No. 1 - Playing the Markets
By: Hottest Stocks in the Markets Are the Markets as Exchange Hook-Ups Heat Up
The Intercontinental Exchange (ICE), a young upstart market that trades commodities and derivatives made a $9.9 billion bid for the prestigious Chicago Board of Trade (CBOT) today, icing out it's rival, Chicago Mercantile Exchange (CME). Now exchanges around the world are caught in a frenzied race to match up with each other, highlighting the fact that jittery investors, surging action in derivatives and a volatile market have sent volume soaring. (Exchanges make money off volume.) Is there a fast trade to be made amid the consolidation?
Eric Bolling says no one saw this coming. The only possible outcome, he sees, is that CME comes back and matches the offer. Eric thinks the New York Mercantile Exchange (NYMEX) and ICE should merge, because there’s more synergy there.
Guy Adami agrees, and adds that he thinks both NYMEX and ICE will be bought. January volume on the NYMEX was 1.5 million contracts a day, up 34% year over year. The stocks are expensive on a valuation basis, but Guy believes investors want these stocks and they’re going higher.
Tim Strazzini agrees with Guy: these stocks are pricey. However, if the exchanges can think of a way to get a larger global footprint, and carve out two years of growth the market will continue to give them this multiple.
Jeff Macke calls it the end of the beginning. He likes the NYSE Group (NYX) because they can accomplish the most, just by righting their own ship. But, Jeff suspects the fast growth is over and this merging is a sign of it.
Dylan asks the rest of the guys: if they had to pick one exchange which would it be?
Tim and Guy both say it'd be NYSE, while Eric says he likes all of them.
Questions? Comments? fastmoney@cnbc.com
Trader disclosure:
On MAR 14, 2007, the following stocks and commodities mentioned or intended to be mentioned on CNBC’s Fast Money were owned by the Fast Money traders. Macke Owns (JWN) Bolling Owns (DIS), (ICE), (NMX), Gold, Silver, Soybeans, is Short S&P Futures, is short Nasdaq Futures, is Short Corn
