Word On The Street
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Financial Outlook
Dylan Ratigan hosted CNBC’s “Fast Money” Friday night. He began the show by discussing the amazing moves seen in financial stocks like Lehman Brothers (LEH), American International Group (AIG) and Washington Mutual (WM) this week. “The moves in these stocks have never been seen in the history of Wall Street,” Ratigan said. Pete Najarian thinks the financial sector looked terrible, but the coal, steel and everything commodity helped the S&P 500 today. Ratigan mentioned that S&P put American International Group’s credit rating on negative watch. “Have they no sense of shame,” Jeff Macke said. He thinks S&P and Moody’s have a lot of explaining to do. Tim Seymour said that AIG has a lot of balance sheet issues. Joe Terranova told viewers that he owns AIG puts. He also mentioned that AIG’s credit default swaps will continue to move higher and the CEO will have to come out with a plan for the company by Monday morning.
Market Talk
Ratigan moved the discussion to the general stock market. Macke said the reasons the indices didn’t look so bad was because previously beaten-down stocks moved higher. Terranova pointed out the dollar came in weak and investors knew the commodity stocks would come on strong today and move the S&P up. Seymour feels there are good valuation stories in the commodity complex. Macke explained that the dollar has rallied too far, too fast. “I would have loved to have stayed long the dollar forever, but if you give me 10% to 15% in this tape I am taking it,” he added.
GE Take
Ratigan mentioned that General Electric (GE) has a lot of exposure to the financial sector. The stock fell 5% today. Seymour explained that 53% of GE’s profits last year came from the financials and that’s why the stock is being hit so hard here. “I am getting sick of carrying GE with “Fast Money,” Macke joked. He pointed out that the market shots the “generals” last.
Oil Move
Ratigan brought up the fact that crude oil dropped below $100 today. Terranova said $100 oil lends to complacency among the American consumer. He thinks the only trade in the energy space is the refiners. Seymour said the consumer is dead.
Apple Take
Ratigan told viewers that Apple Computer (AAPL) hit a 5-month low today. Najarian explained that Steve Jobs looked a little bit thinner at their conference this week and traders sold off the stock. He said he’s long the stock but also holds puts for downside protection. “I blame the board of this company for creating a cult of personality around this stock – and that’s what it trades on now,” Macke added.
Lehman Talk
Sanford Bernstein analyst, Brad Hintz who also is the former CFO of Lehman Brothers, joined the traders to discuss the battered investment bank. Hintz said he expects Lehman to open for business on Monday. He explained that it will be extremely challenging to do the due diligence on a $600 billion balance sheet in a quick manner. “Lehman doesn’t have a funding problem, they can fund themselves,” he said. Hintz said the problem is the “crisis of confidence” in the equity markets. He told viewers to avoid the brokerage stocks until you start seeing credit spreads coming in on investment grade.
The Bull Case For Main Street
The “Fast Money” traders discussed the following bullish developments for main street: the possibility of a housing bottom, the commodity price decline and the rally in the consumer stocks. Macke said he would add an activist government to the list. He thinks the U.S. government will give money to General Motors (GM) and it’s bullish for the stock. Najarian said he sees opportunity in Home Depot (HD) and Lowe’s (LOW) if the housing market is at a bottom. Terranova recommended Wal-Mart (WMT), the coal stocks and Research In Motion (RIMM) in technology. Seymour explained that commodity prices are going down due to demand destruction. He thinks job losses will get worse into the holidays, so he isn’t aboard on the bullish case for “Main Street.”
Yikes Ike
The traders spoke with CNBC’s Scott Cohn about the latest developments with Hurricane Ike. Cohn said this hurricane has the potential for something catastrophic in terms of economics and human loss. He said if the storm surge comes through the Houston ship channel it will be a major impact to the country due to the refineries located in that area. “We will start seeing higher gas prices and it’s already happening here,” Cohn said.
Goldman Earnings
The traders discussed Goldman Sachs (GS) which is set to report earnings next week. Terranova said if they report earnings south of two dollars were in trouble, but if they report north of two bucks it would be seen as a positive for the market. Najarian is concerned about Goldman because of their exposure to the commodity complex.
New Funds For AIG
CNBC’s Charlie Gasparino joined the traders to discuss late breaking news that American International Group (AIG) has hired JPMorgan Chase (JPM) to advise the company on raising new capital. He said the details of the plan will likely be announced over the weekend. Gasparino mentioned that BlackRock (BLK) and The Blackstone Group (BX) are also involved in the plan.
POPS&DROPS
POPS- Campbell Soup (CPB) popped 7%. Macke said he likes the stock for a lot of reasons right now and he suggested that investors get long. Amgen (AMGN) jumped 4%. Najarian said if the data is good this coming week for their osteoporosis drug the stock will trade higher. Sears Holdings (SHLD) soared 11%. Najarian mentioned that Credit Suisse upgraded the stock. Valero Energy (VLO) traded up 8%. Terranova thinks the refiner stocks will continue to move higher. CSX (CSX) rose 6%. “Things look pretty good for these guys,” said Seymour. Hershey (HSY) surged 8%. Terranova explained that the stock is heavily shorted. He thinks HSY will run to $48 a share if it trades above $42 a share.
DROPS- Chipotle Mexican Grill (CMG) plunged 18% lower. Macke said this stock has been “smoking death” since it peaked.
Final Trade
Macke recommended buying General Motors on the dips. Seymour said the bounce in emerging markets will continue, so play it with iShares MSCI Emerging Markets Index (EEM). Terranova thinks Goldman Sachs will announce an earnings surprise to the upside. Najarian picked Hologic (HOLX). Wind Stocks are all the rage this year.  Read why WNEA may be the single best play in this sector today!