Fast Money Recap - Bullish on Biotech (1/5/09)

Recap of CNBC's Fast Money, Monday January 5.

Alcoa (AA), U.S. Steel (X), Target (TGT)

The S&P fell as investors took profit after last week’s rally. Verizon and AT&T fell on downgrades, and financials stumbled on predictions of 3% loan losses for commercial banks by 2010. Karen Finerman thinks the economy is gradually getting worse and Friday’s unemployment number will cut short the “mini-euphoria.” Jeff Macke notes growth stocks were “off to the races” and the S&P held technical support at 920. Guy Adami said Monday was not exactly tragic. Joe Terranova thinks investors are cautious, and Macke said it is a traders market, and would take gains in Alcoa and U.S. Steel. Adami says Target is a “trader’s dream” with its 50% correction.

Oil Prices rise 5%

Oil prices continued their upward climb, but Joe Terranova doesn’t think it is because of the Israeli incursion into Gaza, since the Mideast conflict has been going on for over 30 years. Terranova thinks the catalyst it the U.S.’ intention to buy oil on the open market, but he does not think oil will rise beyond $100 in 2010.

The Dollar Rallies

The dollar rose against the yen on confidence in President-Elect Obama’s stimulus package and tax cuts. However, Jeff Macke thinks the strong dollar is nothing more than an indication of how bad things are other places. Guy Adami notes gold’s pennant formation and adds he is bullish.

Autos on the Skids: Toyota (TM), Honda (HMC), Ford (F), GM (GM)

Auto sales dropped a third in what was the final month of the worst year for the U.S. auto industry in 15 years. Guy Adami commented people are keeping their cars for longer and Terranova added a new car is too risky a purchase for the average consumer. Macke added Toyota has had zero percent financing since October.

Is Steve Jobs Okay? Apple (AAPL)

The news of the non-appearance of CEO Steve Jobs will pretty much overshadow the MacWorld Conference, which very likely may have no new products to unveil says analyst Gene Munster of Piper Jaffray. However, the fact that Jobs tried to dispel rumors of pancreatic cancer with a statement that he is suffering from a hormonal imbalance easily corrected by nutrition is a positive sign that at least Apple is willing to face the issue it has been dodging for awhile. While some think the Nano iPhone may be released at the conference, Munster’s sources say it is more likely the product will appear later. He added the iMac and Mac Mini are currently the most talked-about products.

Will Tax Cuts Be Good for the Economy?

Obama’s proposed $310 billion tax cuts for the middle class and for businesses. Arthur Laffer, a supply-side economist, is skeptical and says tax rate reductions have to be in place for tax cuts to have teeth. Laffer also did not see a stimulus in the proposed tax rebates for previously-paid taxes. Laffer concluded that Obama’s stimulus package will ultimately create a larger tax burden on the populace.

Bullish on Biotech: Pfizer (PFE), Biogen (BIIB), Amylin (AMLN), OSI Pharma (OSIP), Vertex (VRTX), iShares NASDAQ Biotechnology Ind (IBB), Gilead (GILD), Onyx (ONXX), Myriad (MYGN)

2009 looks like it will be bullish for biotech, according to JP Morgan, and M&A activity will only generate more interest in the sector. Endo Pharmaceuticals has proposed buying Indevus for $370 billion, and there is speculation that Pfizer might search for a mate among Biogen, Amylin, OSI and Vertex. Karen Finerman thinks there will be significant M&A activity in biotech, but thinks the sector is too volatile to buy individual names. She prefers IBB. Fast Money guest Mike Huckman would watch Gilead, Onyx, Myriad and Orexigen ahead of JP Morgan’s healthcare conference on January 12. Of the group, Huckman emphasized Orexigen, which is expected to release results on its weight loss drug very soon.

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