Lehman Upgrade? - Fast Money Midday Recap (8/21/08)

Recap of CNBC's Fast Money, Thursday August 21.

Dylan Ratigan commented that crude oil is rallying today. He also mentioned that the dollar is trading downward as the major indices trade in negative territory.

Consumer Discretionary - Consumer Discretionary SPDR (XLY)

Jon Najarian brought up the Consumer Discretionary SPDR which contains companies such as retailers and auto manufacturers. He has noticed very high put option volume, leading him to feel negatively toward companies that are levered to discretionary income. Jeff Macke sarcastically mentioned how “consumers have been in a cocoon for months.” He said consumers' discretionary income has been strained for quite awhile, which is why retailers have been having a troubling time.

Steel and Coal - U.S. Steel (X), National Oilwell Varco (NOV), Joy Global (JOYG)

Adami said U.S. Steel was trading higher today but he is not bullish on any of the steel companies and suggested that investors “sell into the rallies.” Joe Terranova mentioned that he likes National Oilwell Varco; the stock is up about 5% to $78.26. However, he said he disagrees with Adami and stated, “U.S. Steel should be up.” Najarian stated that he really likes Joy Global, since he is bullish in the coal industry.

RIMM Shot - Research In Motion (RIMM)

Ratigan said Research In Motion will be releasing a new BlackBerry model, to be called Bold. Najarian said “keep an eye on this one” regarding Research In Motion. He stated that on average, the stock has moved up about 50% when it trades above its 100-day moving average right before a product launch.

Take Profits - Burger King (BKC)

Adami said he is not a supporter of Burger King at this level. He told viewers to take profits. He said he feels the stock has to move more to the downside before it will be attractive enough to buy.

Breaking news - Merrill Lynch (MER)

Merrill Lynch will buy back auction-rate securities from individuals with accounts of $100 million of less by Jan. 15.

Bullish on Copper - Freeport-McMoRan (FCX), Southern Copper (PCU)

Guy Adami is bullish on the copper sector, specifically Freeport-McMoRan. Stacey Gilbert, market strategist for Susquehanna, was also bullish in the copper and coal sector. Gilbert noticed unusually high call option activity for Southern Copper yesterday. She said she feels this is a very bullish sign for Southern Copper.  Gilbert also stated that she agrees with Adami about Freeport-McMoRan, stating she feels copper and coal are both signaling  bullish activities.

More Moves - Microsoft (MSFT), Lehman Brothers (LEH)

Ratigan brought up how Microsoft plans on spending $300 million for its adverting campaign with Jerry Seinfeld.

After Ladenburg Thalman upgraded Lehman Brothers, the stock is trading flat at $13.65-- the stock was previously down 9%. The upgrade on Lehman has also sparked a rally for the rest of the financials and lifted the major indices from their lows.

Chipolte Grilled - Mexican Grill (CMG), Darden Resturants (DRI)

Jack Hartung, chief financial officer of Chipotle, came to discuss what has been affecting his business and what differentiates it from its competitors. He said that Chipotle Mexican Grill has one of the highest margins in the industry. Regarding food inflation, Hartung said he does not feel lessen in the near term, but that it should not dramatically affect his company since it has been able to pass along some of the costs to the customers. Najarian said he does not feel that investors should consider buying Chipotle, but he said he likes Darden Resturants, which owns chains such as Olive Garden and Long Horn Steakhouse. Macke feels there is more downside left for restaurants due to food inflation and a strain in consumer spending.

Upgrade for Lehman (LEH)

Dick Bove, Analyst Ladenburg Thalmann, came on the show to explain his reasons for upgrading Lehman Brothers today. He said if the stock continues to trend downward or at current levels, a company might make a hostile bid for the firm. Macke said he does not believe a firm would want to buy Lehman Brothers, as the firm's assets have no value. Bove disagreed, claiming there is a value for its assets and it does not have to unload the assets at “fire-sale prices.” He later mentioned that after doing some comparable analysis, he feels the stock should be trading at higher levels, and that is the main reason behind the upgrade.

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Comments

[kkin365:]

A month or so ago, in Barron's, one fund manager had a short position on X, when the stock, if I recall correctly, was about 145. The stock went up; now it is down somewhat. In my view, it should be down.

2008 Aug 22 02:23 PM