The U.S. stock market ended Friday's trading to the downside. The Dow sank 0.9%, the S&P 500 lost 0.7%, and the Nasdaq slipped 0.2%. After hours, FedEx (FDX) - Get Report warned about its earnings, sending shares lower.
"Fast Money" TV show, Guy Adami apologized for recommending FedEx and said the news doesn't bode well for
, but it does bode well for the rails.
Jeff Macke said that FedEx committed the cardinal sin by warning on a Friday afternoon, hoping no one would notice. He said the news indicates that retailers are going to complain about high oil prices next week.
Pete Najarian pointed out that FedEx dropped its earnings per share guidance by 20 cents, with oil up $20. He said that if investors see a pullback in oil, they might be able to gauge an improvement in FedEx's earnings, because FedEx blamed its warning on oil.
Macke said it might be time to pare some oil positions. He said it might be time to take an opportunity here and buy
shares fell today. CEO Vikram Pandit announced plans for the company to unload $400 billion in assets. Finerman said she thought the news wasn't earth-shattering. She said it's difficult to turn a company the size of Citi around quickly. She also said that if viewers believe management, it's possible to come up with a model where the bank earns $3.50 to $4 per share the next year. The stock, therefore, could go to $38, she said. She said she plans to buy more shares for her fund.
Macke said that Citi has pulled back substantially. Because the bank is facing a credit crisis, it doesn't really know what its earnings are going to be, he said.
off the Citi news. He said it's also a great week to look at
. American Express is a Warren Buffett name, he said, and its credit exposure might actually be a boon as the crisis eases.
On news that billionaire investor Carl Icahn may buy
( BBI) can't. Macke said the Blockbuster merger didn't make sense. He said Circuit City might be better off without merging with Blockbuster. He said Icahn is the winner here, because there are no other bidders for Circuit City, meaning Icahn will either "steal" the company or walk away from a deal.
Adami pointed out that Icahn also raised his stake in
( MOT) to 7.6%. He said that news isn't that good.
Najarian said he doesn't understand Icahn's thinking here.
traded lower this week. Najarian said he doesn't think the Yahoo! story is over. He said he owns Yahoo! calls. The stock should be lower if no one is interested in buying the company.
Oil's Demand Story
The traders talked to
contributor Addison Armstrong about oil. Armstrong said he's starting to see energy headwinds. He said the FedEx news isn't good for oil on the demand side. He said that investors should stay with the upward trend in oil until it breaks down, but it may be time to diversify into other areas.
Macke said that in the short term he isn't sure demand is dropping off. Armstrong said that demand erosion will occur over a longer time frame. He said U.S. demand is slackening and predicted a downturn in Chinese demand after the Olympics.
Quicker Than the Ticker
Energy Conversion Devices
( ENER), which went up 51%. Macke recommended
, shares of which rocketed up 7% the day after his recommendation. Finerman chose
, which climbed 7% on earnings. Adami selected
, which added 16% since his call in early April.
report earnings next week.
Adami predicted strong earnings from H-P. He said the company is an industry leader and has bought back a lot of stock. The stock is a long-term buy, he said. Najarian pointed out that the company that makes H-P's laptop hinges has said orders are up 26%. He said H-P's price-to-earnings ratio makes it cheap. He's looking forward to an impressive number, he said.
Macke said H-P has been on a tear, and that competition from
hasn't been that formidable.
On Wal-Mart, Finerman said she expects profit margins to narrow. Macke said guidance will be key. He said investors will be looking for accelerated spending from consumers on the back of the stimulus package. Najarian said he likes Wal-Mart's direction and its strategy of cashing government rebate checks.
The traders then talked with
senior economics reporter Steve Liesman about the state of the credit crisis. He said he thinks the economy is about halfway between chaos and normal. He said equities are holding up well in the face of bad news from AIG,
( FNM) and Citi. He predicted that
( FRE) could raise capital next week.
Liesman said for things to become more comfortable in the credit markets, private capital would have to replace assistance from the
Zach Karabell, president of River Twice Research, joined the crew to talk about the markets. He said that earnings, bar the financials, are a lot better this quarter, up 10%. He said, factoring out the bad consumer, the economy looks stronger. He said the trade to make is on a weak dollar and strong global growth. He recommended U.S.-listed companies with a lot of global exposure on dips. He included such names as
as a trade off that theme. The company gets 75% of its revenue from overseas, he said.
traded on extraordinary volume this week.
Najarian pointed out heavy call activity in
. He said the options trading was unusual in that it occurred after the company announced earnings.
Finerman had recommended
, a trade that didn't work out. She said the company's quarter was OK, but management did a poor job of expressing that on the conference call. She said she bought more shares on the dip.
, which went down 12% this week. He said he thinks the decline is a buying opportunity.
Adami and Najarian both recommended Citigroup, which didn't do so hot. They both said they'd buy it at this level.
To honor the upcoming Mother's Day, the traders spoke with
CEO James McCann. He said fuel prices were hurting the company but it's using new efficiencies to weather the storm.
Macke recommended UPS on a dip resulting from earnings. Adami picked
. Finerman chose
June $45 calls. Najarian selected H-P.