Recap of CNBC's Fast Money, Monday June 2. Click on a stock ticker for more analysis.
Down Time: Wachovia (NASDAQ:WB), Goldman Sachs (NYSE:GS) and Citigroup (NYSE:C), KeyCorp (NYSE:KEY), Bank of New York Mellon (NYSE:BK)
On news Lehman Brothers, Morgan Stanley and Merrill Lynch were downgraded and Wachovia’s Chief KevinThompson was dismissed, financials and the Dow faltered. Jeff Macke said when the S&P 500 didn’t surpass 1400, it sold off. Jeff Macke would by GS at $150 and Citi at $20. Pete Najarian is concerned about BK and KEY and discussed unusual options volume in the stocks.
With the beginning of the hurricane season, concerns over supply dislocations grow. Guy Adami would look at refiners such as HOC and VLO, but said his favorite is TSO and he noted bullish action in the stock. Najarian would take profits in FTO, since it has jumped 30%. He also discussed coal plays MEE and ANR which produced metallurgical coal used for steel production. Adami added BTU is an “easy” trade which may go to $90, but he warns of a downside risk of 9%.
Investors took profits in tech and sent the sector down with Apple leading the nosedive. Macke said it was time for a decline in Apple, INTC performed fairly well, but MSFT and YHOO are worrying. Macke suggests building a position in Apple. Adami would buy INTC on this decline. Finerman discussed rumors the iPhone will be released between June 15th and July 12th because AT&T employees were asked not to take vacations during this period.
BUD hired financial advisers as it considers InBev’s buyout offer. Najarian sees upside in the stock, Macke likes TAP and Adami’s beer is SAM, which has a heavy short interest.
Barrons Revs up GM: General Motors (NYSE:GM)
Barron’s positive article about GM drove up the stock 2%, but Adami says he is still cautious.
Eli Lilly, Novartis, ImClone, Celgene and Genentech had good moves on the Cancer Conference. Najarian particularly likes DNA for its drug Avastin.
UBS analysts Michael Morris says the NBA Playoffs will be good for ESPN owner Disney and added live sports are “DVR resistant” and appeal to men across the board. While he thinks the playoffs themselves won’t have such a huge effect on the stock, he would make note of finals that run for more than four games or have ratings higher than the double digits. Morris would buy DIS with a $38 price target.
Hedgies Flee Oil?
Dennis Gartman commented the news that hedge funds may be fleeing oil, and says it may be a good move for smart money. Gartman says sometimes these moves affect oil prices and sometimes they don’t, but he added it is a good idea to be on the same side of the trade. He says the government is seeing crude traders as bad guys and added, “I’m also expecting to see the government create a new definition of what a hedger is as their investigation continues.”
The exchanges will bounce if the economy recovers but will get crushed if there is a downturn, and the group discussed whether such stocks are worth the risk. Macke says business is strong, but the stocks look terrible, and would choose less risky names such as NYX rather than NMX and CME. Finerman likes NYX which has a high beta but is a good buy. Adami notes NYX is the cheapest.
TheStreet.com Dan Fitzpatrick looked to the charts to find what is working, and concentrated on moves in construction stocks. GVA is consistently trading above its 50-day moving average, is making higher lows and should rise. MDR also has higher lows and could go above $62. He likes FLR if it stays above the support line. Adami, Macke and Najarian would wait for a pullback before buying FLR.Trader Radar: Warner Music Group (NYSE:WMG) traded on extraordinary volume on Monday.
How to Play a Hurricane?
While Macke and Finerman said they would be on the other side of hurricane plays, Addison Armstrong of Tradition Energy said “It’s not nice to go against Mother Nature.” He would look at the oil fields and services sector because their repair equipment will be in demand when a disaster strikes.
Guest: Stephen Roach, chairman at Morgan Stanley Asia
Roach says it is not logical to believe in globalization in good times but suddenly to believe in de-coupling when there is a downturn. While China has a huge cushion to absorb shocks, Japan is more vulnerable and may be more affected by a bad economy. Domestically, Roach said both credit and property bubbles have burst and the American economy will stay soft. He added the inflation scare will probably be a false alarm and would buy bonds.
Final Trade: Macke: Short Dow30 ProShares (NYSEARCA:DOG), Adami: Celgene (CELG), Finerman: Bon-Ton Stores (NASDAQ:BONT) for the "Million-Dollar Portfolio Challenge." Najarian: National Semiconductor (NSM)
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