Dollar Surge - Fast Money Recap (8/8/08)

 Recap of CNBC's Fast Money, Thursday August 8.

Commodities Broken? Freeport-McMoran (FCX)

Friday closed with the bulls took control of the markets. The traders on Fast Money spoke on Friday’s explosive action. Guy Adami said that commodities are “probably broken for the rest of the year.” He has believed “in the dollar for a long time.” He said the dollar will continue to go higher and it would be wise to “sell commodities into rallies.” Jeff Macke said to “trade it off the charts.” “This is a commodity-based rally,” that will torture people. Zachary Karabell said “this was a big pullback,” with “powerful demand.” Karen Finerman cautioned “I wouldn't be long or short here,” because there are deflationary pressures on commodities. She said that investors “don't know what's starting the movements.” Adami spoke up, saying that a “six-month commodity downturn is absolutely feasible.” He continued saying that things in Europe are much worse off than here. Adami suggested looking at Freeport-McMoran because the “valuations have become compelling.” Macke said that investors have to “trade the market you have,” because you cannot fight the dollar rallies. He said to “get long the commodities.” Dylan, in a quick bit of Trade School, underscores the fact that commodities are priced around the world in U.S. dollars, despite what currency is used to purchase them -- this is what ties the dollar to the global commodities markets.

Financials Friday - UBS (UBS), American International Group (AIG)

Finerman said she “didn't do anything with financials today,” and she is comfortable with her shorts. Adami said that UBS was up 3.5% today and it was a powerful move that saw the capitulation. He said that investors should take profit now. Next, he said American International Group was ripping 5% and “if you got the trade today, take it off.” Karabell said that he is concerned about the fundamentals surrounding financials and that they “may be at their peak.”

Been Lovin’ It - McDonald's (MCD)

Of McDonald's, Macke said he's “been loving it” but he does not own a share of the stock. Macke says it's making him nuts and that it's “the best run company in America right this moment.” He would definitely buy them on a dip. Adami said that the comps for the United States are better-than-expected. “If you want an exit point,” he says, pointing at the massive 28M shares traded today. “Now is the time to take a profit.”

Tech Tops Tape - Cisco's (CSCO), Oracle (ORCL), Microsoft (MSFT)

Large cap tech names surged Friday, Macke admits he wishes he was longer tech and that it is “hard to feel worse,” and that this week's action was due to Cisco's good news. Adami said to look at Oracle saying the firm is doing everything right. He said he still feels it's undervalued and worth getting into. Last quarter, it was “phenomenal.” Finerman commenting on Microsoft, saying that the company had a great week and that the rumored $20 billion buyback “seems like a lot.” Karabell said that tech's productivity numbers “continue to be strong.” Companies need to spend in tech to compensate declining demand by enhancing productivity and that is a big part of Oracle and Cisco.

Dollar Lifts

Dennis Gartman of The Gartman Letter

Dennis Gartman, of The Gartman Letter, discussed this week's movements in the dollar. He agrees with Dylan that rarely does currency move as much as 3% in two weeks -- it's virtually unheard of. He said there is a huge “bottom built into the dollar.” You “have to buy weakness in the dollar.” Gartman believes the best vehicle to take advantage of the appreciating dollar for average traders, who don't normally trade currencies, is the Dollar Index, which pits the dollar against a “smorgasboard” of other currencies. Gartman said “volatility is in almost all of the markets.” He said that there is no bullish argument for gold, and currently he is “not in the gold market anymore.”

Olympic Game Plays - Polo Ralph Lauren (RL), Nike (NKE), JC Penney (JCP)

Next, talking about Beijing plays, Polo Ralph Lauren and Nike were discussed. Karabell said that these are “gimmicky trades,” but “Ralph Lauren is doing real well.” Finerman said to take a look at JC Penney because it is more relevant than what is going on with the Olympics. She said its numbers were “surprisingly raising.” Macke said that “any excuse is a good excuse to buy Nike.” He said it is an extraordinarily well run company while Ralph Lauren is “more dependant on a fashion schedule.” Adami said that recently its inventory build numbers killed people, but there is a “nice little double bottom,” and it “might be worth a look.”

To Buy or Not to Buy - Wal-Mart (WMT), Costco (COST), Target (TGT), Abercrombie & Fitch (ANF), Home Depot (HD)

Talking about retailers, the traders questioned whether it is safe to shop again. Macke said it is “all about the reaction,” and that no one is expecting good numbers from the retailers. He continued, saying that the expectation level with Wal-Mart has been raised and that he is more concerned with his Costco position and Target. Finerman admitted she picked up Abercrombie & Fitch today, but she warned to be careful. Adami said that Home Depot may have “gotten ahead of itself,” but it is wise to “buy on dips.” Karabell weighed in, saying that the “expectations are so low on these,” and that stocks have been beaten down. He said it may be a good opportunity to get in.

Fertilizer Influences Crops - Potash (POT), Monsanto (MON)

Shifting to agriculture and rising fertilizer prices, the show welcomed Roger Neshem, the owner of Neshem Farms. Neshem responds that while fertilizer firms like Potash and Monsanto have dropped in the last month, fertilizer prices haven't followed yet, and farmers' margins have been squeezed by those high prices for a while now, especially now that the price of corn and wheat are dropping as well. Speaking on fertilizer, he said that “we're making plans to cut crops where high input costs are,” because margins are being strangled. He plans to plant food this year that isn't heavily fertilizer-reliant, such as soybean, which has a lower input cost. Neshem summed up the situation by saying “it's a really tricky game of cat and mouse we're playing.”

 

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Comments

[truthinvesting:]

This show is very educational especially ADAMI and Finerman who BOTH have picked many winners. Adami is sometimes early but his calls on apa and X were big winners among others and finerman hit apple and cisco at their bottoms

2008 Aug 09 04:19 PM

[User 231885:]

The hubris of CNBC is amazing - "the show welcomed Roger Neshem, the owner of Neshem Farms" - like if he starts growing soybeans, the whole world scheme changes. Just keep in mind if the dollar keeps rallying, which I don't think it will, Potash becomes cheaper to the market and profits increase with the increase of sales for the Canadian seller.

2008 Aug 10 12:28 PM