Recap of CNBC's Fast Money, Monday August 18.
Barron's Drop – Fannie Mae (FNM), Freddie Mac (FRE)
Fannie Mae and Freddie Mac each lost more than 20 percent after Barron's reported that the U.S. Treasury may need to bail out the home finance giants. This action could wipe out shareholders and effectively nationalize these government-sponsored enterprises. The Treasury Department responded by saying it had no plans to use its authority to backstop either of the two companies. All that happened is Fannie and Freddie got disrespected in Barron’s and they fell harder than a Chinese gymnast, exclaims Jeff Macke. “There’s nothing new Monday, (on Fannie or Freddie) that made me worry,” adds FPK senior analyst Howard Shaprio on Fast Money. “The Barron’s argument simply rehashed old arguments and did not offer numbers to support what they were saying.” Shaprio thinks Monday's market action was propelled by fear and nothing more. “We’ve crunched the numbers and we think Fannie and Freddie have sufficient capital to make it through.” Shaprio suggests that Fannie and Freddie might be raging buys on the dip. Karen Finerman and Pete Najarian think you should stay away. “Not yet,” Najarian says. I think Freddie and Fannie are lottery tickets if you want to play the game, adds Guy Adami.
Goldman Sachs (NYSE:GS) - Meanwhile analysts downgraded Goldman Sachs sending the stock down. Fox Pitt cited “weaker-than-expected results across the board and bigger write-downs than we had projected.”
Lehman Brothers (LEH) - The Wall Street Journal reported that some analysts are bracing for investment bank Lehman Brothers to report a third-quarter loss of $1.8 billion or more. I don't like the disconnect between the debt market and the stock market, says Karen Finerman. One or the other is due for a correction and personally I think equities are hanging in much higher than they should be.
Dollar Move - Despite recent strength, the dollar fell on Monday ahead of housing and inflation data to be released on Tuesday. “I think the dollar is fine,” says Guy Adami. It’s just a pause, adds Jeff Macke. I think it’s still going higher.
Oil Service HLDRS (NYSEARCA:OIH) - Fears eased that Tropical Storm Fay would damage major oil and gas infrastructure. In response, oil continued it’s retreat. Oil has been one of the major drivers of the market, explains Pete Najarian. I think the Oil Service HLDRS is interesting; it seems to be over-sold. I’d put casino stocks on the radar, adds Jeff Macke. They are giving back all the gains they made a few weeks ago.
Hewlett Packard (NYSE:HPQ) - The world’s largest computer maker traded lower ahead of earnings Tuesday. The move is dollar related, exclaims Pete Najarian. If you think the dollar has bottomed it could make you hesitate. Hewlett Packard has a great deal of international exposure. I just think investors were taking profits ahead of the quarter, counters Guy Adami. Nothing more.
Lowe’s (NYSE:LOW) - Opened higher Monday but then fell as traders feared that rival Home Depot would offer a lackluster forecast when they report Tuesday.
Home Depot (NYSE:HD) – I don’t expect anything great from Home Depot on Tuesday, says Karen Finerman. I think you’d have to be a silly-heart to get long, says Jeff Macke. If it pulls back 5% ,I think it’s a buying opportunity, counters Guy Adami.
Outperforming Ag - Mosaic (NYSE:MOS), Agrium (AGU), Potash (POT)
Beaten down ag names such as Mosaic, Agrium and Potash all traded higher despite falling significantly last month. I don’t think the ag story is over, says Pete Najarian. However I also don’t think the current unwind is over, either.
John Deere (NYSE:DE) – The stock is a buy if it pulls back to $63 I think it’s buy with a tight stop, adds Jeff Macke. I think ag stocks will get interesting, says Jeff Macke, but not yet.
Final Trade – Your First Move for Tuesday August 19.
Jeff Macke thinks Home Depot (HD) is a buy if it drops $1 after earnings.
Guy Adami recommends playing defense with Johnson and Johnson (NYSE:JNJ).
Karen Finerman likes Golar LNG (NASDAQ:GLNG).
Pete Najarian is pickless for Tuesday.
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