Bullish Dollar Rally - Fast Money Recap (8/15/08)

Recap of CNBC's Fast Money, Friday August 15.

Dollar Rally is Bullish - Financial Select Sector SPDR (XLF), Goldman Sachs (GS)

Tim Seymour noted the dollar rally Friday was bullish. He added the markets have been good, judging from the technicals.  Pete Najarian said the “financials are off a little but it's really all about Goldman Sachs. He said Goldman is showing some weakness as it is down about 2% to $163.57. Financial Select Sector SPDR is doing fine. Guest Dennis Gartman said he would be a buyer of the dollar. He does not think the rally in the dollar is short term.

Commodities Comments

Joe Terranova said “Building is still going to go on in China.” There will still be a huge demand for various needed commodities such as steel and crude oil. He feels the pull back in commodities could just be temporary. Quint Tatro does not agree with Terranova and said the “trade does not work on a technical basis for commodities.” Terranova said the pullback in commodities reflects speculative selling. Dennis Gartman mentioned he is long wheat because it has bottomed and is more likely to rise relative to other commodities.

Railroad Potential

Najarian said Warren Buffett doubled holding in a railroad company, saying that Buffett does not believe the rails story is over and that there is more upside potential left for companies in railroad sector. Guest Dennis Gartman said he would be a buyer of the dollar. He does not think the rally in the dollar is short term.

Financial Plays - Lehman Brothers (LEH), Merrill Lynch (MER)

Ratigan reported that George Soros took a position at Lehman Brothers. Najarian said he thinks Merrill Lynch is the best play if someone were considering buying stock in an investment bank. However, he said “while I like Merrill Lynch more than Lehman Brothers, I do see why he would pick up some shares of Lehman.” Seymour said, “I wouldn't be so quick buy the investment banks.”

AutoZone (AZO) - Ratigan mentioned that Edward Lampert had increased his position in AutoZone. Tatro likes AutoZone and said the companies in this sector all look “excellent on a technical basis.”

Kroger (KR) – Due to the difficult market, Terranova does not think retailers are worth buying. If you want retail, stick to food, like Kroger, he recommended. Seymour said investors can't play retailers only because of dropping gas prices. He said there are other factors to consider such as lower personal income. Tatro said for investors to “watch XLF, watch the financials” to have a better sense of clarity on how to play the market.

Richard Galanti, chief financial officer of Costco - Ultra S&P 500 (SSO)

Richard Galanti, chief financial officer of Costco, said his company has “been able to buck the trend but some bumps have occurred.” He believes it is operating successfully and stated the gas businesses bringing more customers to its Costco stores. Tatro said the overall market looks good technically, which is why he owns Ultra S&P 500.

Chart of the Day – Crude Oil

Terranova said that while crude oil is trading quite bearishly, he feels in the long run it will move higher. He is long crude oil with December 2012 contracts.

Home Improvement - Home Depot (HD), Lowes (LOW)

Colin McGranahan, an analyst for Sanford C. Bernstein, discussed Home Depot and Lowe's. He is very bullish on both companies and said that had investors owned Lowe's at the beginning of the year, they would be up 8%. Both Home Depot and Lowe's will be reporting their earnings next week.

Ron Hermance, CEO of Hudson City Bancorp (HCBK)

Ron Hermance, CEO of Hudson City Bancorp, discussed how his bank is performing exceptionally well, unlike many other banks. He said his bank has a strong financial positioning, and has many borrowers that provided an average down payment of 31% -- which would essentially mean they are far less likely to default on their loans. The company has been able to grow and not suffer from financial meltdown due to not being highly levered to subprime lenders. Hermance feels its strong performance will only continue.

Seeking Alpha is not affiliated with CNBC, or Fast Money

 

Comments

[Billy Boy]

I think the G8 group which met a month or so ago decided to all support the dollar and they are all doing it. The Europeans wanted a weaked Eurodollar for trade reasons and they got it. I think when the Chinese get past the Olympics and get vehicles on the road and factories running again and we start putting oil in the strategic reserve that oil will again go higher. It is sad to hear people say to not drill in Alaska and offshore USA. I know it is not an immediate help for oil prices, but it is sure stupid not to plan ahead for years down the road. It's to drill in California, Oklahoma, Texas, Louisiana, Mississipi etc, but NOT in Alaska, Be real. Most of you greenies have never even been there !!!

[CaptBob]

I think you've got it Billy: Simple usually has th best chance of success.
Politicians have no real interest in alternatives--"Wh... spend a lot of money on something that won't come to fruition while I'm in office and can be reelected on my credits for it??"

The more complicated the formula gets as every divergent interest puts their variables in and deducts what they don't like the less chance it has of working at all.

Simple things like T. Boons windmill freeing up X+Methane from a power plant to run your car and =X- imported oil is a perfect example.

Drilling is a temporary return to past policy and at best will be the buffer we need to gain time for a transition to permanent alternatives.

The last go around (1970's) we squandered the time --there will be no "easy" next time. We can do what has to be done or we can line up behind fools like Pelosi and suffer the consequences.

[Freefalling]

Something has to give eventually. If in the good times, the budget deficit needs a $10.6 E12 cap, how much do you think the recession will require? Think about the Bull in dollars: We just bailed out a bottomless pit (GSE's), Housing is in a death-spiral, not a bottom (use the part of the brain that still can do critical thinking, not the constant part) and the whole banking system is being propped up by playing cards. The dollar is on life support and people are bullish? Based on what? The rest of the world knows our debt will never be paid unless they lend us the money to pay them. I think they're on to us...