Recap of Fast Money, Tuesday July 8. Click on a stock ticker for more analysis.
Financial Perks: Bank of America (BAC), Washington Mutual (WM), Fannie Mae (FNM), Freddie Mac (FRE), Financial SPDR (XLF)
The Dow was stronger as oil fell and there was a rally in financials, notably BAC, WM, FNM and FRE. News the Fed will help big investment banks which underwrite government bond auctions helped the sector. Najarian said financials can be bought and admitted he bought Fannie Mae along with some puts. Jeff Macke is a bear on the sector and said Najarian’s strategy is like “getting a hair weave and going for a trim.”
Oil declined $6, and was $10 lower than Friday’s high of $146. CPM Group founder and managing director Jeffrey Christian thinks oil will dip to $125 before continuing its upward march to $170 and demand soars. Joe Terranova thinks index rolling in the second week of the month is responsible for the short-term selloff, and those who want to trade this drop should move out of USO and into integrated oils. Macke is bullish on oil until the uptrend is broken at $105. Najarian would buy COP, CVX and XOM.
Alcoa (AA) Rises
Alcoa popped on a lower-than-expected loss as sales compensated for higher raw costs. Finerman compared these results to those of retail stocks, because anything short of disaster sounds like good news. Macke disagreed and said the earnings season is going to be terrible across the board. He recommended buying blue chips on dips and USO.
The one sector that is not ill is healthcare, and Najarian discussed his bullishness on the sector. Teva and DNA recently were upgraded by Goldman Sachs. He would look at beaten-up biotechs as investors jump into the sector while fleeing commodities. His picks include: GENZ, GILD and BIIB. Finerman bought MRK and PPH. Joe Terranova likes ABT for a trade.
Crocs (CROX) to the Top
Pete Najarian says options activity in CROX suggests the stock could rally. CROX hit a high of $70, but is now $7. Macke said he isn’t going near the stock until they make a stink resistant helmet.
Commodities fell for the third straight day as supply fears wane and the dollar rises. PM Group founder and managing director Jeffrey Christian thinks gold has farther to fall, but will jump back up again before the end of the year. He added, “I think you have a dollar that no one wants and a euro no one wants. So I think those people park their money in gold and silver.”
Are stocks hurt by high oil prices safe to fall as the commodity sells off? Jon Najarian joined the program to say he would like to see a longer decline in oil, and if it drops to $124, he might consider buying AMR, ALJ and NMX. Jon’s brother Pete said he agreed with AMR, but as a trade. Finerman doesn’t think the drop in oil will be dramatic enough to affect airlines, but predicts people might go shopping slightly more and would buy Target. Macke picks Wal-Mart, although he is bullish on oil.
In Yahoo’s Footsteps: Anheuser Busch (BUD)
Belgian brewer InBev continues to woo BUD, although the American beer company thinks the price is too modest, and is cutting costs in an attempt to prove to shareholders Busch’s refusal to be bought is a sound plan. Finerman thinks BUD is making the wrong decision, and its financial strategies won’t be better than a deal with InBev. Meanwhile, BUD is suing InBev for alleged deceit in trying to obtain the company for a low price. InBev wants to replace Busch’s board.
The G-8 Conference passed a resolution to cut greenhouse gases in half by 2050. Boone Pickens also has endorsed wind power. On this news, Najarian would look at wind plays and Energy Conversion Devices. Joe Terranova would take a look at sugar which is used in ethanol production, and as both presidential candidates discuss lifting tariffs on imported ethanol, Cosan should benefit.
Best of Breed: Procter & Gamble (PG)
While even defensive stocks are taking a beating in this market because of high raw costs, PG remains best of breed, said Finerman, because of product recognition and market share. The company has grown 15% every year for the last three years and doesn’t seem to be slowing down.
One viewer asked if the commodities pullback was a buying opportunity for FCX, and Terranova would buy at $105. Macke says he likes the capitulation in POT and MOS.
When asked about the oil inventory number, Terranova says a draw in oil is expected. Karen Finerman admitted the mortgage data due Wednesday won’t affect the market. On Ruby Tuesday’s 9% rise ahead of earnings, Macke would sell. Pete Najarian is not optimistic about ISRA’s earnings, due to gas prices.
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