Recap of CNBC's Fast Money, Wednesday June 11.
Financial Mess: Goldman Sachs (NYSE:GS), Financial SPDR (NYSEARCA:XLF)
A rise in oil prices, a fall in tech and in financials and talk of inflation brought the Dow down by triple digits. Lehman Brothers has dropped a total of 28% in four straight days, and an analyst from Merrill Lynch retracted the “buy” rating he made last week. Jeff Macke respected the retraction and the analyst’s fortitude to admit he made a bad call. The retraction caused Karen Finerman to suspect some problems at Merrill. Guy Adami agrees that rumors of writedowns at Goldman Sachs are unlikely to be true, and comments GS is best of breed. Najarian discussed put buying in XLF and says the pipeline in financials is broken.
Anheuser-Busch announced that European company InBev made an unsolicited bid for BUD at $65 a share. Macke notes strength in BUD and thinks the company will have a hard time saying no. Najarian looked to options activity as an indication the deal is going to happen. Finerman thinks it would be interesting to see if InBev goes hostile if the deal is rejected. Macke prefers Molson-Coors and Adami likes The Boston Beer Company.
The Semiconductor Industry Association slashed its 2008 growth forecast, and tech, which had been rallying, was dragged down by a drop in Intel. Najarian would buy on dips. Friedman Billings chip analyst Craig Berger says Marvell looks good and chip stocks are a buy, since overseas demand is rising. While he sees short-term selling, chips look strong for the second half of the year.
Oil may be tempting on yet another rise, but Guy Adami would look at natural gas plays XTO and APA for energy exposure without the volatility.
New Options: Honeywell (NYSE:HON)
Najarian thinks options activity in Honeywell indicates the stock could go higher.
Macke says when insiders are selling, avoid the stocks. He is bearish on RTP following their announcement of a $15 billion secondary, and noted other downward trends in Blackstone, Wynn and Genco, which fell after the companies got rid of stock.
A day after Ben Bernanke made strong statements against inflation and in favor of a strong dollar, Federal Reserve Vice Chairman Donald Kohn said the Fed might actually keep rates where they are, and when the economy is hit with high oil prices, higher inflation may be tolerated on a temporary basis. Macke wouldn’t be long the dollar until the Fed comes up with a consistent policy.
Cheesecake Factory (NASDAQ:CAKE) CEO David Overton
Cheesecake Factory shares have fallen 25% so far this year, and CEO David Overton admits growth in CAKE is sluggish along with the rest of the casual dining space. Concerning commodity prices, Overton says the company is hedged for the rest of the year, and thinks it is important to pass value on to customers. Overton says Cheesecake Factory is not suffering from its location in malls and is planning to repurchase $150 million worth of shares.
A salmonella scare in tomatoes is hurting organic food plays such as WFMI. However, even after the scare passes, Costco and Wal-Mart is threatening Whole Foods in the organic food space, notes Najarian.
American Superconductor just scored a half a billion dollar contract in China for wind turbines, and the shares jumped 25%. Najarian would also take al look at HXL and FPL.
Jeff Macke didn’t recommend trying to trade around retail sales numbers, since the bad news is already out. Guy Adami says if Alcoa COO Klaus Kleinfeld speaks at the UBS conference in London, it is a good idea to listen. Finerman said she would only pay attention to United Airlines’ meeting if they supply a bag of peanuts. Najarian would look at Taser on Smith and Wesson’s earnings report. When asked how he would trade the U.S. Open, Macke quipped golf clubs are a tough sell in the current economy.
Oil’s Ripple Effect: Las Vegas Sands (NYSE:LVS)
The group discussed the impact high oil prices may have on casinos as fewer people will want to fly out to Vegas. Adami disagreed, and says Las Vegas Sands looks good at $49.50.Final Trade: Adami: National Semiconductor (NSM), Najarian FPL Group
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