STOCKS FALL ON RECESSION FEARS
The headline: Fed MinutesReveal Concern About ‘Prolonged and Severe’ Downturn
The action Tuesday seemed dull but Pete Najarian felt upbeat that the intraday lows didn’t hold. The rebound was led by the usual suspects of late: agriculture chemicals, oil and natural gas. Commodities are driving this market, he said.
On the news that Dell is said to be considering taking an investment from Dubai, the traders were skeptical. Dubai has a sketchy history, Guy Adami said, noting its involvement with MGM Mirage (MGM) and Citigroup (C). He wouldn’t buy Dell off this catalyst.
Adami also opined on the late-breaking news that Procter & Gamble is raising its dividend. While clearly a good sign for the company, he would rather be in Church & Dwight(CHD) or Johnson & Johnson (JNJ), which has better valuation than PG.
INTEL DRAGS DOWN TECH
The headline:Intel Drags on Tech Sector After AMD Sales Warning
The chip names move down much faster than they move up, Pete Najarian said. That said, he would consider buying Hewlett-Packard (HPQ) off the story that the PC giant is entering the education space with a compact laptop for children. This move is clearly aimed at Apple (AAPL), Najarian said, which has been able to successfully penetrate the education computer market. The tide could turn, though, if the economy worsens and schools have to cut back since HPQ’s machine will be substantially cheaper than Apple’s.
BREAKING: AMERICAN CANCELS MORE FLIGHTS
The headline: American Airlines to Cancel Hundreds More Flights to Inspect MD-80 Fleet
Pete Najarian put the positive spin on this, going so far as to say that he actually “loves” the airline space. With competition dwindling through M&A and bankruptcies, AMR , United and the other big carriers have a chance to grab pricing power, he said.
BREAKING: UPS WARNS
The headline: UPS Lowers Q1 Guidance, Citing Deteriorating Economic Conditions
This does not bode well for FedEx (FDX) and also invalidates the “good news” that online retail is doing well, Jeff Macke said. UPS wouldn’t be warning if it was getting all that shipping business from online stores.
Or does it matter? Pete Najarian thinks it’s possible that UPS is seeing an increase in volume but it can’t compete with the pain of record oil prices.
THE REIT STUFF
The headline:Dow Jones Wilshire REIT ETF (RWR) Curiously Up 13% Over Past Month
Guy Adami is bewildered as to why it would be up but said wouldn’t buy into REITs right now.
If Pete Najarian had to own one, it would be Sam Zell’s Equity Residential (EQR), which he called the best of the lot.
“No thank you,” Karen Finerman said.
OPTIONS ACTION: PLANES & POULTRY
The headline:Boeing Expected to Report Further Delays When It Updates 787 Dreamliner Status Wednesday; Tyson , Largest U.S. Meat Processor, Down Ahead of Earnings
Watch Kaiser Aluminum to move in either direction off of any Dreamliner news, Karen Finerman said. It’s actually a small part of Kaiser’s business, so she would buy it on a Boeing-related pullback. After all, Alcoa’s (AA) aerospace business is one of the few components of that company that’s actually doing well.
On Tyson, Pete Najarian noted that the stock is completely leveraged to the price of wheat and corn, which are both up significantly in the last few months. The stock is sitting at its 200-day moving average – if it can’t break through, that could be a big problem for the company.
TREND OF THE DAY: ONLINE RETAIL
The headline: Online Retail Spending to Jump 17% This Year to $204B Despite Sluggish Economy: Forrester Research
This is spin, according to Jeff Macke. It’s not bullish for the economy because it is not great compared to last year’s figure or in the context of how brick-and-mortar retailers are doing.
TAKE YOUR POSITION: THURSDAY’S SALES DATA
The headline:Wal-Mart (WMT), Retailers to Report March Sales Figures Thursday
Expect some warnings, Jeff Macke said. Buy dips if you can get them, but move along if you can’t.
ISLAND IN THE SUN?
The headline: NYC Mayor Bloomberg Seeking to Install Solar Panels on All City-Owned Buildings
The trade off this is MEMC Electronics , as far as Guy Adami is concerned. The company guided lower but he thinks the stock has already put in a bottom.
Jeff Macke’s solar play remains Cypress Semi .
GATTACA: HOME VERSION
The headline: With New Genetic Test, Just Mail Your Saliva and Discover If You’re Prone to Any of 18 Diseases Such as Cancer or Heart Attacks; Cost of Test is Between $2,500 and $3000.
While no one on the desk would consider paying for such a test, Pete Najarian offered Myriad Genetics (MYGN) as a trade. The company is involved in gene testing and preventive medicine, including a drug for Alzheimer’s disease.