STOCKS GIVE UP EARLY GAINS
The Dow ended modestly lower with investors worried about the outlook from a raft of companies such as General Motors and Goldman Sachs in this harsh economic environment. The bearish sentiment snuffed out early enthusiasm on word of a Chinese stimulus plan.
The financial sector led the way lower after Barclays Capital analysts said they expect Goldman Sachs to post a quarterly loss for the first time in its history due to steep equity market declines.
Dow component GM's shares, meanwhile, fell to 62-year lows after Deutsche Bank lowered its equity value on the automaker and a number of brokerages warned that GM and its rivals are burning through cash fast.
Strategy Session with the Fast Money traders.
It was a strange day and it didn’t make a lot of sense to me, says Tim Seymour.
The early rally was a screaming opportunity to sell, counters Jeff Macke. Good economies don’t need stimulus.
Circuit City declaring Chapter 11 bankruptcy didn't help, adds Guy Adami. And it's not necessarily a good thing for rival Best Buy, he adds. Circuit City’s customers aren’t running over to their rival and buying flatscreen TV’s.
I think it’s interesting that China is calling it a stimulus when the rest of the world is calling similar initiatives a bailout, adds Pete Najarian. Also the moves on Tuesday suggest that commodities could have more downside.
CHINA FAILS TO STIMULATE ANYTHING TODAY
To the surprise of investors around the world, China joined moves by governments around the world and introduced a stimulus package to fuel the nation’s economy.
The plan calls for higher spending on roads, airports and other infrastructure, tax deductions for exporters and more aid to the poor and farmers. Spending on health and education will increase, as well as on environmental protection and high technology.
I’ve got my eye on the infrastructure plays because of this news. Look at Cemex and Lafarge, adds Tim Seymour. The stocks are beaten up and they could benefit from the infrastructure spending.
If you want to play China, check out Sohu counsels Pete Najarian. Also put Sina and NetEase on your radar. Their numbers could be staggering.
How will energy markets react?
Don’t play oil directly. Crude is busted and it’s not going to be un-busted for a while, exclaims Jeff Macke.
DEUTSCHE BANK ANALYST SAYS GM GOING TO ZERO
General Motors shares plunged Monday after an analyst forecast their price would fall to zero, saying that even if there is a government bailout of the auto giant, shareholders would not benefit.
"We are lowering our target on GM equity to zero dollars," the Deutsche Bank report said.
"Even if GM succeeds in averting a bankruptcy, we believe that the company's future path is likely to be bankruptcy-like," it said.
Guy Adami reminds that in May Barron’s said the stock would be trading near $30 in a year’s time. He wants them to print an apology.
I vote that we socialize the company, exclaims Jeff Macke. Take them over!
Cars aren’t going away, adds Adami. But if you want to play the space go down stream to BorgWarner.
I think Toyota is the next company to keep an eye on, adds Najarian. I think they have a lot of room to the downside.
GOLDMAN LEADS FINANCIALS LOWER
Shares of Goldman Sachs fell sharply Monday morning as another analyst cut his fiscal fourth-quarter forecast amid the severe downturn in the credit markets in recent months.
Barclays Capital analyst Roger Freemen now projects Goldman Sachs will lose $2.50 per share during its fiscal fourth quarter, which ends Nov. 30. Freeman previously estimated Goldman Sachs would earn $2.71 per share during the quarter.
Goldman appears to be poised to fall below $69.99, its closing price on the first day it was a publicly traded company, reminds Melissa Lee who’s filling in for Dylan Ratigan.
They’ve got problems, says Pete Najarian. What’s in the closet? And Morgan Stanley stock seems to be following in lock step. The question is, what is the proper P/E?
I call them the Sharon Stone of finance because they’re just not aging well, adds Jeff Macke.
There’s a lot of unknowns, adds Tim Seymour. And the market doesn’t like unknowns.
BATTLE THE BEAR WITH BIG MACS?
McDonald's Corp helped the Dow fare better than the S&P 500 and Nasdaq. The world's largest hamburger chain said global sales at its fast-food restaurants open at least 13 months rose 8.2 percent in October, topping analysts' targets.
The trade down effect is in tact, says Jeff Macke. It’s one of the few consumers names along with Wal-Mart that I’m long.
I think it’s an Asia play, adds Guy Adami. I like the stock.
24% of their sales comes from the emerging world, adds Tim Seymour. And I like YUM Brands in the space.
AFTER HOURS ACTION: STARBUCKS
Fewer customers and venti-sized costs for closing poorly performing stores led to lower sales and profit in the fourth quarter at Starbucks the company said Monday.
Seattle-based Starbucks said profit fell 97 percent to $5.4 million, or a penny a share, from $158.5 million, or 21 cents per share, a year earlier. The coffee retailer earned 10 cents per share when the costs from closing about 600 stores in the U.S. and 61 locations in Australia are excluded.
This company doesn’t seem to be able to do anything right, says Pete Najarian. And after hours the stock is showing it.
OBAMA CHECKS OUT THE OVAL OFFICE
President-elect Barack Obama visited the White House on Monday for his first post-election meeting with President George W. Bush, a strikingly symbolic moment in the transition of power.
I hope Obama hires Tim Geithner as the new Treasury Secretary, says Guy Adami. Currently Geithner is the head of the New York Fed.
Terranova Is Co-Portfolio Manager Of The Virtus Diversifier PHOLIO; Virtus Diversifier PHOLIO Owns (IGE), (DBC), (DBV) Terranova Is Chief Alternatives Strategist Of Virtus Investment Partners, Ltd.; Virtus Investment Partners Owns More Than 1% Of (ABD), (ARE), (BIG), (CLB), (DLR), (EPR), (EXR), (MAC), (SLB), (SKT), (UA), (IGE), (DBC), (DBV); Virtus Investment Partners Owns More Than 1% Of Seagate Tax Refund Rights; Virtus Investment Partners Owns More Than 1% Of Shares Of Essex Property Trust Inc.; Virtus Investment Partners Owns More Than 1% Of Shares Of Corporate Office Properties Trust SBI MD
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Trader disclosure: On Nov.10, 2008, the following stocks and commodities mentioned or intended to be mentioned on CNBC’s Fast Money were owned by the Fast Money traders; Adami Owns (AGU), (BTU), (C), (GS), (INTC), (MSFT), (NUE); Macke Owns (SDS), (MCD), (WMT), (BNI), (UUP), (MSFT); Macke Is Short (BBY); Najarian Owns (BBY) Put Spread; Najarian Owns (SBUX) Puts; Najarian Owns (CHK) Call Spread; Seymour Owns (AAPL), (BAC), (F), (MER), (BX); Seygem Asset Management Owns (PTR)
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Terranova Is Co-Portfolio Manager Of The Virtus Diversifier PHOLIO; Virtus Diversifier PHOLIO Owns (IGE), (DBC), (DBV)
Terranova Is Chief Alternatives Strategist Of Virtus Investment Partners, Ltd.; Virtus Investment Partners Owns More Than 1% Of (ABD), (ARE), (BIG), (CLB), (DLR), (EPR), (EXR), (MAC), (SLB), (SKT), (UA), (IGE), (DBC), (DBV); Virtus Investment Partners Owns More Than 1% Of Seagate Tax Refund Rights; Virtus Investment Partners Owns More Than 1% Of Shares Of Essex Property Trust Inc.; Virtus Investment Partners Owns More Than 1% Of Shares Of Corporate Office Properties Trust SBI MD