OIL HITS RECORD, DOW DROPS
The headline: First Weekly Drop In A Month; Dow Drops 2.4% This Week
The Dowfaded under the weight of crude oil which surged past $125 per barrel Friday. Light, sweet crude for June delivery rose as high as $125.12 a barrel in electronic trading on the New York Mercantile Exchange at midday before falling back to $124.86 by early afternoon in Europe.
When will oil's record run end?
We’re starting to see some energy headwinds, reveals Tradition Energy Director of Market Research Addison Armstrong. This could be the end of the beginning.
We’re really starting to see a turndown in equities over concerns that high oil is going to cramp the global economy, he adds. That is going to be what turns the oil market around. High prices will cure high prices.
What does that mean, high prices will cure high prices?
I think over time you’re going to start to see erosion. Already in the US demand for gasoline is flat to lower year on year. And I’m looking for things to slow down in China after the Olympics.
What’s the trade?
Stay with the trend for the short-term, Armstrong replies. It’s too early to short oil. But if you have profits, you might want to take them.
I agree, says Jeff Macke. It's time to take some money off the table.
AFTER HOURS ACTION: FEDEX
The headline: FedEx cuts profit forecast citing fuel prices
U.S. package delivery company FedEx slashed its quarterly earnings forecast on Friday, blaming surging fuel prices.
FedEx said it now expects to report a profit of $1.45 to $1.50 per share for its fourth fiscal quarter ending May 31, lower than its prior forecast of $1.60 to $1.80 per share.
The company, based in Memphis, Tennessee, said that since it made its fourth-quarter profit forecast in March its estimated fuel costs for the period have risen by $100 million, or 7 percent.
Again, it’s oil making the headlines, observes Jeff Macke. It seems the cost of fuel sets us up for a bumpy ride next week.
I was wrong about this stock, concedes Guy Adami. I’ve been recommending it. And these results don’t bode well for UPS.
The headline: Citigroup Falls Even After CEO Pandit Unveils Plan To Eliminate $400B In Assets Over Next 3 Years.
Citigroup, the largest U.S. bank, said on Friday it plans to shed $400 billion of assets within three years and boost revenue by up to 10 percent annually in a bid to restore profitability after huge losses tied to flagging mortgage and credit markets.
Vikram Pandit, who became chief executive in December, announced the plans at a much-awaited presentation to investors and analysts. He has faced growing demands from investors to slash costs, shed poor-performing businesses, and reinvigorate a stock price that has fallen more than half in the last year.
It’s not possible to turn around Citigroup in only a few months, says Karen Finerman. However, in about two years I wouldn’t be surprised to see this stock at $38.
Forget Citigroup, says Pete Najarian. If you’re looking for a "financials" play check out Visa , Mastercard or American Express .
WHALE WATCHING: CARL'S CURIOUS CRUSADE
The headline: Carl Icahn And Associates 'Ready' To Purchase Circuit City If Blockbuster Fails In Effort.
Circuit City gave into pressure from activist shareholders and essentially put itself up for sale. The electronics retailer gave Blockbuster and its largest shareholder Carl Icahn, access to its books. Icahn then defused concerns over whether Blockbuster could finance the deal by saying he's prepared to buy the company if all else fails
I’m not sure it makes sense to marry Blockbuster’s fortunes, which seem grim to me, to those of Circuit city which seem equally grim, exclaims Jeff Macke.
If you want to throw caution to the wind you could buy Circuit City – but I’d only do it in CNBC’s Million Dollar Portfolio Challenge so you’re not playing with real money.
LONELY YAHOO LEADS TECH LOWER
The headline: Yahoo Ends Week Down 10% As Investors Mourn Withdrawn Microsoft Offer.
Yahoo!could be on the brink of sealing the deal to form a potentially lucrative advertising partnership with Google.— a deal that would lower the odds of Microsoft renewing its attempts to buy Yahoo.
Because Google's technology proved it could select more profitable ads, the alliance could help Yahoo snap out of a prolonged slump that made it vulnerable to Microsoft's unsolicited buyout bid. Microsoft raised the bid to $47.5 billion, or $33 per share, before pulling it off the table last weekend.
Microsoft cited Yahoo's willingness to subordinate its own ad system to Google's as a major reason for dropping its bid.
I like Yahoo and maintain a position, reveals Pete Najarian.
I’m delighted to be out of Yahoo!, counters Jeff Macke.
GOLDMAN'S WHOPPER FREAKOUT
The headline: Goldman Sachs Adds Burger King To Americas Conviction Buy List.
It’s good to be the king. Goldman Sachs added Burger King to its “Conviction Buy List” and removed McDonald’s the world's largest fast-food chain.