FAST MONEY: TRADERS SOUND A LITTLE SCARED OF RISK

The RECAP:

The traders all seem a little scared of the market as they see that the treasury market is showing that the problems with credit is not being solved by the recent Fed move and most of them suggested safe names in railroad and tech. There wasn’t much in suggestions to buy and they noted that volume was light today. Volatility remained high and that was a bad sign. A good indicator for the economy is the reports and guidance for all the retailers this week.

WORD on the STREET:

The market moved higher on Bernanke-Dodd meeting. Najarian noted that railroad stocks moved. Union Pacific (UNP) and Burlington Norfolk (BNI) were noted. Stacey Gilbert, “The Hammer” said that everyone is tired but Guy Adami says the market looks encouraging. Eric Bolling is gone? I’m not sure. Anyone has news?

Najarian says financials are not on a bottom yet. Guy Adami says Berkshire Hathaway (BRKA) is at a 52 week high and you should buy what Buffet is buying like Bank of America (BAC). Macke again was skeptical of the market.

Chip trades were mentioned. Stacey Gilbert says tech is the safe haven as well as railroads.

Capital One (COF) closed their Alt-A mortgage division, GreenPoint Mortgage and Guy Adami says that’s it’s going to be a problem for all of the financial market but everything is priced in. While Najarian and Gilbert says that the unknown is becoming a huge issue. Najarian and Gilbert are options specialist.

Lowe’s (LOW) moved up on earnings and guided down but does it mean it’s better; Jeff Macke says no! It’s just bouncing off a low and according to Dylan Ratigan “because they didn’t suck that bad.”

Freeport McMoran (FCX): Gilbert and Adami says it’s a buy here! While Macke says no!

Fluor (FLR) – moves up on 2B Kuwait contract and some more contracts. Adami says own it!

Medtronic (MDT) earnings tomorrow? Buy or no? Najarian expects a good report but no options movement.
GameStop (GME) earnings tomorrow? Gilbert says there is options activity for a 10 percent move expect.
PetroChina (PTR) – Dropped 16% and Adami says it’s a buy because Buffet owns it too.
Goldman Sachs (GS) and Mastercard (MA) and Alcoa (AA) – there were lots of options activity saying that there is upside
Nasdaq (NDAQ) they are selling their share of London Stock Exchange and going to buy back stock and focus on the OMX

Treasury Yields had their biggest moves: Flight to quality suggest that according to Gilbert that the short term market says that everyone is scared. Macke says that financials are in trouble and there is a panic. Adami suggested you need to pick good companies like Juniper (JNPR) and Flour (FLR) while Najarian agrees that you have to be selective to dividend like railroads and pharma.

Retail Report: The biggest scare would be if the consumer stopped spending. Target is reporting tomorrow but Jeff Macke, the retail report says that it’s not about the numbers but it’s about the guidance. He says Target (TGT) is the one to watch. Zumiez (ZUMZ), Dicks Sporting (DKS), Gymboree (GYMB) and other specialty stores are doing well but should show how strong retailers will be.

Gadget Trade: Research in Motion (RIMM), Garmin (GRMN) and Palm (PALM) all moved up. Najarian says that RIMM has momentum and Nokia (NOK) is good as well. Macke says Palm is dead. Everyone said not to buy it.

POPS: First Solar (FSLR) – Najarian says it’s a buy , Dendreon (DNDN) – Najarian says it’s not a buy yet still risky, Smurfit-Stone (SSCC) – Adami says its hard for him to own it yet even though it recovered. Baidu.com (BIDU) – Najarian says it’s good. Tribune (TRB) moves up on closing arbitrage.

DROPS: Lehaman Bros (LEH) – Adami says there are problems don’t buy it. DirectTV (DTV) – Mack says still a sell, Moodys (MC) – Gilbert says too risky because they are related to subprime, Nordstrom (JWN) – Macke says high end retailers are weak too.

FINAL TRADES:

Najarian Says buy ATML on Options
Guy Adami and Stacey Gilbert says buy FCX
Macke says sell ANF

MAD MONEY: CRAMER FIGHTS BACK AND TALKS RIVERBED AND EBAY

Jim Cramer came back Monday to the Barron’s article trashing him and his record but he was glad to see so much support from his fans and his audience. He was gracious enough to thank them and reiterate what he’s all about which is making everyone money.

REGIONAL BANK TRADE:

As his first sector trade he recommended regional banks because they should make more money as the spread grows larger when the Fed is expected to cut rates later this year. People are expect a few now so it will only benefit these banks. Cramer’s pick was KBW Regional Banking ETF (KBW). KBW has more than 50 holdings, and its five-year earnings growth is more than 9.4%.

Cramer also suggested that National City (NCC) and Comerica (CMA) were good regional banks and they were potential takeovers of regional banks.

“If you can’t get a good price, wait until it settles down,” cautioned Cramer about a buy-in to KBW. We’re buying a sector here, not best of breed,” he said, adding that this may be the “best way to play the upcoming cycle of the Fed.”

EBAY TRADE:

“I see a bargain in tech and that bargain is eBay (EBAY).” Cramer did stress that it’s “not a buy right now,” because it is trading at 21 times next year’s estimated growth.

But on the positive, Ebay has a “pristine balance sheet” and more than $3.6 billion cash on hand. In their traditional auction business, it has more than 100 million buyers and sellers worldwide while it’s slowing, they are still able to press for organic growth. One way is selling ads on their own site which generates tons of views that is being converted to ad revenue. It’s growing at 96% year over year. But they have two extreme fast growing parts of their business which is Paypal and Skype. Skype is how the world talks and it is the most popular communication tool in the business and personal world. Whether doing business in India, China, US or Europe it is the tool. As Wifi and WiMax grows, Skype will grow and advertising will be a great avenue for Ebay. Then the next global name is Paypal which is the most dominant online payment system in the world. Even the great Google Checkout hasn’t been able to make a dent. Cramer called it the online Mastercard (MA). In addition they own 25% of Craigslist which is the dominant classified online ad site in the world. I myself must admit that it’s amazing. I sold my car, found my apartment, and got my fridge all from Craigslist.

Cramer said to get Ebay below $34 which it closed just below. He reiterated that like Google (GOOG), Garmin (GRMN) and Research In Motion (RIMM), eBay is a “long-term investment play” while also a “digitalization of commerce play.”

UNITED ONLINE PICK

As a content and a traditional dial up play, Cramer spotlighted United Online (UNTD) It pays a dividend of 6% because of it’s dependable dial up revenue because amazingly dial up is still 20% of the U.S. online adult population through Netzero and Juno. In terms of content it owns, Mypoints.com and Classmates.com which the later is being spun off as a separate company as an IPO. Classmates is a social network as well as a subscription based service. Although it has a lot of cash, I have some doubts because both businesses are in the decline with dial up and classmates.com. Cramer recommended it under $14.

RIVERBED TECHNOLOGY PICK:

Riverbed Technology (RVBD) CEO, Jerry Kennelly was on the show to explain what Riverbed does which his all businesses to be able to expand their access speed connection but their new product Steelhead Mobile product extends it to laptop technology. Predicting that there will be more than 543.1 million mobile office workers by 2009, Cramer called it a buy at under $40.

LIGHTNING ROUND:

Cramer was bullish on Under Armour (UA), Crocs (CROX), Texas Instruments (TXN), Analog Devices (ADI), Intel (INTC), Consolidated Edison (ED), Deere (DE), Agrium (AGU), Monsanto (MON), Seaspan (SSW), Eagle Bulk Shipping (EGLE), General Maritime (GMR) Integrys Energy (TEG), NYSE Euronext (NYX) and Air Products & Chemical (APD).

Cramer was bearish on Atmel (ATML), Hansen Natural (HANS), Terra Nitrogen (TNH), American Electric (AEP), Akamai (AKAM) and GrafTech (GTI).

LIGHTNING ROUND HIGHLIGHTS:

Under Armour (UA): The 37% short interest in the stock is “ridiculous,” said Cramer. “This back-to-school season is going to be awesome. I know the stock is up a lot … but you know what? I am sticking by it. I think that this stock — and by the way, Crocs (CROX) — are two stocks that will go higher.”

I’ve got terrific stocks such as Texas Instruments (TXN). … I’d rather see you in Texas. I’d rather see you in, yes, Analog Devices (ADI), but more important, I would rather see you in Intel (INTC).”

Air Products & Chemical (APD): This stock was one of Cramer’s $80-to-$120 plays. “That stock is beginning to make its climb right back. I think it’s absolutely terrific. I absolutely think that Air Products is ready to go to par, or $100. I want to stick with Air Products.”

BARRONS VS CRAMER

On the recent edition of Barron’s which is published by Dow Jones which is now owned by Mr. Rupert Murdoch who happens to be creating a rival station to the beloved CNBC that we all love and watch just wrote a report trashing him because his returns are lagging the market. By their measurements, over the least, Cramer’s stocks rose 12 percent, compared with a 22 percent rise in the Dow Jones industrial average and a 16 percent rise in the Standard & Poor’s 500 index. This is obviously a staggering percentage to be trailing the market.

If we look into the report a little more there are some points to be refuted. One while Cramer makes a recommendation, he does not tell his readers to just jump into the stock which usually jumps after his recommendation. Usually he recommends buying them in a week or so and using limits. If you were to buy every stock after the recommendations, your returns would trail the market because you’re buying it at a definite high. Also his show is not about picking stocks although it may seem like it, it’s meant to be educational and supportive of his books which provide in more details of how to become a better investor. In a light of their criticism, Barron’s says “There is no doubt that Cramer is trying diligently to make you money. His advice is generally smart, his knowledge of individual stocks amazingly detailed,” and that is the point about Cramer, he sincerely wants to make his audience money and when you read his autobiography, “Confessions of A Street Addict”, you’ll see how it is.

But throughout his career, Cramer has been criticized and ostracized yet he lives on as a Robin Hood in a way; attempting to make the unfavorable world of investing a little more favorable to the average Joe or Jane. He may be the spark to many people who would otherwise not have a light.

MAD MONEY: CRAMER BACK TO BULL MODE

In one single day, Cramer changed his tune because now he’s loving it apparently. How a simple discount rate cute will fuel the economy and credit issues. I thought this problem had to do with bad loans and will throwing more money at it solve it? Cramer did agree that this was more a change in “in psychology, not fundamentals.” But this change Cramer said investors are on the offensive now and they should buy! Ultimately Cramer believes that analysts will be urging investors to “buy, buy, buy” after the weekend.

While there wasn’t a huge rally, Cramer said that this move averted a huge drop in the market possibily over 1000 points from Friday to Monday because overnight, the futures indicated the market to be down almost 150 points easily. But the Fed came in and changed the dynamics of everything. Although the mental attitude changed, Cramer said to “forget that the market was up today,” because hedge funds are still in “sell mode…pay off the investor masses” who were redemming their money from funds. There was a large outflow however statistically, retailer investors are a horrible indicator of the market but if there are enough outflows some funds will fall. But most of the time, you should take a contrarian view.

Yet Cramer warns that the 5.4% plunge for Japan’s Nikkei 225 Friday could happen here as well “most of the bad stuff is behind us.” Cramer sounded quite optimistic though.

Cramer viewed the Fed cut was the equivalent of an injection of nearly $120 billion in liquidity into the banking system as a move that saved Thornburg Mortgage (TMA) and Countrywide Financial (CFC) both were “within days of failing” but now look like takeover targets! What a turn of events! Countrywide even had a run at their banking deposits yesterday after news of them tapping credit which was definitely not a good since. They currently fund 70% of their loans with their funds but hope to go down to 100% by September which means cutting loan production. In addition he recommened Goldman Sachs (GS) and Lehman Brothers Holdings (LEH) – He owns Goldman for his charitable trust, Action Alerts PLUS.

OTHER PICKS:
Sears Holding (SHLD), which he owns for his charitable trust because it has a lot of cash on hand. Other picks were Bear Stearns (BSC), Downey Financial (DSL) and Washington Mutual (WM)

HURRICANE PICKS: Hurricane Dean is predicted to hit the Gult:
He picked Centex (CTX), as it could see a “short squeeze” and added Schlumberger (SLB) and Halliburton (HAL), because oil and gas are “total smoke shows.”

Once again, Cramer was pitching NYSE Euronext (NYX), which he owns for his charitable trust saying that valuation is low and their volume because of volatility is way too high.

Cramer gave all these recommendations saying that the stocks are ones that you can “buy high and sell higher.” but suggested to wait for the stocks to come down a bit from it’s spike from the rate hike.

LIGHTNING ROUND:

Honeywell (HON): CEO Dave Cote “is just the master of Honeywell. He’s buying back stock hand over fist. He’s doing a great job. … Honeywell is absolutely a TripleBuy.”

UBS (UBS): “Has been spindled, mutilated, crushed, whipped, and you know what? It’s a great franchise, and it’s going to come back. … The stock is way, way off its 52-week high. … Let’s pull the trigger if we can around here and buy some UBS. … It’s going to start rallying.”

Cummins (CMI): “I like Cummins. … It has now pulled back. … Caterpillar (CAT) is now down … 16 straight points. I think Caterpillar is a better buy now than Cummins.” Cramer owns Caterpillar for his charitable trust.

US Bancorp (USB): “I think Warren Buffet has just bought a ton of USB. Very little exposure to the mortgage market. … US Bankcorp is fine with me. I would stick with US Bancorp.”

Ingersoll-Rand (IR): “Warren Buffet has been buying this stock almost as aggressively as the company has itself. … The buyback is one of the most aggressive on the New York Stock Exchange. …. I think Ingersoll … is a buy.”

Ametek (AME): “Precision instruments is a good business. … I like Ametek. … Lenny Dykstra … thinks that this stock is the next one to move. … If he likes AME, I’ve gotta be on board, too.”

FED CUTS DISCOUNT RATE: JUST A BANDAID?

So after intense pressure to cut the Fed rate of 5.25 lower, they cut the discount rate which is the rate in which the Federal reserve lends to banks from 6.25 to 5.75 which allows banks to have more access to cash. Liquidity was the problem in the market because of the credit crunch because no one was willing to lend money and borrowing money was too expensive. Now this flushes the market with a lot more liquidity so that the mortgage companies who all were at their very last ends with funding would survive but for how long.

The federal funds rate which is tied to the prime rate which affects consumers and businesses was not cut. Everyone is expecting soon especially with consumer sentiment going down. The temporary bandaid will get us through this period but we have to keep in mind how the full brunt of the housing downturn will affect consumers. “This is fine for temporary relief, but I think they will still have to cut the funds rate because the markets will still be turbulent,” said David Wyss, chief economist at Standard & Poor’s in New York. The main problem is still the housing problem which is flowing into prime mortgages which is merely the beginning because who is going to buy all these mortgages now that they know they are going down. The hedge funds will step in when they see more blood. The market was down really hard before market but with the announcement, the Dow shot up 300 points but we’ll see if it can hold it which will provide the large psychological boost because if it doesn’t, if the Fed can’t save us who can?