHK) - Get Chesapeake Energy Corporation Report
appeared on the show. He told the panel that the market for natural gas is correcting itself and that "sets up well for 2010 and 2011" for the industry.
McClendon, who was sharply criticized by Karen Finerman for his "outrageous" $121 million compensation package, declined comment, saying the matter is in litigation and that any comments he makes on it will be limited to filings with the
Securities and Exchange Commission
.
Lee shifted the discussion to the financial stocks, which closed mixed on reports that 10 of the 19 major banks will need more capital.
Macke said the stress tests are as "phony as a three-dollar bill." Najarian said one bright spot in the financials has been
Fortress Investment Group
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and
Blackstone
(BBN) - Get BlackRock Taxable Municipal Bond Trust Report
, which continued to move to the upside.
On the flip side, though, Seymour noted
Legg Mason
(LM) - Get Legg Mason, Inc. Report
, which was down 25% because "$44 billion in assets under management is walking out their door."
Najarian said investors should consider
Discover Financial
(DFS) - Get Discover Financial Services Report
, which has participated in the rally of other credit card companies. He said Discover could be working its way to the upside after it cut its dividend, shored up its books and received $1.5 billion from the government.
Casino stocks continued on the upside today, with
MGM Mirage
(MGM) - Get MGM Resorts International Report
,
Las Vegas Sands
(LVS) - Get Las Vegas Sands Corp. Report
and
Wynn Resorts
(WYNN) - Get Wynn Resorts, Limited Report
making hefty moves up.
Macke said he took the occasion today to trim back his holdings in casino stocks. Seymour said people are piling into these stocks, but they may be a little late.
Mike Huckman,
CNBC
's biotech reporter, came on the show to talk about a potential blockbuster diabetes treatment for
Eli Lilly
(LLY) - Get Eli Lilly and Company Report
and its partner
Amylin Pharmaceuticals
( AMLN).
He said the two companies are waiting for FDA approval for a once-weekly diabetes treatment called exenatide LAR, which, if approved, could be worth $1 billion in sales a year.
He said Roche and
Genentech
( DNA) are also waiting word from the FDA for approval of Avastin for brain tumors.
Jim Suva, an investment research analyst for
Citigroup
(C) - Get Citigroup Inc. Report
, came on the show to say that
Research In Motion
( RIMM), which is now trading at $75, has all the makings of a $100 stock in 12 months.
After listening to RIM's CEO, Suva said the company is moving the bar higher by increasing the functionality of its smartphones so that they can operate like portable laptops and "attach email directly from your networks."
Unconvinced, Najarian said the company just puts out a phone, but Suva replied that it's much more than a phone. "RIM will allow you to access all your files and resumes without calling up your assistant, Suva said.
Macke wondered how much more upside there is to the stock, which is already up 85% this year. Suva contends there is more because the focus has been margins and not unit growth.
During the week, the trading panel has taken turns penning open letters to companies that need help. It was Macke's turn on Tuesday as he turned his attention to Gregg Steinhafel, the CEO of
Target
(TGT) - Get Target Corporation Report
.
Macke said Steinhafel shouldn't listen to Bill Ackman, a hedge fund manger with a large call position in the stock, because he lacks moral authority. He said the CO should instead work on cleaning his stores, executing and putting out a better marketing campaign.
In the final trades, Macke said to take profits on Las Vegas Sands. Adami was long on Eli Lilly. Seymour said to stay flat on
Companhia Vale Do Rio Doce
, and Najarian said he liked
McDonald's
(MCD) - Get McDonald's Corporation Report
.
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