Word On The Street
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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!