Financial Take
The “Fast Money” trades started out the show with a discussion about the takeover rumors swirling around Lehman Brothers (LEH). Pete Najarian said he sees more upside than downside with Lehman Brothers. Zach Karabell didn’t agree. He explained that its hard to know what is going on at Lehman. Quint Tatro thinks the financial stocks are a gamble. Jeffrey Hare of Sandler O’Neill also weighed in on Lehman Brothers. Hare reduced his estimates for the broker stocks including Lehman Friday. He said the biggest problem with Lehman is the lack of confidence in the balance sheet. “I just think with the size of their commercial and residential mortgage portfolio, investors don’t have confidence in what book value they’re buying,” he said. He mentioned that a takeover of Lehman is unlikely until they fix the balance sheet.
Fannie/Freddie Talk
The traders spoke with Richard Baker, CEO of Managed Funds Association about the controversy surrounding Frannie Mac (FNM) and Freddie Mac (FRE). Backer said the only way to save FNM and FRE is to allow them to sell products without any restrictions. He said its hard to find anyone who supports these companies in their current state. “It’s a question if they can lay out a legitimate analytics to convince investors that their assets are real,” Baker said.
Whale Watching – Warren Buffett
The gang discussed comments made be Warren Buffett this morning on CNBC that he is no longer betting against the U.S. dollar and he has been adding to one of the financial stocks that Berkshire Hathaway holds. Buffett wouldn’t specify whether it was American Express (AXP) or Wells Fargo (WFC). Najarian thinks its American Express because he is seeing double the options action in AXP versus Wells Fargo. Zach Karabell mentioned he isn’t impressed with Buffett because Berkshire Hathaway (BRK.A) hasn’t been performing.
China Technicals
Quint Tatro told viewers that the IShares FTSE/Xinhua China 25 Index (FXI) looks like its putting in a double bottom on the chart. He thinks from a technical perspective the risk/reward looks very bullish. Tatro also likes the fundamentals for China.
Dennis Gartman On Commodities
Strategic investor Dennis Gartman, author of The Gartman Letter joined the crew to discuss some commodity plays. Gartman said he still likes the grain market and he is long. He said he likes corn and wheat the most in the space. He recommended playing commodities with the PowerShares DB Agriculture Fund (DBA). Moving on to crude oil, Gartman told viewers steer clear and the action is atypical. He also likes the action in the dollar and he noted the euro couldn’t rebound today. Finally, Gartman said everyone he talks with is bullish on gold. He advised viewers to make the hard trade and get out of gold or short it.
RIMM Talk
Joe Terranova told viewers that he is long Research In Motion (RIMM). Zach Karabell reminded the trades that Nokia (NOK) is coming out with a phone that will compete with the new BlackBerry Bold.
Options Action

Jon Najarian joined the traders to discuss some stocks with interesting options action. He pointed out that Charles Schwab (SCHW) and Akamai (AKAM) had bullish call activity. The action suggests to him that news could be coming for these stocks. Get the scoop on tomorrow’s hottest trade ideas – TODAY! BeaconEquity.com PREMIER PICKS have an amazing track record. Join this select group and ride the profit wave!

Jim Cramer had some harsh words for the management of Lehman Brothers (LEH). He told the company to get off his front page and pick a plan of action for the company. He said Lehman’s problems are like a “lurking black hole” similar to the crises the market is seeing with General Motors (GM), Ford (F), Washington Mutual (WM), Citigroup (C), AIG (AIG), Fannie Mae (FNM) and Freddie Mac (FRE). Cramer said that nobody wins the longer Lehman delays things and doesn’t form a resolution for the firm. “The SEC gave us a chance to catch our breath by not allowing such a quick demise of institutions at the hands of aggressive shorting that ruins confidence, but that went away,” he said. Join the fastest growing community of small cap investors at Stockhideout.com

Lehman Talk
The traders spoke with analyst Dick Bove about Lehman Brothers after he upgraded the stock to a buy saying the firm could be a target for a hostile bid. Bove explained that if you remove Neuberger Bergman, which he thinks is worth $9 billion, from Lehman’s market cap – you get the rest of the company for nothing. Ratigan questioned that take, saying that Lehman has a ton of liabilities in the mortgage arm. “But let’s assume the buyer is a bank,” Love said. “There’s no need for them to sell these assets on a fire sale basis. They can hold onto them until they mature. The vast majority of the assets are cash flowing. So if you can sell Neuberger Bergman for more than you pay for all of Lehman you would get Lehman for nothing.” Macke doesn’t buy it. He said the market is selling Lehman every day and even Goldman Sachs Group (GS) is getting hit.
Oil Chat
The crew discussed the move in oil Thursday that saw crude rally over $5 a barrel. Some investors suggested that crude was running because the dollar was trading down. Terranova said the move was due to short covering. Makce said don’t chase oil. He thinks crude oil is experiencing a counter-trend rally and the United States Oil Fund (USO) will run into resistance at $100. Adami said take profits in Schlumberger (SLB). Jon Najarian mentioned that he’s short the Consumer Discretionary SPDR (XLY). He said he saw lots of put buying on the ETF and high oil will be bad for the the XLY because it holds retailers and auto manufacturers.
Research In Motion Talk
The crew discussed Research In Motion (RIMM) after the company said it will release its new BlackBeery Bold. Najarian thinks the product will be big. He explained that RIMM traded above its 100-day moving average, and 8 out of the last 9 times RIMM has done that the stock soared 49% over the next 50 days in front of a new product release.
Chipotle Mexican Grill CFO Interview
The traders spoke with Chipotle CFO John Hartung. Hartung told the traders that food inflation is probably going higher but it wont hurt the company – Chipotle passes higher costs along to its customers. He said Chipotle has the highest margins in the industry at 22%. “During these tough times customers get a great value at Chipotle because they come in and have a meal made from very high quality ingredients that typically you’d have to go to a high end restaurant to find,” he said. Macke, Terranova and Adami all said they wouldn’t buy the stock. Najarian suggested Darden (DRI) for a trade in the sector. He said Darden does a great job of hedging commodity costs.
Options Action
Stacey Gilbert of Susquehanna joined the traders to talk about some options activity. She told the crew that she noticed unusual call options action in Southern Copper (PCU). She also likes Freeport McMoRan (FCX) for a play on the copper and coal sectors and calls on the name are out trading the puts. Terranova said he also likes copper play FCX. He mentioned he is long copper and short gold for a play on dollar strength.
Commodity Take
Coal stocks and metals stocks were in play Thursday after UBS upgraded Massey Energy (MME). Adami said he likes Freeport McMoRan (FCX) for a play on the copper sector. Terranova disclosed he is long US Steel (X) but he’s thinking about selling because the stock isn’t working. He told viewers to look at National-Oilwell Varco (NOV) instead. Najarian said keep an eye on Joy Global (JOYG) because he is seeing lots of call buying on the name. Chat and share ideas with the best small cap traders LIVE each day free at Stocknetworkonline.com

Word On The Street
WORD VIDEO HERE
Fannie/Freddie Speculation
The traders discussed the rumors floating around Wall Street that the credit crisis could get much worse after reports surfaced that said Freddie Mac (FRE) meet with the Treasury department on Wednesday morning. The rumors drove shares of FRE and Fannie Mae (FNM) down big. Najarian said that FRE and FNM are toast. He explained that the options market isn’t showing anything that suggests the two companies will survive. He said options traders are buying puts all the way down and the stocks will most likely end up at $2. Najarian said he doesn’t see a trade here and thinks it’s foolish to buy puts now.
RIMM Talk
The traders talked with Citi Investment Research analyst, Jim Suva about Research In Motion (RIMM). Suva said the new BlackBerry Bold is a big improvement from the Curve and Pearl devices. He thinks the phone will be a big hit with business users but it wont be popular with consumers because of the $300 to $400 price tag. Terranova said RIMM is heading to $140. Adami pointed out that Citi just slapped a $160 price target on the stock and Merrill Lynch has a $170 price target. He said when RIMM gets momentum it usually heads much higher.
Jobless Report Take
The traders discussed the jobs report that is due out on Thursday. Deutsche Bank chief economist Joe Lavorgna thinks the number will be around 450,000 and more jobs will be lost due to the weak economy. “But markets are forward looking and if you think the bottom is in the fourth quarter then the market should start to improve,” he said. Lavorgna said stocks could start to make a move up in late fall.
POPS&DROPS
POPS- Canadian Natural Resources (CNQ) traded up 7%. Terranova likes Suncor (SU) in the space. VeriFone (PAY) soared 32%. Najarian said nice pop. Take-Two Interactive (TTWO) jumped 6%. Macke said sell the stock. Hansen Natural (HANS) surged 8% after news hit that billionaire Nelson Peltz increased his stake in the company. Adami said there’s something to this but he doesn’t know what. San Juan Basin Royalty (SJT) added 7% after the company said it would pay a monthly dividend. Terranova told investors that if they want natural gas exposure look somewhere else. This stock is just a dividend play.
DROPS- eBay (EBAY) fell 2% after the auctioneer cut its fees to attract new sellers and compete with Amazon.com (AMZN). Macke said this company is Amazon’s weak sister. BJ’s Wholesale Club (BJ) lost 7%. Macke said it could be a buying opportunity. Analog (ADI) dropped 9% after the company reported reported profits and sales below Wall Street expectations. Adami said don’t go near it. Royal Bank of Scotland (RBS) lost 3%. Terranova said don’t touch the stock. Novatel Wireless (NVTL) plunged 25% after analysts at Morgan Joseph downgraded the stock from buy to hold. Najarian said ouch!
Fast Message
Mark from New York writes, “Does Soros’ purchase of 9.5 million shares of Lehman Brothers (LEH) make you more bullish on this name?” Najarian said maybe for the long term, but he doesn’t feel that Soros is trying to pick a bottom. Rob from California writes, “How would a Fannie/Freddie takeover help or hurt the big banks like Bank of America (BAC) or Wells Fargo (WFC)?” Terranova said it would remove uncertainty from the housing market.
Final Trade
Adami likes Schlumberger (SLB). Terranova picked Valero (VLO). Najarian prefers U.S. Bancorp (USB). Get the scoop on tomorrow’s hottest trade ideas – TODAY! BeaconEquity.com PREMIER PICKS have an amazing track record. Join this select group and ride the profit wave!

Jim Cramer spoke with chairman and CEO, Jonathan Tisch of Loews Corp (L) about the condition of the high-end American consumer. Tisch said the market in major markets like New York remain strong helped by the weak dollar that is boasting sales from overseas tourists. “If it wasn’t for that,” Tisch said, “I’d be very concerned.” However, the strength isn’t being seen everywhere. He said markets like Hawaii are a disaster due to the cutback of seats available on leading airlines. Tisch mentioned that Las Vegas is also weak due to too many rooms and slow gambling revenues. Despite the weakness, Tisch pointed out that Loews is expanding its footprint. He said the competition for prime hotels and properties remains fierce with private equity and offshore capital still active in the sector. Join the fastest growing community of small cap investors at Stockhideout.com

Jim Cramer spoke with John Stumpf, president and CEO of Wells Fargo (WFC) about the action in the bank stocks. Stumpf told Cramer that despite the problems in the sector Wells Fargo is till growing due to the bank’s capital strength, liquidity and operating model. He said there’s less competition because so many banks are trying to fix their balance sheets, while Wells Fargo is growing theirs. “These are not necessarily bad times for us,” he said. “We tend to outperform when times get tough.” Stumpf explained that analysts question Wells’ dividend increase, because the bank has strong revenue growth, solid earnings and a good long-loss reserve that will support the dividend hike. Cramer asked the CEO about the possibility of a government takeover of Freddie Mac (FRE) and Fannie Mae (FNM). Stumpf thinks the takeover would be a positive for the housing sector and the economy, but it wont impact Wells Fargo much. Stumpf also responded to a recent report from Oppenheimer & Co’s Meredith Whitney that claimed a change in th way Wells reports bad home equity loans is making the company looking better than it really is. “Wells changed the amount of time before the bank charges off defaulted home equity loans from 120 days to 180, the industry standard, giving Wells more of a chance to work with its customers, Stumpf said.” “So it was actually a customer advocacy, not anything about the income statement.” He explained the rule left off $268 million in charge-offs for the second-quarter, but Wells took a $3 billion writedown, half of which was for bad loans and the other half to build loan-loss reserves. He also pointed out only 5.5% of the bank’s assets are “Level 3″ debt. Cramer said Wells Fargo is the best bank in America. He said the stock is inexpensive and sells at only two times book value. Get the scoop on tomorrow’s hottest trade ideas – TODAY! BeaconEquity.com PREMIER PICKS have an amazing track record. Join this select group and ride the profit wave!

Lehman Talk
The traders discussed Lehman Brothers (LEH) after JPMorgan Securities forecasted a write down of $4 billion of mortgage-related paper for the third-quarter for the investment bank. Najarian explained that investors thought the worst was over for Lehman, but that isn’t the case. He said the trade is to short Lehman but he isn’t very comfortable with it. Terranova said he likes Goldman Sachs Group (GS) in the sector because it is best in breed. Najarian pointed out the yields on Fannie Mae (FNM) and Freddie Mac (FRE). He said its a high-risk trade but the yields are saying something. Macke said the yields are telling the market that they’re going out of business. He also mentioned that Lehman Brothers will have to raise money to survive.
American International Group Chat
Goldman Sachs cut its price target on American International Group (AIG) and released a bearish report that said the insurer will need to raise capital and will most likely see rating agency downgrades. Goldman said it sees $9 to $20 billion in losses from AIG’s CDS book. Zach Karabell said don’t get long AIG. Macke said avoid the financials for anything other than a trade. He feels the bad news will continue until the credit market cracks. Terranova disclosed he bought AIG puts for hedge against his Goldman Sachs long.
WATCH TOLL BROTHERS CEO INTERVIEW HERE
Options Activity
Najarian noticed unusual options action in Ryland Group (RYL). He mentioned that traders are buying lots of October puts.
Medical Trade
The crew took a look at Medtronic (MDT) after the electronic medical heart device maker beat analysts expectations and reported a 30% jump in revenues from its spinal and stent divisions. Najarian said he likes how MDT is trading. He explained that MDT and Johnson & Johnson (JNJ) are strong and outperforming the S&P and Dow right now.
Oil Take
The traders talked about the rally in oil off the dollar’s weakness Tuesday. Terranova thinks that Venezuela and Iran will ask for a production cut if oil falls to $100. He said the move in oil today was short covering ahead of the weekly inventory report set for Wednesday. Macke said oil is just bouncing here. Najarian told viewers to look at the Oil Services HOLDRs (OIH) for an interesting trade at these levels.
Finerman Phone Call
Trader Karen Finerman called into the show today from her office to talk about the markets action. She said their is a real disconnect between the stock market and the debt market. Finerman mentioned the financial sector continues to look bad. She pointed out that Freddie Mac’s (FRE) debt is so expensive that she wonders how they make money. She predicted that more shoes will drop for the financials, specifically in auto loans and commercial mortgage backs. She advised investors to short more bank stocks, especially if the Federal Reserve raises rates.
Retailer Trades
The traders discussed Home Depot (HD) and Lowe’s (LOW) after Home Depot said sales will fall 5% for the fiscal year ending in January. Terranova told viewers to dump HD if it breaks below the 200-day moving average at $25.85. Macke disclosed he sold his long position in Costco (COST) today, because the sector is just too tough. Chat and share ideas with the best small cap traders LIVE each day free at Stocknetworkonline.com

Jim Cramer spoke with the CEO of Anadarko Petroleum (APC), Jim Hackett about the effects of the falling cost of natural gas on his company. Hackett said the fall in natural gas is due to extreme volatility. “Perhaps it was overbought,” Hackett said in regards to natural gas, “now it’s probably oversold.” He said in the long-term natural gas will be very strong until a viable alternative fuel comes to market. Hackett said the fall in his company’s stock is just due to volatility and he isn’t concerned about it. He feels that Anadarko, Apache (APA) and Devon (DVN) are all undervalued stocks that have big upside from current levels. Cramer said natural gas stocks are trading at a discount to the price of the actual commodity. He told viewers to buy Anadarko and look for the data from the California initiative as a catalyst to take shares higher. Chat and share ideas with the best small cap traders LIVE each day free at Stocknetworkonline.com