Recap of Fast Money, Monday June 23.
Goldman Sachs reversed its May 5th buy rating on financials and consumer discretionary sectors, and stocks in both sectors fell. Merrill Lynch dropped nearly 4 percent on expectations it will write down $3.5 billion next quarter. Citigroup tends to cut 10% of its jobs. Pete Najarian would not bottom pick, and says financials will fall further.
Oil rose again to $137 in spite of Saudi resolutions to ramp up production. Guy Adami would look at oil service plays HAL and SLB, and Karen Finerman discussed insider buying at oil refiners. Najarian still prefers natural gas, especially CHK and BJS. Jeff Macke commented," The trend is your friend."
GM (NYSE:GM) Stalled
GM hit the lowest level since 1975, and Macke said its performance was horrific, adding "there is no bottom in sight." Guy Adami thinks the bottom may be near, but investors need to see volume capitulation.
On news that Bunge plans to buy CPO at a 31% premium, Finerman suggested keeping an eye on the deal, and says it is puzzling, since it is a stock for stock transaction. Guy Adami would buy Deere on the news.
Less than a week after FedEx announced disappointing results due to rising fuel prices and lagging consumer confidence, UPS warned that it would have similar news. Guy Adami is surprised at UPS' delay and says if the stock drops, it might be a trade. Macke, however, doesn't see how these names can be traded.
Gold surrendered some of its gain from last week and fell $17. Guy Adami thinks gold's next move is down to $820.
Defense Attack L-3 Communications (NYSE:LLL): Pete Najarian says options action indicates L-3 might bounce rise soon.
Ahead of the Fed
Tony Crescenzi, Miller Tabak & Co chief bond market strategist, discussed the Fed meeting on Wednesday. Although he thinks rate hikes are more likely than additional rate cuts, he doesn't think the hikes will come any time soon, given the economic environment. Crescenzi does see a recovery in 2009, especially with the election of a new president, which tends to boost confidence. Najarian agrees that now is not the time for an increase in interest rates, while Guy Adami thinks hikes could happen this fall. Finerman thinks a deflation in oil would make the market less volatile.
Whose Phone is Smarter? Google (NASDAQ:GOOG), Research in Motion (RIMM)
Google is joining the smart phone war, but its Android mobile software platform is beset with difficulties. CNBC's Jim Goldman says this is a symptom of a deeper problem the company has with executing organically. Pete Najarian says the soup is being spoiled by too many cooks as 30 different companies are attempting to put the phone together. Piper Jaffray raised its price target for RIM ahead of earnings, since the company keeps grabbing market share. Najarian would buy RIM before earnings.
It seems that everyone is offering promotions, purportedly to take the edge off of gasoline prices. However, trend guru Donny Deutsch thinks costumers are turned off by this kind of pandering and the companies should focus on their core essence. Guy Adami wonders when people will accept the fact that high gas prices are here to stay, and Deutsch thinks Toyota should instead make more efficient cars and Jack in the Box should reduce the price of its menu items.
The traders gave their assessment of the economy which at times seems like a disaster when looking at inflation, high gas prices and employment and at other times, delivers hopeful news such as Wal-Mart's 4% gain and the GDP getting by at 0.9%. "I don’t think the economy is that bad," says Jeff Macke. "It’s just a little wet and smelly." Stocks tied to the consumer, especially casinos and airlines are particularly bad, and Macke says inflation and employment should improve before trading in those sectors.
Inflation in India is at a 13 year high in the double digits, and while China is confident raising gas prices won't encourage inflation, there are doubts. Tim Seymour expects central banks to raise rates, a move which will cut global growth.. However, he does see opportunity in EWW and EWZ, since Brazil and Mexico have already raised rates, and CYB as a currency play. Najarian would use caution with EWW, since three stocks comprise 50% of the index.
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