'Fast Money' Recap: Worrisome Market Signs
The markets fell Wednesday, marking the biggest three-day slide since the end of March.
The
Dow Jones Industrial Average
fell 184.22, or 2.18%, to 8,284.89, while the
S&P 500
lost 24.43, or 2.69%, to 883.92. The
Nasdaq
dropped 51.73, or 3.01%, to 1,554.19.
Jeff Macke said on
CNBC
's "Fast Money" TV show dismissed some of the reasons for the slide such as weak retail sales. "Sometimes you sell off because there's no reason to buy," he said.
Guy Adami said the S&P is close to where it should be at 875. If the index slips to that benchmark, investors could be in nice shape for a bounce, although the situation is still very dicey, he said.
Tim Seymour said there was an early tipoff in today's sell-off from the sell-off in other parts of the world. He said China's industrial production data is showing us that there may not be legs to sustain the two-month rally. "If we don't hold at 870, there may be a huge air pocket below," he said.
Steve Cortes, a new member to the panel, said the new news this week is that the situation for consumers is getting worse, with raising unemployment, loan delinquencies and China's weak export numbers. He said China is not getting the bang it expected from its stimulus.
Melissa Lee, the moderator of the show, turned the focus to the financials, which declined today, with the
KBW Bank Index
(KBW)
down 6.5%. She said the decline reflected concerns about dilutive impact of bank secondary offerings.
But Adami said today's market action more accurately reflects where the stocks should be: "Now they are performing the way they should be," he said.
Macke, though, said "banks are shorts," until further notice. Cortes disagreed with Macke, saying there are differences among the financials. For instance, Cortes said
Citigroup
(C) - Get Report
is a broken company with no prospects, having sold all of its valuable assets, whereas
Goldman Sachs
(GS) - Get Report
is the sole liquidity provider for the market, along with perhaps
Morgan Stanley
(MS) - Get Report
.
Shifting to tech, which was down today, Adami said
Intel
(INTC) - Get Report
continues to work as a technical trade at $15 and
IBM
(IBM) - Get Report
continues to be the best in the space.
Steve Cortes was cautious about tech stocks, saying they are very dangerous after having been a safe haven for the past five months. As of last week, tech stocks were starting to lose leadership versus the S&P, he said.
With oil unable to cross the $60-a-barrel mark, Seymour liked the refinery names and integrated companies like
Petrobras
(PBR) - Get Report
.
Adami called the decline in oil today in the face of bullish statistics a "classical reversal" in crude and a scary situation, with "a lot of money is piling into crude."
Cortes said he sees value in crude because it is in demand as an alternative currency along with gold and other resources.
Lee said big pharma stocks were bucking the downward trend today. Adami said he likes
Abbott
(ABT) - Get Report
for its valuation and because its main drugs don't come off patent until 2017.
Lee invited Esther Kwon, a S&P beverage and gaming analyst, who has a hold on
MGM Mirage
(MGM) - Get Report
.
Despite MGM's move to issue stock to pay down part of its massive debt, she said asset sales are still necessary because the company is still highly leveraged.
She's also worried about MGM's exposure to the Las Vegas market, where she sees a huge supply of rooms looming.
Lee said the Obama administration announced plans today to regulate the $30 trillion credit default swaps market by creating a central electronic clearing house to handle standard CDS. She said the chief beneficiaries could be
CME
(CME) - Get Report
and
Intercontinental Exchange
(ICE) - Get Report
.
Lee asked the panel for some ideas for trades in Thursday's session. Adami mentioned
Wells Fargo
(WFC) - Get Report
as a stock to pick up when it retraces to $22 and
Mastercard
(MA) - Get Report
when it falls to $152.
Seymour liked getting into Petrobras at $33.32 and the
iShares MSCI Emerging Markets Index
(EEM) - Get Report
at $26.50.
Cortes said energy and ag names like
Exxon Mobil
(XOM) - Get Report
and
Potash
(POT)
made sense in an "era of currency devaluation."
Macke offered up
Ford
(F) - Get Report
.
With
Wal-Mart
(WMT) - Get Report
about to report its earnings, Lee invited Deborah Weinswig, a Citigroup analyst who predicts the retail giant will beat consensus earnings by 2 cents.
Weinswig believes the company will benefit from sales of home-related merchandise and is impressed with its revenue from food and consumables. She said Wal-Mart is attracting a higher income individual into its stores.
Gene Munster, an analyst for Piper Jaffray, talked briefly about the new iPhone, which he believes
Apple
(AAPL) - Get Report
will launch at the end of June or early July.
Lee brought in Julia Stewart, chairman and CEO of
Dineequity
(DIN) - Get Report
, whose stock is up 131% this year.
She said the company's first-quarter results are terrific and is optimistic about the rest of the year. She said the company is focusing on what it can control and is doing well at its IHOP and Applebee's restaurants. Despite the uncertain economy, consumers in the family and casual dining categories want to enjoy their brands, she said.
In the final trades, Macke advised selling
Amazon
(AMZN) - Get Report
. Adami liked
Fortress Investment
(FIG)
while Cortes likes owning the yen. Seymour likes
Tesoro
(TSO)
.
"Check out
"'Fast Money'Portfolios of the Week" on Stockpickr every Thursday.
