Financials Fly High - Fast Money Recap (7/16/08)

Recap of CNBC's Fast Money, Wednesday July 16.

 Financials Soar: Bank of America (BAC), Citigroup (C), Goldman Sachs (GS), UBS (UBS), Wells Fargo (WFC)

 Dylan Ratigan started the Fast Money show off saying "today was the single biggest day ever for the financials!"  Bank of America surged 22% to $22.67 and Citigroup rose about 13% to $16.47.

Jeff Macke said he was happy he made a good move by buying Goldman Sachs yesterday. Goldman Sachs was up about 10% today.

Guy Adami mentioned how UBS bounced up by 18% to $26.74. He said the stock "should be trading at $30." and he couldn't believe the stock "traded at $20 yesterday" Adami recommends you buy the stock.

Karen Finerman thought Wells Fargo's earnings were good. However, she said she "doesn't understand why they raised the dividend" since the extra capital should be used as a cushion for future possible losses.

 Stocks of Interest:  Intel (INTC), Exxon-Mobil (XOM), eBay (EBAY), Alpha Natural Resources (ANR), Peabody Energy (PEA)

 Macke moved the discussion to Intel. He said Intel's earnings were decent, but he took this opportunity to sell out his position.

Oil tanked today by another 2.72%, to 134.96.

Adami says Exxon-Mobil looks attractive but he likes the opportunity in Schlumberger. He said Schlumberger looks good and "has a very high chance of beating analysts' expectations when it reports its earnings on Friday."

Ratigan mentioned today's CPI of 1.1%.

Adami said he foresees "a rate hike in the October-November meeting."  He said this "will help the dollar and knock down the commodities."

Finerman disagreed with Adami, saying the Federal Reserve "has many other issues to face right now". She does not feel the Fed will be raising interest rates ahead of inflation.

Ratigan brought up eBay which beat the street in the second quarter by 2 cents at 43 cents a share, excluding special items.  Earnings were boosted by eBay's buyback program. During the quarter the company purchased back 19 million eBay shares worth $566 million in the quarter, helping to boost earnings per share.

Najarian said although eBay reported good earnings for the second-quarter, their forecast was a problem.

Ratigan brought up Alpha Natural Resources, which is getting bought out for $10 billion. Najarian has liked Alpha for quite some time.

Najarian said "coal is not a one trick pony." He said to keep an eye on this sector.  He does not feel the stocks there are overvalued.

Adami said he likes Peabody Energy.

Macke said "coal stocks are rolling over." He feels the "momentum is gone" and for that reason is not interested in the sector.

 Chart of the Day: S&P Energy (XLE)

 Steven Cortes, CEO of Veracruz LLC, came on the show to talk about energy plays. He said he has a short position on XLE. He feels another play worth considering is to buy into the energy in the emerging markets or simply to short XLE.

Ahead of Earnings: Merrill Lynch (MER), JP Morgan (JPM)

Ratigan mentioned Merrill Lynch and JP Morgan will be reporting earnings tomorrow.

Stacey Gilbert, Susquehanna Market Strategist, came on the show to talk about how to trade on Merrill Lynch and JP Morgan ahead of earnings. She said there is a lot of volatility built into these stocks.  She says a good way to position yourself is to use options to match your thesis on the particular stock, Merrill Lynch or JP Morgan, with regard to where you think the stock will move tomorrow.

Najarian agreed that "the volatility can be used to your advantage."

Gilbert expanded upon her idea of using options by saying "you can take various ways to benefit from JP Morgan's movement by setting up a straddle."

 Winners Tomorrow?  Microsoft (MSFT), IBM (IBM), Google (GOOG)

 Finerman mentioned a stock she owns, Microsoft. She said the stock has performed well over the past few days and that "I'm a little optimistic on the company beating estimates."

Adami agrees with Finerman, "everything looks pretty good for Microsoft," he says. "Microsoft will do well tomorrow, probably trade to $29 soon."

Najarian believes IBM will be a winner tomorrow on earnings.

Macke disagreed with Najarian saying, he likes IBM but does not feel it's worth buying a stock that will have "a 1% movement." What he looks forward to seeing tomorrow is Google.

 Trade Tomorrow: American Express (AXP), Google (GOOG)

 Frank Aquila Sullivan & Cromwell M&A advisor, came on the show to talk about the recent M&A activities. He said he has known for awhile many deals would occur for cash, which has been happening recently. He also said he sees "financing starting to come back".  This could potentially allow more deals to be done in the future. Overall, he says companies have healthy balance sheets and since stocks are trading below fair value, we will continue to see acquisitions with hefty premiums.

Finerman discusses a great stock to buy that she feels is undervalued. The stock she recommends is American Express. She lists many reasons why the stock is undervalued. The two main reasons are: first, Warren Buffett is one of the largest shareholders in the company and second, the company is trading at "just 12 times earnings." She gave a detailed overview of American Express' business segments to demonstrate the company is undervalued and is a good buy at current levels.

Doug Anmuth, Senior Analyst of Lehman Brothers, came on the show to talk about his top pick in the Internet space, Google. He says the stock is trading at a low valuation, making it a good buy ahead of its earnings tomorrow. He cautioned that to think Google's macro exposure is "completely immune is not accurate," but believes the numbers will remain strong despite the macro effects. He firmly believes the stock is a good buy for the short term and long term.

Macke said it's a tough trend to call. He doesn't recommend the stock since he finds the volatility too great especially if the company misses earnings.

Adami and Najarian say when the stock dips significantly, they would see it as an opportunity. Until then, they feel it is too risky to buy at current levels.

 Final Trades – Tomorrow's First Moves

 Macke is picking Microsoft (MSFT).

Adami picks Schlumberger (SLB).

Finerman also picks Microsoft (MSFT).

Najarian likes Novartis AG (NVS).

Seeking Alpha is not affiliated with Fast Money or CNBC.

Comments

[lefty]

Don't you love the term, "excluding special items", or for short, "ex items". What a way to hide expenses.