Greenlight Puts Red Light on Financials - Fast Money Recap (5/23/08)

Recap of CNBC's Fast Money, Friday May 23.

Long or Short Oil? U.S. Oil Fund (USO)

Oil rose 4.7% last week, stocks were beaten up and the weak dollar and supply concerns were to blame. Jeff Macke would buy USO on dips and said shorting oil is “the silliest trade right now.” Tim Seymour thinks the Fed should be more concerned with inflation, and feels the economy is bearing too much a resemblance to that of the 70s. Jon Najarian says there is a short-term top in crude and Guy Adami observed DUG jumped on Friday, and might indicate a potential dip. Macke says speculation is bringing oil higher. Dennis Gartman said one has to be “absolutely, bloody nuts” to trade crude oil. He looks the airlines, which will rise when oil falls, but Gartman emphasizes it is a trade and he would put in stops. He is also long gold and grains. The group noted airlines fell 20%. Guy Adami is bullish, but Najarian says only international airlines are working.

Debt for GM, Debt for the U.S.A: GM Motors (GM), Ford (F), Borg Warner (BWA)

GM says strikes at its own and at parts suppliers’ factories will cost the company $2 billion before taxes. Adami says he has been bullish on F in the past as a turnaround story, but doesn’t like GM. Guy Adami now prefers BWA as a downstream play. Tim Seymour notes F and GM are down 20%, and their international businesses are growing. Macke thinks consumers are staying home rather than selling their SUVs.

Retail Solution: Wal-Mart (WMT), Costco (COST)

On news of a decline in driving for the first time since 1979, retail stocks got hammered, but Macke would be long WMT and COST because these cheap one-stop shop retailers provide a solution to the problem.

Casino Gamble MGM (MGM)

Casinos are taking a hit, and Najarian said the only ones he would trust are in Macau. Guy Adami considers MGM a possibility but Macke wouldn’t touch the stocks.

Technical Difficulties: Apple (AAPL), Research in Motion (RIMM), Google (GOOG), Intel (INTC)

Tech fared badly last week, particularly RIMM and GOOG. Najarian would buy Apple and predicts it will reach $200. Macke likes the stock only as a trade into the new iPhone. Guy Adami would buy INTC on a dip.

Yahoo’s Boo-boo (YHOO)

Yahoo’s shares were hammered after it rejected Icahn’s suggestions for a new board. Macke says Yahoo is silly.

Cheaper by the Six-Pack: Anheuser-Busch (BUD), Boston Beer (SAM), Molson Coors (TAP), AmBev (ABV)

Bud jumped 7% on news Belgian Brewer InBev might make an offer of $65. Macke is concerned about anti-trust problems, while Seymour thinks InBev is sufficiently levered to European markets to avoid controversy. Najarian disagrees with the deal, and thinks the consumer is being hurt badly by unregulated mergers. The group said beer is a good summer play, and although raw costs are rising, relaxing in the back yard with a beer is still cheaper than going on vacation. Adami says SAM is oversold and should see a big upside. Macke likes Molson and Seymour prefers AmBev.

Greenlight puts the Red Light on Financials: Lehman Brothers (LEH), Moody’s (MCO), Financial Select SPDR (XLF)

David Einhorn, president of Greenlight Capital, says LEH has not written down enough bad mortgages and says the company should raise capital. Greenlight is short LEH. XLF tumbled 7% on suspicions raised by Einhorn. Najarian thinks unusual put options activity in LEH, four times more than normal, is similar to what he saw in Bear Stearns before the fire sale. Tim Seymour recommends caution and Macke says the whole group is scary, especially Moody’s admitted it had mispriced a large segment of the debt market.

Evergreen Solar (ESLR) CEO Richard Feldt

Feldt discussed growing demand for solar and how ESLR benefits from using less silicon than its competitors. Macke is worried about the sector and Adami says the move has already been made. Najarian would buy the stock on dips.

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Comments

[jakw]

RE: Greenlight or greenhorn, whatever, his comments as a short seller at the ripe old age of 30 somethings have been sued, challenged and defeated by hisgtory for at least ten years. That you give his comment 1/8" of space is BAAAaD Judgment. He is to be ignored like dog doo on the corner wshere he pontificates/

[Vegasjoe]

Jakel sounds a little too emotional to be spewing in a blog like this; perhaps he is long LEH and and has under water options? Take it to senior management, Jakel: they created this mirage in the desert!

[chagrinned1]

David Einhorn sure gets the media attention he does not deserve. He is an inverate short seller who truly believes he can talk down the prices of his short sale holdings and thereby profit. Must you folk be the tools he uses to do this???