Recap of CNBC's Fast Money, Thursday August 21.
Crude Oil Jumps - ExxonMobil (NYSE:XOM)
Crude oil jumped more than $5 a barrel on geo-political tensions and the weaker dollar. Shares of ExxonMobil rose 2% for one of the biggest moves in the markets. The shorts got squeezed, says Joe Terranova. That’s the bottom line. My feeling is that oil will run higher and then fail about $4 or $5 higher.
Upgrade Boosts Lehman (LEH)
Shares of Lehman recouped most of their losses after an upgrade hit the Street. Bove said, “If you take a look at Neuberger Bergman and you make the assumption that at its low point it’s worth $9 billion and you subtract that from the market cap of Lehman, it means the rest of the company is worth less than zero. That suggests you get all the rest of Lehman for nothing.” I disagree with Bove, says Pete Najarian. I think they get $5 billion for Neuberger Bergman.
Bailout Expectations Rise - Fannie Mae (FNM), Freddie Mac (FRE)
Meanwhile expectations rose that the government will bailout Fannie Mae and Freddie Mac. This drove their debt prices higher on Thursday as investors bet the securities will be guaranteed by the U.S. government even if shareholders are wiped out. Despite gains in Fannie, shares in both government-sponsored enterprises, which own or guarantee almost half of all outstanding U.S. mortgages, remain near their lowest levels in nearly two decades.
Bernanke Speaks Friday
Fed Chairman Ben Bernanke is scheduled to comment on Friday about the financial crisis. “I think he’s going to give us a very strong defense for an activist Fed,” says JPMorgan Funds chief market strategist David Kelly on Fast Money. “I think his main point will be we were right to be active.” Kelly also thinks Bernanke will calm Street concerns about inflation “If investors think the Fed has to raise rates quickly to quell inflation it hinders them in dealing with the financials,” he adds. “So I think between the lines he will say we’re really not that worried about inflation. We want to get these financial companies right.” Ultimately Kelly thinks Fed rhetoric will be good for the dollar. If you’re looking for a trade Kelly says to sell gold because, “there are a lot of reasons to be against it.” Not only does he think the banks could cool off but “if the dollar rallies that’s negative for gold.” Also, Kelly sees an oil bubble. “I think people should have faith the economy will recover and the stock market will follow,” Kelly says.
The Oil Service HOLDRs, the oil services ETF, has surged more than 7% in 3 days on renewed strength in crude. Right now we’re sitting at the 200 day moving average for the OIH. If it can break and hold above those levels I would be bullish, counsels Pete Najarian. However I prefer specific names in the sector. Get long Halliburton, Schlumberger or Diamond Offshore he says. There’s been one strategy that’s worked in every asset class, says Jeff Macke, and that’s sell the rip! Macke's bottom line: Sell, sell sell!!!
“The surprise in terms of growth in emerging markets this year is actually Latin America,” said Joyce Chang, JPMorgan's head of emerging markets strategy, during a recent conference. For the 12 months ending March 2008 Latin America was the best performing region among the emerging markets. Latin America has typically followed the United States into recession in the past, but this time even the International Monetary Fund estimates the region will grow 4.4 percent this year versus a U.S. economic growth forecast of 0.5 percent. And the best play in the space may be Brazil according to Will Landers, manager of the BlackRock Latin America fund. “Brazil is probably one of the best emerging markets in terms of corporate governance and valuations,” says Landers, “and the fundamentals are great, too.” Landers likes Brazil ETF (EWZ) or if you like individual stocks he recommends Petrobas, Vale, Banco Bradesco and Companhia de Bebidas das Americas.
Final Trade – Your First Move for Friday August 22.
Guy Adami recommends Celgene (NASDAQ:CELG).
Joe Terranova prefers long crude oil because he thinks it has room to run.
Pete Najarian likes Amylin Pharma (AMLN).
Jeff Macke has no pick.
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