Word On The Street
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General Motors Take
Burnett mentioned the best stock in the Dow today was General Motors (GM). Macke said the fundamental news for General Motors can’t get worse. He thinks the stock works for a trade here and you can’t be short the name. Najarian pointed out that the “GM trade” has worked because oil prices have been falling.
Housing Talk
The “Chart of the Day” was Toll Brothers (TOL) which hit a new 52-week high. Finerman said that people believe that the housing market has bottomed. She said she’s skeptical that the bottom is really here, but it’s possible. Finerman pointed out that housing play Mohawk Industries (MHK) was up big today and help onto its gains. Adami said Home Depot (HD) was up big today and continues to outperform. He advised viewers to buy the stock on dips.
Financial Talk
The discussion moved to the financials with Lehman Brothers (LEH). Adami said he isn’t convinced that Lehman will get bought out for a premium. He said the high-risk trade here is to be short Lehman. Najarian said in the financial sector the names that continue to impress are Charles Schwab (SCHW) and Ameritrade (AMTD).
Technology Take
The traders moved on to discuss the technology sector. Finerman said she bought some call options on Apple Computer (AAPL) today. She thinks the stock is a great “back-to-school” trade. Macke questioned if Google is losing its focus with the release of the new operating system Chrome. Najarian thinks that Google is going for the juggler on Microsoft (MSFT) with the new browser. Adami likes Advanced Micro Devices (AMD) for a tech trade. He said the stock has a huge short interested and could go to a 7-handle.
Options Action
Najarian highlighted some unusual options activity in the September $40 calls on Lexmark (LXK). He suggested that the trading action had no institutional size, so he thinks it’s just some small retail traders who are speculating on a buyout. Macke joked that the short-sellers have been printing money on Lexmark.
Boeing Strike Debate
Burnett brought up the deadline for Boeing’s (BA) machinists who vote Tuesday on whether to go on strike over job security and medical benefits. Finerman thinks a deal will happen and the stock will go up a couple of bucks.
Commodity Talk With Dennis Gartman
Strategic investor Dennis Gartman, author of the Gartman Letter, joined the traders to discuss the commodities market following the big drop in oil today. Gartman explained that the plunge in oil is directly due to the strength in the dollar. He said the dollar went through $1.46 against the euro last night and that drove all commodities lower. Adami thinks the dollar will continue to show strength in the second-half of the year. Gartman said the gold market looks awful here. He pointed to the lack of strength in gold in the face of news like the Russian/Georgian conflict that should have sent the commodity higher.
New Browser – Google
Piper Jaffray’s analyst, Gene Munster joined the traders to discuss Google’s (GOOG) new web browser Chrome. He explained that the new browser will improve users overall Internet experience. Munster said it’s also a defensive move by Google because Internet search trends show that users initiate their Google searches from web browsers. He also thinks it’s a smart move because the company will be able to promote its applications through Chrome. Munster said Google will pick up 10% to 15% of the browser market in one year. He also likes Apple here for a play on the back-half of the year.
Retail Trade
The traders discussed the retail sector with August same-store sales due out on Thursday. Finerman said retail trades with oil. However, she thinks expectations are so low for the group that the risk/reward is attractive. Finerman said at current valuations J. Crew Group (JCG) is interesting. Macke said the news can’t get worse for Sears Holdings (SHLD). Adami pointed out that Gap (GPS) is performing better and if the stock pulls back he would buy it. He also likes Urban Outfitters (URBN) due to the stocks high short interest.
Political Trade
Sanford Bernstein senior analyst Doug Harned joined the traders to discuss his call that the defense sector will suffer under either a McCain or Obama administration. Harned said defense spending is very tight and both presidential candidates will have a hard to increasing the defense budget. Najaran pointed out some unusual options activity in Lockheed Martin (LMT). He said the $110 puts saw strong activity today. Macke explained that if the Democrats win it will be bullish for defense contractors as troop levels go down and bombs and technology use goes up.
Trader Radar
Shares of Bank of America (BAC) were among the most actively traded names on the NYSE Monday.
Breaking News – Fund Done!
The traders turned to CNBC on-air editor Charlie Gasparino for some breaking news on the Ospraie fund. Gasparino explained the Ospraie fund is closing up shop and giving money back to investors. The fund is down 38% this year and is rumored to have made bad investments in the commodity-related stocks Gasparino pointed out that Lehman Brothers hold a 20% stake in the firm. Burnett said shares of Lehman dropped 5% in after-hours trading on the news.
CEO Interview Tesoro
Bruce Smith, CEO and Chairman of Tesoro (TSO) joined the show to talk about the energy complex. Smith said the fundamentals never supported $147 crude oil. He feels that oil industry is responding by taking capacity out and improving margins as company’s chase demand. He said the liquidation in commodities due to the fallout from the Ospraie fund wouldn’t surprise him.
Final Trade
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