Pros: Despite Massive Plane Order, Boeing Not a Buy
On Wednesday pro traders were closely watching the action in Boeing after American Airlines placed what it calls the biggest order in airline history and committed to the purchase of at least 460 planes over the next 5 years.
The new aircraft are more fuel efficient and part of American's massive plan to overhaul their fleet.
However, American, which had been a Boeing client, is splitting the massive order. Boeing will make 200 planes but 260 will be made by rival Airbus.
In a live interview on CNBC, Boeing CEO of commercial aviation Jim Albaugh explains that neither Boeing nor Airbus had the capacity to deliver all the planes that American wanted. “It was too large for any one manufacturer. Would we have liked to have it all? Of course!”
On Wall Street pro traders were trying to decipher what these developments mean for Boeing, the industry and the market in general.
Looking at the big picture the Fast gang thinks this may be the beginning of a massive reorder phase as all the airlines make an investment in 'planes of the future.'
However, that doesn't make them bullish Boeing - at least not in the near-term. Zach Karabell, especially, would not establish a long position in the wake of these developments.
“Boeing has a huge defensive component,” he says, “and (with budget cuts) that part of the business will be very rocky. Since you can’t just buy the commercial airplane side of their business, you have to buy the whole thing – and I wouldn’t!”
Trader Brian Kelly is also cautious on Boeing, simply because American had been a Boeing customer exclusively, but this order opens the door to an increased relationship with Airbus. “It’s really a win for Airbus because it’s not just Boeing anymore.”
Kelly thinks the play is probably downstream. He likes United Technologies which sold off after not winning a bid to make the engine for the new planes. “But they said they weren’t counting on winning the contract. I think the sell-off may be an opportunity.”
GAMING THE APPLE ECOSYSTEM
Elsewhere in the market, investors were chattering about how Apple , again, wowed the crowds with results that blew past even the Street's most optimistic expectations.
How should you profit from Apple’s enormous strength?
Although many traders are looking at downstream plays (and we’ll get to that in a minute) the desk largely agrees that the best way to play Apple -- is long Apple.
However, if you want other ideas Brian Kelly suggests long Qualcomm , whose chips are in Apple prodcts as well as chip giant Intel , which is making inroads into the mobile market broadly. And, he also likes VMWare and EMC as bets that tablets such as the iPad, generate a greater demand for virtual storage.
Zach Karabell thinks Broadcom is interesting, largely because it’s underperformed its peers. “It’s a higher beta play,” he says.
Jon Najarian suggests American Tower, Crown Castle or TESSCO, plays on the back haul of data.
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Trader disclosure: On July 20, 2011, the following stocks and commodities mentioned or intended to be mentioned on CNBC’s "Fast Money" were owned by the "Fast Money" traders; Cortes owns (GS); Cortes owns (MS); Cortes owns (EXC); Cortes owns (SVU); Cortes owns (PM); Cortes owns (NWS); Cortes is short Silver; Cortes is short (EUR); Cortes is short Copper; Cortes is short (LULU); Cortes is short (LVS); Cortes is short (IYT);
Karabell owns (AAPL); Karabell owns (GOOG); Karabell owns (GS)
For Zach Karabell
Rivertwice Capital & Karabell own (QCOM)
Rivertwice Capital & Karabell own (BRCM)
Rivertwice Capital is short (XLF)
Rivertwice Capital is short (SPY)
Rivertwice Capital is short (QQQ)
For Dennis Gartman
Funds Managed By Dennis Gartman and Dennis Gartman own (LNG)
Funds Managed By Dennis Gartman and Dennis Gartman own (CF)
Funds Managed By Dennis Gartman and Dennis Gartman are short the S&P
Funds Managed By Dennis Gartman and Dennis Gartman own the Australian Dollar
Funds Managed By Dennis Gartman and Dennis Gartman are short the British Pound
Funds Managed By Dennis Gartman are short (EUR)
Dennis Gartman owns Brent
Dennis Gartman owns (WTI)
For Brian Kelly
Accounts Managed By Brian Kelly Capital Own (TOL) calls
Accounts Managed By Brian Kelly Capital Own (MCP) calls
Accounts Managed By Brian Kelly Capital Own (INTC)
Accounts Managed By Brian Kelly Capital Own (QCOM)
Accounts Managed By Brian Kelly Capital Own (GDXJ)
Accounts Managed By Brian Kelly Capital Own (SLV)
For Mark Mahaney
Citigroup Global Markets Inc. or its affiliates beneficially owns 1% or more of any class of common equity securities of eBay Inc, Yahoo! Inc, Netflix Inc, WebMD Corp. This position reflects information available as of the prior business day.
CNBC.com with wires.