Sell in May, Go Away - Fast Money Recap (4/30/08)

Recap of CNBC's Fast Money, Wednesday April 30. Click on a stock ticker for more analysis.

Market Overview: Financial Select Sector SPDR (XLF), Citigroup (C), Bear Stearns (BSC)

There was a selloff in the financials late in the day, observed Pete Najarian, and he said XLF has pulled back after hitting $27 for the seventh time. He blames Citigroup for keeping XLF back. Jeff Macke said there was a potential rally on Citi’s raising capital, but it didn’t pan out. He didn’t think the Fed meeting had much of an impact on the market and didn’t think the selloff was so severe. Guy Adami predicted a slow start for Thursday and Karen Finerman said April was good considering Bear Stearn’s creation of a bottom at the beginning of the month. Najarian disagreed, saying the market was performing poorly before the BSC sale, and April didn’t seem so great.

Microsoft (MSFT), Yahoo (YHOO), Google (GOOG)

As MSFT meets to determine its next step in the Yahoo takeover, Macke reported a rumor that MSFT will try for Board membership or scrap the deal. He thinks this is preferable to raising the bid. Finerman thinks a better idea would be to appeal directly to Yahoo shareholders. Macke thinks it is a bit rich that Yahoo was demanding $39 to $40 a share when Yahoo stock had been $18 or $19 prior to takeover talks. Najarain predicts the deal will drag on because MSFT needs Yahoo to compete with Google. Until there is a closing, Najarian would play the takeover with Yahoo options by selling calls. Speaking of Google, the internet giant’s share jumped 3% on good news from YouTube. Macke says GOOG’s move is a case of good stocks breeding success, and doesn’t think YouTube produces meaningful revenue or plays much of a role in Google’s stock price. Najarian noted Google’s 27 price-to-earnings ratio makes Google one of the least expensive techs, and he would wait fro a dip to buy.

Exxon Mobil (XOM), Halliburton (HAL), Apache (APA), Chesapeake Energy (CHP), ConcoPhillips (COP), First Solar (FSLR)

XOM raised its dividend, and oil climbed above $114. Adami thinks XOM will beat estimates but will not report fantastic earnings, and he prefers HAL. Najarian likes natural gas, particularly APA, which reports Thursday. He noted COP is the integrated oil company that tops Goldman Sach’s conviction buy list. FSLR is a cheap solar, said Najarian but Macke cautioned that solar will be hurt if crude oil falls.

Starbucks (SBUX), GM (GM), Ford (F), Giant (G), Borg Warner (BWA)

Macke was skeptical about SBUX’s introduction of smoothies for the summer, and said the company needs a different approach altogether. Najarian reported heavy call activity in Giant and likes the online gaming company. GM beat earnings and jumped 9%. Adami said GM has a better-than-expected loss, and while the company has been performing well, he prefers F and BWA.

Joe La Vorgna on the Federal Reserve

La Vorgna doesn’t think the Fed is finished cutting, and a sluggish jobs number may mean an additional reduction of interest rates in June. He added that unless mortgage rates are lower, the recovery won’t seem so impressive.

Dennis Gartman, The Gartman Letter

Dennis Gartman hasn’t declared an end to the commodities bull market, but believes the six month commodities rally is over. Gold has been a major disappointment, wheat hasn’t risen for a while and there is a global rice crisis. While he likes natural gas compared to oil, he is not an aggressive natural gas bull.

Citigroup (C)

Although she confesses she missed the bottom, Finerman says she would consider buying Citi because of the Fed cuts and because Citi is raising equity cheaply. Najarian and Doug Kass of TheStreet.com agreed. Adami says although the stock has risen 40% since March, he thinks the stock has further to go if Meredith Whitney of Oppenheimer gives the stock a positive rating. Macke said that while Citi may be alright in the long-term, investors will have to deal with short-term pain as the stock loses value.

Apple (AAPL), AT & T (T), Verizon (VZ), Sprint (S)

As the release of the 3G iPhone draws near, Adami would buy AT&T, which is giving a subsidy to keep the price of the phones around $200. Najarian thinks this will be good for Apple and for T, which should easily earn back the value of the subsidy. Macke is concerned about pricing skirmishes between T, VZ and S.

Trader Radar: Buffalo Wild Wings BWLD traded on unusual volume on Wednesday.

Sell in May, Go Away: Deere (DE), AgCo (AG), Wal-Mart (WMT), Home Depot (HD)

Adami likes the adage “Sell in May, Go Away”, because he notes the Dow is sluggish between May and October. Jon Najarian joined the show to disagree, and said there will be short plays like Deere and AG and long plays as WMT and HD will be strong. Macke would take gains in WMT.

iShares MSCI Brazil (EWZ), Banco Bradesco (BBD), Uniao de Bancos Brasilieros (UBB)

Tim Seymour discussed the effects of the rise of the dollar on emerging markets, and he said Brazilian stocks EWZ, BBD and UBB were rallying, probably because of short covering. .

Final Trade: Macke: Sell Starbucks, Adami: Cisco (CSCO), Finerman: Citigroup, Najarian: Cheseapeake Energy

Seeking Alpha is not affiliated with CNBC, or Fast Money

Comments

[gabe borenstein]

Quite a few predictions most of them unenthusiastic.From the Macro perspective ,the stock market had performed quite well.For all of the recessionary predictions(not a reality especially if the FED cuts rates 100bps more),the stock market did quite well.Since the FED comprehends that the economy functions well as long as financial insitutions function well ,it became an active participant in the J.P Morgan -Bear merger ,but more importantly it signalled to the markets/investors that no financial institution will be allowed to fail.True,the record open short interest in the market and specifically financial sector is responsible for irrational bearish attitudes.Psychology is not an economic reality.The monetary and fiscal policies in place ,with some further accomodation from the FED (and allowing for the lag)will contribute to a major economic rebound in the period ahead and will contribute to unprecedented rally in the U.S equity markets .The financial sector will lead that rally.Socio/economic events/upheaval in the emerging markets will result in the record demand for dollar denominated assets(U.S markets and real estate).Commodity inflation?there are no signs of demand pull inflation which would be a cause to worry.The cost push inflation that we are witnessing to date ,is a function of a unprecedented leveraged speculation.In order to resolve this phenomenon,all of the relevant exchanges(NYMEX,Comex) should impose a 100% margins on trading and unprecedented price implosion will follow allowing the FED to focus on the real iisues.To the skeptics ,I would like to point out that some 28 years ago Comex imposed 100% margins on the precious metals ,causing the silver to tumble from fifty dollars to six.So much for commodity inflation.Ther issues/problems .I have been warning about since june 2005(Mark Gilbert- Bloomberg interview,Brian Sullivan Bloomberg TV) are behind us..For all of the pessimism the U.S markets and the economy are on the verge of a major rebound.

[Unbeliever]

Sell in May? Nope, not me. I sold in April. I will stay out of the market for the next 6 months (or more). Why? We have intelligent people arguing both directions for the market. The arguments in each direction are strong. The truth is no one can predict what will happen.

My belief is the market could make small gains in the next 6 months or make huge losses. To me the risk of loss is greater than the value of the possible gain. So, I will sit on the sidelines waiting for the right moment to reenter the market.

[Growin $$]

I believe the Chesapeake discussed on the show was CHK