Word On The Street
Dylan Ratigan hosted CNBC “Fast Money” show Tuesday night. He started the show with a discussion of Goldman Sachs Group (GS). He mentioned that Goldman CEO Lloyd Blankfein spoke at a Merrill Lynch conference today. Blankfein was quoted as saying “our reformation as a bank holding company isn’t having a material impact in the way we operate our business.” Guy Adami said the problem is that Wall Street doesn’t know how Goldman will make money going forward. He says “at some point the smartest guys in the room will come out and say something.” Tim Seymour said the good news for Goldman is that value guys are looking at the stock. Karen Finerman says “the one good thing for Goldman is that credit default swaps have not moved out materially.”
Chart of the Day
The “Chart of the Day” was the Dow. Ratigan pointed out that the Dow is stuck in the middle of the range. Adami says “the only edge you have in the market is the range, so sell the extremes and buy the dips.” Najarian said if you want to trade the range than play Burlington Northern Santa Fe (BNI) at $80, Norfolk Southern (NSC) at $52 and Union Pacific (UNP) at $60. Seymour said one interesting play is Frontline (FRO), which should announce a 35% dividend yield next week. Seymour said the story of the day was the announcement that American Express (AXP) gained emergency approval to become a bank holding company overnight. Najarian told viewers to look at IBM (IBM) and Hewlett-Packard (HPQ). He says “if the emerging markets start to comeback, these tech names will trade higher.”
Oil Plays
Ratigan asked the traders what they think of oil-related equity names. Adami explained that there is no money in the commodity market right now. He says “stocks such as Exxon (XOM) and some of the oil service names will be great plays early next year when the money comes back.” Seymour said watch Petroleo Brasileiro (PBR) which is trading at three times earnings. Najarian told viewers that commodity play Archer Daniels Midland (ADM) is seeing a lot of bullish options activity.
China Talk
Ratigan moved the conversation to China. Seymour said if he would be bullish on any emerging market, he would be more bullish on China. He said you can play China with the iShares FTSE/Xinhua China (FXI), PetroChina (PTR) and China Mobile (CHL). Finerman says “China is absolutely full of it, and the stimulus package is too little too late.” Adami pointed out that Jacobs Engineering (JEC) traded down 7%, despite having a great backlog and big exposure to China’s infrastructure build out.
GM Take
Ratigan brought up General Motors (GM). He said the stock is at 66-year lows and a bailout appears to be certain. Jon Najarian said one thing General Motors, Ford (F) and Chrysler can do is sell clean diesel cars in the U.S. like they do overseas. He says “they can have these cars in this country in months, but they need to relax on crash testing and EPA.” Finerman said we need to fix the union and labor problems at General Motors, or the bailout will not work. Najarian told viewers he is coving his short position in names such as Cummins (CMI) and TRW Automotive (TRW).
Hedge Fund Pains
The traders discussed some ways to play hedge fund liquidations with 13Fs due out this week that show some of the largest institutional holdings. Finerman said investors should read the 13Fs for Citadel Investment, Atticus Capital, Harbinger Capital and Pershing Square Capital. She says “they are very big holders of some stocks, and if you have seen stocks that have moved a lot, than that could be the reason.” Ratigan said investors should watch names such as U.S. Steel (X), MasterCard (MA), Alpha Natural Resources (ANR) and Cliffs Natural Resources (CLF). Najarian mentioned that Wall Street whale Julian Robertson has been buying Apple (AAPL), Visa (V) and MasterCard (MA). He says “you have to like Visa at these levels.”
Liz Claiborne CEO Interview
The crew spoke with Bill McComb, CEO of Liz Claiborne (LIZ) about if this year’s holiday season is in trouble. McComb said he is grateful that he downsized the company a year ago. He says “woman’s apparel and accessories are down 15% to 20%.” He said the best period he can think of to compare the current economic crisis to, is right after September 11, 2001. McComb explained that Claiborne has cut capital spending by 50% and implemented additional expense controls for 2009.
Legg Mason CEO Interview
Legg Mason (LM) CEO Mark Fetting, joined the traders to talk about the state of the mutual fund industry. Fetting said now is the time to look at asset managers like Legg Mason. He explained that it’s more deprecation of the market and not capital outflows that have hurt Legg Mason’s assets under management. He says “Legg Mason Capital Management led by Bill Miller just got a big client to come in for $1 billion.”
POPS&DROPS
Pops- American Science & Engineering (ASEI) popped 15% after the company reported a 63% jump in second-quarter profits. Najarian says “growth and backlog all strong for ASEI.”
Drops- Las Vegas Sands (LVS) plunged 33%. Adami explained the stock fell after the casino operator priced $181 million share secondary. Capital One (COF) fell 1%. Finerman said she is short Capital One for a play on declining auto loans and credit card loans. Freeport McMoRan (FCX) fell 9%. Seymour says “FCX looks great here, and I do believe in copper long term.” Goodyear Tire & Rubber (GT) lost 11%. Starbucks (SBUX) traded down 2%. Najarian said everyone is going to McDonald’s (MCD) now.
Trader Radar
Shares of Tyco International (TYC) were among the most active names on the NYSE Tuesday.
Final Trade
Seymour recommended Focus Media (FMCN). Adami picked McDonald’s (MCD). Finerman said she bought some Google (GOOG) and sold some calls against it. Najarian told viewers to buy some puts on American Express. 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!