The Dow bounced mid-day Thursday after word of a Lehman upgrade hit the Street and CNBC brought you the live interview with analyst Dick Bove in a First on Fast.
LEHMAN UPGRADED BY BOVE
At midday analyst Dick Bove upgraded Lehman to a “Buy” saying the company could be the target of a hostile takeover.
In an exclusive interview on Fast Money Bove said, “If you take a look at Neuberger Bergman (the asset management arm of Lehman that’s likely up for sale) and you make the assumption that at its low point it’s worth $9 billion and you subtract that from the market cap of Lehman, it means the rest of the company is worth less than zero. That suggests you get all the rest of Lehman for nothing.”
Dylan Ratigan questions that theory. “But all of Lehman for nothing could include a vast liability on the mortgage side?”
“But let’s assume the buyer is a bank," replies Bove. "There’s no need for them to sell these assets on a fire sale basis. They can hold onto them until they mature. The vast majority of the assets are cash flowing. So if you can sell Neuberger Bergman for more than you pay for all of Lehman you would get Lehman for nothing.”
They just kick the snot out of Lehman every day the market is open, says Jeff Macke. But more important Goldman Sachs is getting clobbered, too.
Meanwhile, heightened expectations for a government bailout of U.S. home-funding giants Fannie Mae and Freddie Mac drove their debt prices higher on Thursday as investors bet the securities will be guaranteed by the U.S. government even if shareholders are wiped out.
Shares in the government-sponsored enterprises, which own or guarantee almost half of all outstanding U.S. mortgages, erased steep early losses to post modest gains by midday, but
remain near their lowest levels in nearly two decades.
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What do you think? Answer the Charles Schwab Question of the Day.
CRUDE OIL SURGING
U.S. front-month crude jumped mid-day Thursday as the dollar pulled back sharply from this week's eight-month highs versus a basket of currencies. The jump in oil prices fanned spending concerns and added to worries about inflationary pressures.
Some investors says it’s Russia driving price of crude but I think the market got too short, says Joe Terranova.
Don’t chase counter-trend rallies, exclaims Jeff Macke. It’s going to run right into resistance at $100. So stop berating me!
If you’re holding Schlumberger I think you should take profits, counsels Guy Adami. It’s had quite a move over the last few days.
I have to tell you I would be taking money off the table in oil, adds Jon Najarian. However I’m short the Consumer Distretionary SPDR because if the crude rally holds, it’s bad for consumer discretionary.
U.S. VS. JAPAN
The dollar tumbled, pressured by persistent worries over the U.S. financial sector, which also sparked a broad flight from risky trades and pushed the Japanese yen sharply higher.
The currencies are a great way to take the temperature of the market, explains Joe Terranova. I think the spike in the yen says there’s strong conviction that the fear in the financials is real.
TOPPING THE TAPE: COMMODITY STOCKS
The coal names as well as the metal producer were all higher mid-day Thursday due in part to a UBS upgrade of Massey Energy.
The stock that I like most on the long-side is Freeport McMoRan, says Guy Adami. It got way too cheap.
I’m long US Steel, says Joe Terranova. The stock is not performing as I think it should and I’m considering getting out.
I’d put money into National-Oilwell Varco, adds Joe Terranova.
Keep your eye on Joy Global, adds Jon Najarian. I’m seeing strong call buying activity in this stock.
RESEARCH IN MOTION'S NEW 'BOLD'
Research In Motion premiered it’s new Blackberry Bold smartphone in Canada; although analysts find it impressive they say its is not a game changer.
I think it is a game changer, counters Jon Najarian. RIMM popped above the 100-day moving average. In the past when that has happened infront of a product roll out, 8 of the 9 times the stock rallied 49% over the next 50 trading days.
> RIMM’s Bold Move------------------------
IN THE ZONE: WHAT'S THE FAST MONEY TRADING NOW?
Could beaten down metal stocks be a buy now? Susquehanna's Stacey Gilbert has noticed bullish option activity on metal stocks.
She tells the traders that options action in copper names appears to be quite bullish with calls in Southern Copper notably active on Thursday. However, she adds that her favorite company in the space is Freeport-McMoRan because “calls almost always outpace the puts.”
I’m also playing copper through FCX, adds Joe Terranova. My trade is long copper and short gold on the belief that the dollar will continue to get stronger.
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Trader disclosure: On Aug 20, 2008, the following stocks and commodities mentioned or intended to be mentioned on CNBC’s Fast Money were owned by the Fast Money traders; Macke Owns (MSFT); Macke Is Short (TM); Adami Owns (C), (GS), (MSFT), (INTC), (NUE), (AGU), (BTU); Jon Najarian Owns (C); Jon Najarian Owns (AAPL) And (AAPL) Calls; Jon Najarian Has Long (RMBS) Call Positions; Jon Najarian Owns (ACI) Calls, (JOYG) Calls, (RIMM) Calls, (XLY) Puts; Terranova Owns (NOV), (POT), (RIMM), (EOG), (KOL), (FCX), (GS), (AAPL), (INTC), (YHOO), (BNI), (X), (SA), (VLO), (SU), (XLF), (CME), (GOOG); Terranova Owns (AIG) Puts; Terranova Is Short Crude Oil Time Spread (Short Dec. 2009, Long Dec. 2012); Terranova Is Long Crude Oil Futures (Dec. 2012)
Terranova Is Chief Alternatives Strategist Of Phoenix Investment Partners, Ltd.; Phoenix Investment Partners Owns More Than 1% Of (ABD), (ARE), (BRE), (CNTY), (CLB), (OFC), (DLR), (ESS), (EXR), (FL), (IAT), (IGE), (LNET), (MAC), (OIIM), (PSPT), (DBC), (DBV), (SLB), (SKT), (BLV)
Terranova Is Co-Portfolio Manager Of The Phoenix Diversifier PHOLIO; Phoenix Diversifier PHOLIO Owns (IGE), (DBC), (DBV)
Gilbert Owns (FCX) November Calls And (FCX) November Call Spreads
Susquehanna Capital Group Is A Market Maker In (PCU), (FCX), (RIO)