Recap of CNBC's Fast Money, Tuesday May 20.
Gas High, Consumer Low: AIG (NYSE:AIG), Trinity Industries (NYSE:TRN), Apple (OTC:APPL), Research in Motion (RIMM), Google (NASDAQ:GOOG), Trinity (TRN)
Rising oil and the concerned consumer are bringing down stocks, and Joe Terranova thinks the combination will spell trouble as the S&P dipped below its 200-day moving average. Jeff Macke thinks the market needed an excuse to sell and agrees with T. Boone Pickens that oil is going higher. Najarian blamed AIG for some of Tuesday’s problems and agrees that high gas prices will mean a difficult summer. Terranova and the group agreed the market will trade sideways. Najarian praised Tuesday’s survivors: Apple RIMM and GOOG. Adami likes Trinity.
Not on Speculation: Oil Services HOLDRs (NYSEARCA:OIH)
Terranova said speculators are not the sole force driving oil, but futures price crude at $140 a barrel. Macke agrees shorting oil is not a good strategy. Terranova recommends drillers. Najarian prefers OIH, and adds refiners will not have a comeback for a while.
Go to Rio: iShares MSCI Brazil (NYSEARCA:EWZ)
Terranova would look to Brazil for commodity plays, such as EWZ. Macke thinks Brazil may be affected by a downturn in the U.S. economy and Najarian pointed out Brazil is doing better than many other emerging markets.
In spite of a respectable quarter, HD’s shares dropped 6%, but Macke would take the pain and be long HD. Najarian said Macke would be correct if housing is going to recover soon, but he isn’t confident, and would not buy HD or LOW.
T. Boone Pickens picked up 10 million shares of Yahoo, and the Macke commented that while this may be a good move for billionaires, it may not be worth the risk for the ordinary trader. Terranova agrees with Adami that Google is a good trade on the Microsoft/Yahoo battle.
Gold rose, the dollar fell, and Terranova thinks the Canadian loony may be a good trade. Adami blamed Germany’s producer price data for the dollar’s drop, but he thinks the European banks will cut rates. Adami would buy FCX and X. Adami doesn’t like the fact CHK’s and NUE are issuing secondary offerings, but would buy them anyway.
Financial Put-Down: Financial Select Sector SPDR (NYSEARCA:XLF)
On news of increased put activity in financials, Najarian discussed the heavy put volume in XLF. He said the reason is not merely to protect long positions, and predicts financials will trade sideways, with emerging markets rolling over.
With oil rising, the group discussed ways to play oil without buying oil stocks. Terranova says GS has great oil traders and Adami likes HXL and Trinity for wind exposure as well as HAL. Macke thinks rising oil prices will keep consumers at home, and would look at ATVI and YUM. Najarian warned these companies have high raw costs to contend with.
Du Pont’s Day in the Sun (NYSE:DD)
Najarian praised DD as an undiscovered solar play, since it has exposure to photovaltic energy. Bigger solar companies’ strong earnings indicate PV will continue to grow and this is promising for DD. Adami thinks DD is adaptable and is cheap on valuation.
With inflation growing at the fastest rate in 16 years, Zach Karabell, President of River Twice Research, came on the program to discuss ways to play inflation. He noted inflation isn’t affecting all items, just those which are purchased with the greatest frequency, and suggests looking to irreplaceable inputs, or must-have items such as iron ore necessary for steel production. This points to stocks RIO and CLF. Strong brands also cannot be replaced, and he is bullish on LVMH, Apple and TIF.
The group discussed stocks associated with summer barbecues. Najarian notes CLX owns Kingsford Charcoal, and Terranova says he might consider CROX if women start wearing them. Adami likes SPH on valuation basis and Macke picks Wal-Mart.
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