Inflation Nation - Fast Money Recap (6/10/08)

Recap of CNBC's Fast Money, Friday March 7. Click on a stock ticker for more analysis.

Fed Protection

The dollar reached a 3 month high as oil pulled back and investors seemed cautious about the Fed Chairman Ben Bernanke’s remarks that he will fight inflation. Many believe this may spell rate hikes. Jeff Macke commented the Fed may raise rates even if it affects sgrowth, and thinks Friday’s consumer price index number will be very telling. Guy Adami reiterated his prediction that the dollar will continue to rise in the second half of the year.

Oil Drops

On worries about slowing growth, oil dropped $3 a barrel. However, Russia’s Gazprom predicted oil could reach $250 by the close of the decade. Tim Seymour thinks the Asian markets, which have been crucial to global growth, may roll over.

Sweet on Apple (AAPL), Synchronoss (SNCR)

Apple jumped on raised price targets from Citigroup and Lehman Brothers. Macke pointed out SNCR’s performance was poor, and commented Apple’s partners may not rise with Apple. Adami expects AAPL to reach $200.

Bottom-Picking Banks: Lehman Brothers (LEH), Goldman Sachs (GS), Wachovia (WB)

Brokerages cut estimates for LEH after its big loss and announcement that it will raise equity, a move that will dilute the value of Lehman’s shares. Guy Adami would buy WB with a stop below $18.20. Macke suggests looking at GS when it reaches $150. Options action suggests Citi and GS may cut dividends, says Tim Seymour.

Hunting for Natural Gas: XTO Energy (XTO)

XTO said it will acquire Hunt Petroleum for $4.2 billion, and Guy Adami praised the deal, saying XTO is buying reserves and exploration and would buy the stock on a pullback. Tim Seymour would take a look at Gazprom.

Aluminum Shines: Alcoa (AA)

On news of Alcoa’s 9% rise, Guy Adami is bullish and says there is some indication that CVRD is looking at Alcoa as a takeover target.

Monsanto Still a Monster: Monsanto (MON)

Monsanto’s shares fell in spite of bullish comments from Morgan Stanley and raising the question whether the ag story is over. Adami says MON will continue to be a monster stock, but Macke would buy in the sector only with an exit strategy.

Auto Parts Pep: Pep Boys (PBY)

Pep Boys was a big mover on Tuesday and saw its shares jump 10%. CEO Mike Odell says that as consumers want to save money on gas, they are more interested in making improvements to their cars and to replace old parts rather than buying new vehicles.

Affordable Ford (F)

Kirk Kerkorian is offering to buy Ford stock at $8.50 premium by tendering half of Ford’s shares. Adami says Ford could still be a turnaround story, but doesn’t like the price, and Macke commented “Unless your last name is Ford, you jumped on this one.”

More Oil? Halliburton (HAL), Schlumberger (SLB)

Tim Seymour says Mexico and Venezuela isn’t ramping up oil production because they don’t have to, and adds he prefers Russia’s prospects, since its Gazprom owns 25% of Europe’s supply and has an eye on U.S. markets. Seymour added the dollar and other factors will also have an effect on oil. Although Halliburton and Schlumberger are not straight emerging market plays, the stocks do have overseas exposure.

Will the Fed Raise Rates? CurrencyShares British Pound Sterling Trust (FXB), CurrencyShares Euro Trust (FXE), Coca-Cola (KO), Hewlett-Packard (HPQ)

Ben Bernanke’s anti-inflation rhetoric was more sharp than in the past and many predict the Fed with raise rates by early August. Guy Adami would avoid gold, and Finerman would short the pound and the euro. On a dollar rally, Macke would avoid multi-nationals such as Coke and Hewlett-Packard.

Oil Inventory: What’s in Store? Hess (HES)

Joe Terranova, chief alternative strategist for Phoenix Investment Partners thinks Wednesday’s oil inventory report will show a falling demand for gasoline; “I’m not sure any other data matters,” he said and suggested getting out of refiners. He suggests getting long integrated oils now, adding that he covered his short on Hess, and he’s long the Canadian dollar.

Could Dow Jump 500 Points?

After significant losses for the Dow, could the Dow see a 500 point rally next week? Miller Tabak chief bond market strategist Tony Crescenzi thinks this could be possible ”If the G-8 delivers a communiqué showing a preference for a stronger dollar and if OPEC boosts oil production, the combination could jolt the commodities markets, and bring a huge sigh of relief to investors.” Guy Adami suggests creating a position for a down move on oil and an up move on stocks with stops in place. Jeff Macke thinks a buying frenzy is unlikely.

Olympics Plays: Market Vector Russia ETF Trust (RSX), iShares FTSE Xinhua (FXI), UltraShort FTSE Xinhua (FXP)

Seymour says the China Olympics trade is over before the games even begin because of the Chinese government’s missteps. In any case, it is a better trade to play infrastructure ahead of the 2014 Winter Olympics in Russia. Seymour is bearish on FXI and is bullish on FXP and RSX.

Fast Messages: Wal-Mart (WMT), Disney (DIS), Boeing (BA), Microsoft (MSFT)

One viewer wanted a list of “worry-free” stocks and Macke suggested WMT, DIS and MSFT. Another viewer asked how oil could have fallen after such a big jump. Tim Seymour explained that concerns about the sustainability of high oil prices and falling demand for gas as oil rises bring down the price. Finerman said a strong dollar will be bad for Boeing because it raises the prices of the planes they sell to foreign markets.

Final Trade: Macke: Disney, Adami: Deere (DE)

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Comments

[Brewer]

MSFT a worry free stock? It's more like an earnings-free stock.