Recap of CNBC's Fast Money, Thursday June 5.
Holy Dow: Wal-Mart (NYSE:WMT)
Thursday saw a market-wide rally and with a triple-digit jump for the Dow on news of stronger consumer confidence. WMT reached a four-year high thanks to government stimulus checks. Guy Adami predicts the S&P 500 will surpass its point of resistance and reach 1410. Pete Najarian said the market-wide bullishness was “unbelieveable” and couldn’t account for it. Guy Adami pointed to record short interest in May, and says commodities and equities are coming back. Jeff Macke thinks investors are tired of bad news and are ready for a comeback.
The Oil Coil
Reversing a s brief downward trend, oil rose 4.5% or $5 on Thursday. Adami says this gain isn’t just a short covering and predicts there is more upside for the commodity, but the path of least resistance is that oil will go lower. Macke thinks the move is due to speculation because there was no supply or demand catalyst to bring up the stocks.
Lehman shares closed higher, but Greenlight Capital's David Einhorn is bearish on the stock. Adami agrees with Einhorn. Finerman thinks Lehman may be a buy here and thinks the stock will rally if the company raises capital, which is easy for it to do. Najarian says this is not a Bear Stearns scenario, because Lehman has more access to liquidity and the Fed’s discount window. Macke considers financials as trading vehicles, since he expects the rally to continue and would sell into strength. CNBC’s Charlie Gasparino discussed news LEH executives may announce earnings early to quash rumors the bank is facing a liquidity crisis. Adami thinks LEH may go lower and noted WB closed unchanged in spite of huge trading volume. He would buy this bank when it cuts its dividend. Najarian said MER didn’t rally like other financials, and he is not bullish.
Tech rallied for the second day in a row with Cisco leading the way. Najarian praised HPQ for its acquisition of EDS and says options activity indicates a move higher. With PCs strong, Adami would buy WDC.
Verizon will surpass AT&T and to become the nation’s largest wireless with its acquisition of Alltell. Najarian thinks the deal will benefit companies levered to wireless such as RIMM, QCOM and AAPL while Adami says T is a buy.
Tribune in the Read: Tribune (TXA)
Tribune CEO Sam Zell is talking about cutting jobs and reducing page count of the company’s publications. Finerman says doesn’t inspire bullishness in the sector and Macke says Zell is a solid takeover guy in a declining industry.
Take Two’s shares rose higher after hours on better-than-expected earnings and raised profit forecast as the result of the success of its Grand Theft Auto 4 Game. Finerman noted the company announced discussions of a merger and is sending a message to Electronic Arts that it better make a good deal or TTWO will merge with another company. Macke prefers ATVI.
National Semiconductor’s shares jumped as revenues exceeded expectations, although net profit was lower. Adami says while NSM is cheap, he likes Intel better.
Gold/Oil Disconnect Gold continued its fall as the dollar consolidated its gains. Adami noted that gold wasn’t moving up with oil, as has been the trend, and thinks the yellow metal will drop in the second half of the year.
Goldman Sachs downgraded PFE on falling value for its pipeline and safety concerns over some of its drugs. The stock hit an 11-year low and Najarian thinks PFE could make a comeback by making an acquisition. He likes LLY.
Nasdaq Comeback: Nasdaq (NASDAQ:NDAQ) CEO Robert Greifeld
Although shares are down on fears trading volume will fall, a Lehman upgrade and CEO Robert Greifeld tell a different story; “We see in our business that our volumes are setting records. And in May we had a price increase in our transaction services. It was the first time we had that in many years and our market share went up in May and continues to go up in June.” He also discussed the company’s strategy of offering real-time data on the Web free for the first 30 days followed by a charge to the host site. Najarian is bullish, particularly because of the company’s price-to-earnings ratio of 8.
On the Job
MKM Partners chief economist Mike Darda discussed his forecast for Friday’s job report, and thinks it will be better than expected as, according to his data, the country added 20,000 jobs in contrast to the consensus, which has job growth down 60,000. While job growth is soft, it is in indicative that weakness is ending, and Darda thinks the stock market will rally on Friday on this news. “Anything less than disastrous is good,” added Darda, “since expectations have been beaten down lately.”
Airlines CAL and UAUA discussed cutting costs because of rising fuel prices. CAL plans to get rid of 3,000 workers and to retire 67 old planes, while UAUA says it will cut at least 1,400 jobs and reduce its fleet by 100 planes. Macke thinks oil is a catalyst for the airlines to make needed improvements and he would buy on dips. Finerman is skeptical and comments the moves could prevent the companies from losing money, but will not necessarily generate profits.
On news the Fed gave the green light on the proposed merger between BAC and CFC, Countrywide shares rose.
BJ’s Wholesale Club used a colder and rainier May as an excuse for weak same store sales numbers. “If it rains, a good retailer will sell umbrellas,” commented Macke. Such excuses are often used to mask real problems at a company, and Macke likes Wal-Mart, which avoids blaming the weather.
Speculation is flying concerning next week’s release of Apple’s new iPhone which is expected to be faster and to support corporate e-mail. Lehman Brothers IT hardware analyst, Ben Reitzes, thinks price will be crucial and predicts something in the $200-$300 range. Reitzes is also bullish on AT&T because he thinks the new phone “could hog a lot of traffic and have higher average revenue per user per month. It could even start a whole new mobile community and become the goldmine they’ve been waiting for.”
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