Markets began the day strong and got stronger from there, with “commodities continuing to pull back for a second day,” said host Dylan Rattigan. Karen Finerman said “rotation is still happening” and that banks were benefiting. Going into this rally she also said she was “shorting, particularly the financials.” Tim Seymour felt it was a “decent place to add some more commodity names,” while Jim Macke said the “rally is way overdone.”
Bad Company, Good Stock – Ford (NYSE:F)
Some hurting, poorly managed companies can turn out to be great stocks. Fast Money's special series Bad Company, Good Stock takes a look at Ford. The stock is trading at its lowest valuation levels in 22 years, Ford's troubles allowed Toyota to pass it in annual sales last year. The F-150 Pickup was the no. 1 selling vehicle for 17 straight years until the Honda Civic surpassed it in May. Can Ford turn it around and return to its former dominance? Tim Seymour pointed out some positives in Ford's defense. “You have to make the assumption that these guys are going to become global car companies and they really need to compete in areas where I don’t think they’ll be able to compete forever.” said Seymour. He added, “The costs are going down because if you look at the output of cars out of the United States, roughly 40% are based upon a union cost basis which fortunately has come down markedly over the last year as Ford starts to write down the UAW liabilities.” Guy Adami called CEO Alan Mullally a “genius” and thinks he is a great CEO. He'd love to buy Ford, but cautions that Wall Street continues not to reward the stock, and right now they don't love the name.
News After the Close – Cisco (NASDAQ:CSCO)
Macke wasn't sure what to make of the after-hours news about Cisco and said he “needs to step back and read what was said.” Guy Adami felt it was a “great company with compelling valuations” but he wasn't running to it.
Morgan Stanley (NYSE:MS) Hired: Fannie Mae (FNM), Freddie Mac (FRE)
The analysts spoke to Steve Liesman and discussed the treasury's hiring of Morgan Stanley to advise on Fannie Mae (FNM) and Freddie Mac (FRE). Liesman said that Morgan Stanley was “probably the only available bank to do this job,” as he felt it was the most sound. He also remarked that the big problem the treasury is facing is, “how do you raise equity without wiping out existing equity?” He finished by noting that the Fed is “focused on the banking system, and on the need to raise capital.” Moshe Orenbuch, managing director of Credit Suisse, joined the discussion. He touched on the news out of the treasury, saying that “we're writing a new book here”. He continued saying it is unprecedented for the Treasury to get private help. He said both Fanny and Freddie “need more capital,” saying that Credit Suisse “has an underperform rating on both.”
Performance – MGM (NYSE:MGM)
MGM Chairman Terry Lanni appeared on Fast Money to discuss the performance of his company's hotels and casinos in Las Vegas. Lanni remarked that both the oil and the airline market were large factors for his business, but that they had “navigated it very well.” He also said we are “getting a lot of international business that we've never had before,” with the Bellagio alone being composed 30% of international visitors. He also cautioned that while they were “weathering the storm well, there still is a storm out there.” Lanni was also optimistic about the future of the city, saying that “Vegas is not falling off the cliff.” He added that his company's casinos “have very little local play, so the affect of the housing reduction has far less effect.” Lanni closed by pointing out that the company's goal is to “keep focusing on international business, where we're accelerating our share of the market.”
The analysts briefly discussed technology stocks, in particular their performance after hours. Mack said he was “bummed” that he had sold his Intel shares. Adami was curious “to see what Juniper is doing after hours,” and also cautioned that he “wouldn't be rushing into Cisco.” Seymour, talking about the slight rise for Microsoft, said he did “think this will have a huge reverberation across the whole sector tomorrow.”
Final Trade – Your First Move for Wednesday August 6.
Jeff Macke is still recommending Costco (NASDAQ:COST).
Karen Finerman’s said she is going back to her old love Flowserve (NYSE:FLS).Tim Seymour said he was going with Freeport-McMoRan (NYSE:FCX).
Guy Adami just said Exxon Mobil (NYSE:XOM).