'Fast Money' Recap: How Real Is China's 'War of Words'?

NEW YORK (TheStreet) -- Crawford Del Prete, executive vice president and chief research officer at IDC, was a guest on CNBC's "Fast Money" TV show. He said there is currently a "war of words" between China and U.S. technology stocks.

The most vulnerable stocks belong to hardware companies including Cisco Systems (CSCO) and EMC Corp. (EMC), while software and services companies are the least vulnerable. However, he said this "war" is likely to be a non-event. 

Tim Seymour, managing partner of Triogem Asset Management, questioned whether China is even that crucial to Cisco's business. He added International Business Machine (IBM) has some issues in China, while Apple (AAPL) seems to be doing quite well in the country. 

Guy Adami, managing director of stockmonster.com, said the pullback in IBM was going to happen regardless of Wednesday's headlines about China, although those likely didn't help the price action. He reasoned that shares are on the way to $175. 

Steve Grasso, director of institutional sales at Stuart Frankel, said he sold Qualcomm (QCOM) but it was due to the broader market's recent rally, not the issues in China. 

Copper hit three-week lows. Adami said the bearish price action does not bode well for other metals. 

Seymour said the March low of $2.90 per pound is likely to hold for copper. He admitted there seems to be a lot of supply although demand is also strong. 

Ike Boruchow, senior research analyst at Sterne Agee, said Coach (COH) has $800 million on its balance sheet, which is good, but pointed out that most of it is located offshore. That's why the company had to recently borrow $200 million. He suggested it's burning through too much of its domestic cash flow to justify buying back more stock or raise the dividend.

He argued that Coach keeps losing market share and continues to report lower comp-store sales growth. His top pick is Kate Spade (KATE), which he said can double revenue and operating margins, since the company is still so small. 

Karen Finerman, president of Metropolitan Capital Advisors, is long the June $40 put options on Coach. She said the new CEO is likely to lower the bar and investor expectations at the upcoming analyst meeting. "Everything sort of seems to be going wrong," she added. 

Grasso said, "I think you're still safe" in owning Pandora (P) at current levels. 

Seymour is long Nike (NKE), but not because of the upcoming World Cup in soccer. He noted that basketball shoe sales are up 18% year over year and the company's operating margins are strong. It's one of the "most attractive" large-cap stocks, he said. 

Dr. Yaron Werber, who leaders Citi's biotechnology research team, was a guest on the show. He downgraded Clovis Oncology (CLVS) to hold from buy and slashed its price target from $109 to $53. 

He reasoned that Clovis Oncology will no longer be the first to market with its lung cancer drug. Instead, AstraZeneca (AZN) looks likely to debut its drug in the first quarter of next year, while CLVS won't have its treatment ready until mid-year 2015. AZN's treatment also has less adverse side effects, he said. His top pick in biotech is Medivation (MDVN).  

Grasso said he is still long CLVS and is looking for the stock to bounce back to the $52 level. 

Seymour said expectations that were too high last week have since fallen headed into Thursday's European Central Bankmeeting -- meaning there could be a surprise to the upside from the ECB's announcement. He said to buy the iShares MSCI Emerging Markets ETF (EEM) and sell short the iShares MSCI Germany ETF (EWG). 

FuelCell Energy (FCEL) dropped 8% and was the first stock on the show's "Pops & Drops" segment. Seymour said its second-quarter results were bad but the company says it will hit its estimates in the second half of the year. 

General Motors (GM) jumped 4%. Finerman said she bought the stock on Wednesday, ahead of Thursday's release of the company's investigation results on its fatal ignition switch recall. 

Medtronic (MDT) popped 4%. Grasso called the stock a "safe place" to invest money but suggested waiting for a pullback before doing so. 

Newell Rubbermaid (NWL) climbed 4%. Adami warned investors to careful with the stock at current levels. 

Terry Gregg, CEO of DexCom (DXCM), said the company's mobile applications are already available on Apple devices, and Apple's focus on health and wellness should aid in DexCom's expansion. He added wearable technology is the future, and the company's Continuous Glucose Monitoring (CGM) device for diabetes should see continued adoption in future. 

Adami said that although DXCM is not yet profitable, the stock is buyable following the recent pullback.

Finerman is long Macy's (M), but called PVH Corp. (PVH) a fantastically run company. She said the selloff seems a little overdone and she is a buyer if it sells off by the same magnitude on Thursday it did on Wednesday. 

CNBC's John Jannarone was a guest on the show. Regarding Time Warner's (TWX) spinoff of Time Inc., he said there are a lot of hedge fund managers  tempted to sell the latter's stock short, but will not in fear of a takeover or asset sales. Although there isn't a lot of positive catalysts for print companies, Time Inc. sports a rather healthy balance sheet, he concluded. 

At current levels, Seymour called shares of TWX "interesting" on the long side. However, he is a buyer of Disney (DIS) based on its content. 

Mike Khouw, managing director and primary strategist at Dash Financial, was a guest on the show with some bullish options activity in shares of Apple. Specifically, he pointed to the 20,000 October $675 call options that were bought for $21.30 apiece and the 10,000 October $700 calls that were bought for $14.75 each. If exercised, it would result in the investor buying $2 billion worth of stock, which is a rather huge investment. 

Seymour said the reported merger between Sprint (S) and T-Mobile USA (TMUS) is "great for consumers" and is a deal that should not have regulatory issues. 

For their final trades, Seymour is buying Mobile TeleSystems (MBT) and Grasso is a buyer of Southern Company (SO). Adami is a buyer of Delta Air Lines (DAL) and Finerman said to buy Allergan (AGN) and sell short Valeant Pharmaceuticals (VRX). 


-- Written by Bret Kenwell in Petoskey, Mich.

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Bret Kenwell currently writes, blogs and also contributes to Robert Weinstein's Weekly Options Newsletter.

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