Fast Money Recap: Bellwether Index Forecasts Cloudy Skies (6/25/09)

Recap of CNBC's Fast Money, Thursday June 25.

Bellwether Index Predicts More Misery: Monsanto (MON), Mosaic (MOS), Freeport (FCX), Goldman Sachs (GS), Morgan Stanley (MS), Copper

Technical analyst John Roque says more misery is ahead for the economy after taking a look at his bellwether index comprised of Monsanto, Mosaic, Freeport, Goldman Sachs and Morgan Stanley. The index is heavy on commodities because it is those stocks that drive a recovery. While there have been gains in these names, there has also been a steep drop off, especially in the case of Monsanto and Mosaic. This is a very bearish sign indicating a prolonged recession.

Bernanke and Treasuries Bring up the Dow

Stocks were up on Thursday, and Karen Finerman attributes this to the effective way Fed Chairman Ben Bernanke handled questions over the Bank of America acquisition of Merrill Lynch. Tim Seymour agreed that Bernanke had a "soothing" effect on the market. The successful sale of Treasuries also brought relief to The Street. Finerman said she would otherwise have expected a down day, given the employment number.

Pre Fever: Palm (PALM), Sprint (S)

Pete Najarian attributed the 13% jump in Palm's stock price to interest in the Pre Smartphone and a short squeeze (there was a 25% short position on Palm). Guy Adami is concerned that the company is unlikely to be profitable until 2011. Najarian thinks Palm will make a profit sooner than that, thanks to the Pre. CNBC Silicon Valley Bureau Chief Jim Goldman said Palm's margins are "off to the races" and there is no indication that the Sprint contract will end.

Hot Commodities: Fluor (FLR), URS (URS), Transocean (RIG), U.S. Steel (X), URS (URS)

Commodities were strong on Thursday as oil climbed above $70 and copper rose to the highest level in two months. Guy Adami likes U.S Steel with a stop at $34 and Tim Seymour's pick is URS, which is building a nuclear plant. Pete Najarian mentioned that Fluor is in the process of building a coal-fired plant in Texas. While oil service stocks are moving right now, Finerman urged caution in stocks like RIG because of volatility.

Looking Forward to Financials: Jeffries (JEF), JPMorgan Chase (JPM), XLF (XLF)

Adami says his trade in Jeffries may be good for only another couple of days. Finerman would keep an eye on JPMorgan's July 16th report, since it may be a catalyst for the sector. It is a good sign that the bank has raised capital and returned TARP money. Guy Adami agrees JPM is likely to go higher and Pete Najarian notes some positive options action in XLF.

Hertz not Feeling the Pain: Hertz (HTZ), Toyota (TM), Honda (HMC)

Hertz CEO Mark Frissora told CNBC, "We've seen continued improvement every single week for the last 10 weeks in the U.S rental car space.” Tim Seymour would buy Honda and Toyota on this news, because both are the main providers of cars to the rental car industry.

Red Hat (RHT), Green Backs

Linux software producer Red Hat was down on Thursday but has seen a 43% increase year over year. The company announced a 7% rise in profits and a 23% gain in profit margins due to cost-cutting measures. James Whitehurst , CEO of Red Hat and former CEO of Delta airlines commented, "I know how to put a lid on costs where you need to. I've done a lot of that in my life." Although the company is facing shorter contract durations and slow bookings growth, the CEO said these problems are temporary and the pipeline is strong. Whitehurst said overseas growth is propelling Red Hat.

Bed Bath and Beyond (BBBY), JC Penney (JCP), Home Depot (HD), Wal-Mart (WMT), Gap (GPS), XRT (XRT)

Bed Bath and Beyond and JC Penney both announced strong quarters, and Guy Adami is bullish on Home Depot and Gap on the news. However, Finerman thinks retail stocks have priced in an invisible recovery and would go long Wal-mart and short XLF.

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Comments

[GotDOCG:]

No REAL loan modification... no consumer spending... no one buys any car at any price, or anything that is not a basic necessity for survival.... back to school business will not happen...stores close...
space for rent brings in ZERO rent...commercial real estate takes a nose dive... and the "E: ticket ride continues...

Case Shiller and Moody's are clueless as to the real number of homes that have been, are and are about to be in trouble... try on
25 million for size...

It's the foreclosures stupid... it's the foreclosures...
a 50 year amortization... of a 5 year reset loan... 4% start of the EXISTING loan balance will... halt the bleeding at the banks... drop loan payments by 40-55%... stabilize the real estate market...infuse over $150 Billion back into the economy... AND put an end to the hemorrhage in real estate tax revenues...

But as the mortgage broker that Hillary Clinton "personally" blamed for the entire meltdown... what do I know...

Jun 26 10:04 AM