Financial Drag - Fast Money Recap (8/18/08)

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 |  Includes: CME, DELL, FMCC, FNMA, GS, HD, HPQ, JNJ, LOW, NMX, ZBH
by: Joan Wickham

Recap of CNBC's Fast Money, Monday August 18.

Financials Drag Markets Down – Fannie Mae (FNM), Freddie Mac (FRE), Goldman Sachs (NYSE:GS)

Dylan Ratigan said the financials are down, bringing down the major indices as well. Some financials trading to the downside are Freddie Mac, down 18% to $4.82, Fannie Mae, down about 18% to $6.52, and Goldman Sachs down 2% to $160.25. Joe Terranova said, “I'm still long on Goldman,” and he feels that investors who are willing to buy a great financial firm for the long term should consider getting in below $160. Jeff Macke said “If you held on to Freddie or Fannie, you would be down about 18% today.” He said there is no fundamental reason to own financials, and regarding Freddie Mac and Fannie Mae specifically, he said “these are stocks you cannot own.” Zachary Karabell stated, “I agree with Macke: Avoid these financials.” Pete Najarian returned to talking about Goldman Sachs, stating, “Goldman is the leader, and sooner or later the bad news will come to an end.” He said that makes this financial worth buying in the long term.

Buck Talk

Ratigan brought up that the U.S. dollar is trending downward today after trading at six-month highs. Macke is still long on the dollar, stating, “It was due for a pullback.” He finds the pullback healthy and continues to remain bullish on the dollar. Karabell said he feels the pullback in commodities could be temporary, since China and other countries are still demanding more iron ore and crude oil. Karabell said commodities could potentially be making a move back to the upside.

No to Retail Side - Lowe's (NYSE:LOW), Home Depot (NYSE:HD)

Ratigan brought up two retailers, Lowe's and Home Depot. Macke said he does not feel there is any reason to invest in retailers, especially Lowe's and Home Depot. He said retailers' “trailing earnings are going to be weak” and the fundamentals are not healthy, causing Macke to feel this sector should be avoided. Najarian feels investors should “wait for the opportunities.”

The Chart of the Day

The Russell 2000 was the Chart of the Day. Karabell commented that small-cap stocks have rallied strongly since they were “beaten up” just like the financials and retailers have been beaten up. Therefore, he feels the rally is short term, and that is why he does not feel compelled to invest in small-cap names.

The Dollar Trade - Hewlett-Packard (NYSE:HPQ), Dell (Dell)

Ratigan brought up how Hewlett-Packard is down 4% to $43.94 before it reports its earnings on Aug. 19. Najarian said he believes investors are trading Hewlett-Packard and Dell as a dollar trade. He said “HP gets most of its money overseas, while Dell gets most of its money within the United States.”

Exchange Partners - Nymex (NMX), CME Group (NASDAQ:CME)

Nymex plans to approve the merger with CME Group by next week. Terranova says the merger is very positive for CME and suggests its stock could be worth buying.

Jon Najarian co-founder of OptionsMonster.com - Zimmer Holdings (ZMH), Johnson & Johnson (NYSE:JNJ)

Jon Najarian, co-founder of OptionsMonster.com, discussed Zimmer Holdings. He said there is a rumor that Zimmer is going to be bought out by Johnson & Johnson. While this is just a rumor, Jon stated he noticed there has been very active call option activity for Zimmer Holdings.

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