Fast Money Recap - Will Goldman Be Tarnished? (11/10/08)

Recap of CNBC's Fast Money  Program, Monday  November 10.

Goldman Sachs (GS), General Motors (GM), Circuit City (CC), Best Buy (BBY)

While the announcement of a stimulus plan in China was expected to bring stocks up, the Dow closed down on worries that Goldman Sachs might post the first quarterly loss in its history because of ailing equity markets. GM’s fall to a 60 year low also didn’t help the markets. Jeff Macke said the rally early in the day was a screaming opportunity to sell and if the Chinese economy were strong, it wouldn’t need a stimulus. Pete Najarian responded the Chinese call it a stimulus, but the rest of the world calls it a bailout, and he is not optimistic about commodities. Guy Adami says Circuit City’s announcement that it is filing Chapter 11 is not good news for its rival Best Buy.

China’s Stimulus Fails to Stimulate: Cemex (CX), Lefarge (LFRGY), Sohu (SOHU), Netease (NTES) and Sina (SINA)

While China’s announcement of a stimulus package was a surprise, it didn’t stimulate U.S. stocks. Tim Seymour would invest in infrastructure stocks Cemex and Lefarge, while Najarian prefers Chinese stocks Sohu, Sina and Netease. Macke would avoid the temptation to invest in crude oil.

General Motors (GM) to Zero? Toyota (TM), Borg Warner (BWA)

A Deutsche Bank analyst predicts General Motors will go to zero, and even if it avoids going bankrupt, its future will be “bankruptcy-like.” According to the analyst, even a government bailout will not benefit shareholders. Macke suggests a complete government takeover of GM, while Adami would look into Borg Warner. Najarian thinks Toyota may be the next domino to fall.

Goodbye Golden Boy: Goldman Sachs (GS), Morgan Stanley (MS)

Goldman Sachs’ stock priced dropped after a fourth analyst downgraded the stock due to credit concerns. Some predict the former leader among the investment banks to fall below $69.99, its closing price on the first day the company was traded. Morgan Stanley seems to be the next victim, but there are a lot of unknowns, and “the market doesn’t like unknowns” Seymour said

Trading Down: McDonalds (MCD), Wal-Mart (WMT), Yum (YUM)

McDonald’s is one of the few companies thriving in this market, which demonstrates the thesis that consumers are “trading down” by eating at McDonald’s and shopping at Wal-Mart. The restaurant chain reported that sales rose 8% in shops open 13 months or longer. Adami thinks MCD is a good Asian play, along with YUM, which derives a third of its sales from emerging market countries.

Catch a Falling Starbucks (SBUX)

Starbucks announced a shocking 97% drop in profits for the fourth quarter and earned an extra 10 cents a share witch costs from its closing 661 stores are excluded. “The company doesn’t seem to be able to do anything right,: commented Najarian.

Circuit City’s Shockwaves: Simon Properties (SPG), Radio Shack (RHS), AUOptronics (AUO), Taiwan Semiconductor (TSM)

 Circuit City’s announcement it is filing chapter 11 was a shock so close to the holidays, but the company cited problems with vendors which were threatening to withhold products. Macke said Best Buy should not have rallied on the news, because it will see some pain as well, and he would short BBY. Guy Adami says shorting REITs such as Simon Properties on the Circuit City story is “swimming in the deep end of the pool…stay away.” Najarian thinks Radio Shack will fare poorly and Tim Seymour would steer clear of electronics stocks such as AUO and TSM.

 

AstraZeneca (AZN)’s Miracle Drug , Amgen (AMGN), Novartis (NVS), Johnson & Johnson (JNJ), Myriad Genetics (MYGN), Celgene (CELG)

 AstraZenca’s cholesterol drug, Crestor, has dramatically reduced strokes and heart attacks among patients who used to drug as a preventative measure, and doctors hail the new drug which may revolutionize the way cholesterol problems are treated. Najarian predicts a ripple effect for other drug companies such as AMGN, NVS, JNJ and MYGN. Adami likes Celgene which has no debt.

 

Death of Buy and Hold

On Black October 2008, a time-honored investment strategy finally bit the dust; "2008 is the year that will go down in history as the year that long term investment died as a thesis,” declared Jeff Macke. However, there are ways to make money in this market with a diversified portfolio and as long as investors keep knowing when to take some profits off the top; "It’s very important to take profits in trades," adds Tim Seymour. "You can’t be in a market like this and asleep at the switch."

 

Final Trade: Macke: Burlington Northern Santa Fe (BNI) with a stop at $75. Adami: McDonald’s. Seymour Devon Energy  (DVN), Apache (APA), Najarian: Sina and Netease  

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