'Fast Money' Recap: Market Marches On
NEW YORK (
) -- The markets started the week on an upbeat note despite the threat of a trade war with China.
The
Dow Jones Industrial Average
rose 21.39, or 0.22%, to 9629.80, and the
S&P 500
added 6.61, or 0.63%, to 1049.34. The
Nasdaq
was up 10.88, or 0.52%, to 2091.78.
Melissa Lee, the moderator of
CNBC
's "Fast Money" TV show, said she was amazed at the strength of the market and how it wants to struggle higher.
Karen Finerman agreed, saying that money on the sidelines continues to come in despite "every reason for the market to go down."
For a breakout of some stocks from a recent "Fast Money" TV show,check out Dan Fitzpatrick's "3 Stocks I Saw on TV."
3 Stocks I Saw onTV |
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Joe Terranova said the much expected correction doesn't seem to be coming. Rather what seems to be happening is a chase for performance by asset managers for the remainder of the year, he said. "That's going to send all the equity indexes out on highs for the year."
Guy Adami, who acknowledged again he's been on the wrong side of this improbable run the past few weeks, said "even the bullish out there have to admit the valuations on many of these stocks frankly don't make a lot of sense."
Pete Najarian picked up on that last statement and argued that there are a lot of stocks whose valuations do make a lot of sense such as
Apple
(AAPL) - Get Report
,
IBM
,
(IBM) - Get Report
,
(GOOG) - Get Report
and
Freeport McMoRan
(FCX) - Get Report
. He said the financials, technology and industrials have been providing leadership for the market.
Lee said even
General Electric
(GE) - Get Report
punched through the $15 level.
Terranova said another tell on the rising market was the "quietness" of put activity.
Lee shifted to a big story during the day -- China demanding talks with the U.S. at the World Trade Organization after the U.S. imposed tariffs on Chinese tire imports. China, in return, has said it will review U.S. poultry and auto parts sales. Adami said he believes this protectionist issue could lead to a trade war and be a big negative for the market.
Terranova said it doesn't make sense to pick a fight with one of the largest economies and a big purchaser of U.S debt.
Carlos Gutierrez, former commerce secretary, said China is responding in a way that doesn't make it seem like a trade war is in the offing. He said the Chinese commerce secretary is going through regular channels, seeking consultations with WTO to discuss the issue.
He said President Obama can go a long way to defuse an anti-trade image by asking Congress to approve free trade agreements with Columbia, Panama and Korea.
Lee shifted the panel's attention to Obama's speech to Wall Street and call for a new era of restraint. He said the country cannot afford a return to reckless behavior and unchecked excess.
Adami said the president was painting too broad a brush in his criticism and ignoring a lot of hard-working people on Wall Street.
Lee noted that financials pulled higher after his speech. Adami particularly liked the performance of one of his favorite stocks:
Raymond James
(RJF) - Get Report
, which came back after an initial drop.
Shifting to the biopharma space, Najarian said there's been a great deal of interest in
Dendreon
(DNDN)
on takeover rumors, and
Hologic
(HOLX) - Get Report
, also a target of takeover chatter.
Lee brought in Jeffery Harte, an analyst with Sandler O'Neill, to comment on the legal scrutiny BofA is getting over the Merrill Lynch deal. Harte said the real issue for the bank is its fundamental outlook and when things will start getting better for the bank.
He said BofA is "capital solid" and very well-positioned to earn a lot of money. "The legal issues are secondary," he said.
He said BofA is trading at a significant valuation discount for a bank that can do things in the banking industry that Wal-Mart does in retail. He said it can do more things at a lower cost than many banks.
He is forecasting earnings of $1.23 per share for 2010.
Lee brought in Ron Kruszewski, CEO of Stifel Financial, which has gained 30% since the fall of Lehmans a year ago. He said his company is just helping investors understand the risks of investing. He said the business model the firm follows today is the same one it had a year ago.
He criticized the government for not letting large troubled financial institutions fail because "they are too big to fail." He said that kind of thinking produces market distortions.
Lee shifted to Tuesday's second-quarter earnings report from
Best Buy
(BBY) - Get Report
, which is up 44% this year.
David Strasser, an analyst with Janney Montgomery Scott, recommended selling ahead of the report. He said he believes sales will be lighter than what the Street thinks it is. He said TV sales slowed in July and August, along with other high-margin items.
He said netbooks look like an interesting item because they generate a lot of accessory sales. Overall, he doesn't think Best Buy has found the killer app it needs. His favorite retailer? It's
Target
(TGT) - Get Report
for its "earnings leverage."
In a segment on "Lessons from Lehman," Adami said the one lesson he took away from the episode is not have all your eggs in one basket. He said Lehman collapsed because it was leveraged too much to one certain aspect of the industry.
In the final trades, Terranova liked
Research In Motion
( RIMM). Adami liked
Dreamworks
(DWA)
. Finerman said to sell a little
Flir
(FLIR) - Get Report
, and Najarian said to buy
Hologic
(HOLX) - Get Report
-- Written by David Tong in San Francisco
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