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Market Little Changed Ahead Of Goldman

MARKET LITTLE CHANGED AHEAD OF GOLDMAN EARNINGS

The Dowfinished Monday’s session modestly lower as investors continued to worry about the course of the economy. The volatility is finally starting to tip lower, explains Pete Najarian. That really started to happen when oil pulled back.

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TO $140 AND BACK

Crudemade a new record high of $139.89 a barrel, before paring gains to settle slightly lower as Saudi Arabia, the world's top producer, appeared poised to boost production to the highest level in decades.

Everything in oil points to Friday, says Joe Terranova. It’s expiration day when the contracts come off the front of the board. But despite that, I think the best way to play the energy space is with nat gas.

I’ve got two trades for you, exclaims Pete Najarian. Chesapeake looks like a buy simply because CEO Aubrey K. McClendon is buying up his own stock. And look at AMR as a play on any pullback in crude.

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GOLDMAN GOLDEN TOMORROW?

Investors are eager to hear from Goldman Sachs Tuesday before the bell. They want to know if the brokerage has been able to steer clear of bad loans and other negatives that have dragged down the overall financial sector.
And only one day later the Street gets results from Morgan Stanley with most analysts polled by Thomson Financial expecting 92 cents per share on revenue of $7.05 billion


What should you expect? For insights we turn to Sandler O'Neil brokerage analyst Jeff Harte. Following is a synopsis of his main points.

I don’t think Goldman is going to miss. I think they’re likely to beat. They have a big commodities trading franchise and from what they’ve been saying they’ve been on the right side of that, says Harte. And Goldman has what’s perceived to be a high quality balance sheet.

And what about Morgan Stanley?

They’re also viewed as quality, Harte says. I don’t think they’ll miss. And if they do miss I think it’s because they’re an aggressive hedger.

Meanwhile, Lehman Brothers reported it’s first -ever quarterly loss on Monday.

What about Lehman?

On the call Monday they helped to put solvency concerns behind them.. but the future remains murky.

What’s the bottom line?

“At the end of the day... I don’t think the brokers are a buy for summer," Harte concludes. "Wait and see what they do to generate revenue going forward.”

Read More:

> Find out how Guy Adami recommends trading Goldman and Morgan in “Take Your Position: Financials”

> Learn what the Goldman and Morgan charts suggest to Carter Worth in "Chartology."
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BET ON DIVING DOLLAR AGAIN?

The dollar fell versus the euro on Monday, snapping a three-day winning streak. New inflation data in Europe all but sealed the deal for an ECB rate hike next month.

The dollar had strengthened in recent days after Treasury Secretary Hank Paulson warned that he isn't ruling out intervening in currency markets to stabilize the dollar. U.S. Federal Reserve Chairman Ben Bernanke also helped lift the dollar by suggesting the Fed is prepared to raise interest rates to fight inflation.

I thought the recent G8 was very disappointing, says Joe Terranova. I don’t think the dollar will plunge but I’m not terribly bullish either.

I expect the dollar to go higher in the second half of the year, counters Guy Adami.

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AFTER HOURS ACTION

Should you buy Rocco's Callaway or Tiger's Nike on the US Open?

I wouldn’t race out and buy ELY, says Guy Adami, but it doesn’t hurt that they have another face to front their prodcuts.

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IS IT TOO LITTLE, TOO LATE FOR SIRIUS?

FCC Chairman Kevin Martin said on Monday that he would support the proposed merger of XMand Siriusafter the firms agreed not to raise prices or stifle competition. His decision could remove the last regulatory hurdle in a lengthy and heavily criticized move to combine the companies.

I think the government absolutely bludgeoned these companies, Jeff Macke exclaims. And whatever Martin says, there are other commissioners who have to weigh in.

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BLACKBERRY STILL BETTER?

Research In Motion stock jumped 6% on Monday after Citigroup and American Technology recommended RIMM as a buy on iPhone weakness.

I think RIMM is firing on all cylinders, says Pete Najarian. But I certainly don’t think Apple is dead. They could very well have a breakout quarter.

You could probably own both, adds Guy Adami. I expect Apple to have a 2-handle on it by July 4th.

Also the technicals on apple also look good to me, adds Joe Terranova. I think it’s a buy with a stop at $165.

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TAKING A KEG STAND

Belgian brewer InBev on Sunday warned Anheuser-Busch . against doing a reported deal with Mexico's Grupo Modelo , saying it could endanger the premium price it's willing to pay for the King of Beers.

I hope BUD learns from Yahoo! and they go to the table, says Jeff Macke. I'd love to see the brewer remain a domestic company but the American thing to do is take top dollar.

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OPTIONS ACTION: RAMBUS

Pete Najarian noticed unusual options activity in semiconductor maker Rambus

Options traders are buying 21 calls, explains Najarian, out to November. I’d keep an eye on this stock over the next several months.

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THEY WANT OUR STEEL

Europe’s ArcelorMittalwill buy Louisiana-based Bayou Steel for $475 million, the world's largest steelmaker said Monday. The purchase is subject to regulatory approval.

The steel stocks haven’t been behaving that well, says Guy Adami. I wouldn’t run into U.S. Steel at current levels.

I expect to see a steel ETF in ’09, adds Joe Terranova. I think you want to be in steel.





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Trader disclosure: On June 16, 2008, the following stocks and commodities mentioned or intended to be mentioned on CNBC’s Fast Money were owned by the Fast Money traders; Adami Owns (NUE), (AGU), (C), (GS), (INTC), (BTU), (MSFT); Macke Owns (ATVI), (MSFT), (INTC), (WMT), (HAS), (DIS); Najarian Owns (AAPL), (BHI), (CHK), (ENER), (HPQ), (TSO), (XLF); Najarian Owns (GME) Calls; Terranova Owns (GS), (LUV), (FXC); Terranova Is Long Dec 2008 Crude Oil; Terranova Is Short Dec 2009 Crude Oil; GE Is The Parent Company Of CNBC; NBC Universal Is The Parent Company Of CNBC

Terranova is chief alternatives strategist at Phoenix Investment Partners; Phoenix Investment Partners Ltd. Is Long Airtran Holdings, Alaska Air Group, American Airlines, Apache, BP, British Airways, Chesapeake Energy, Chevron, ConocoPhillips, Continental Airlines Delta Air Lines Deutsche Lufthansa, ENI SPA, ExxonMobil Gazprom, Hawaiian Holdings, Hess, Holly Corp. Husky Energy, JetBlue, Lukoil, Marathon Oil, Murphy Oil, Occidental Petroleum, PetroBras Intl. Fin. Petro-Canada, Petroleo Brasileiro S.A., Petroleos De Venezuela SA, Qantas Airways Republic Airways, Royal Dutch Shell, Skywest, Southwest Airlines, Suncor Energy, Sunoco, Tesoro Texaco Capital, Total SA, United Airlines, US Airways Group, Valero Energy

Sandler O'Neill Advised Sallie Mae Board In Acquisition By An Investor Group In Which (BAC), (JPM) Will Own Stakes; Sandler O'Neill Advised Countrywide Finl. Board In Agreement To Merge With (BAC); Sandler O'Neill Has Recvd. Inv. Bank. Comp. From (BAC), (C), (MER), (MS) In Past 12 Mos.; Sandler O'Neill Expects To Receive Or Intends To Seek Inv. Bank. Comp. From (BAC), (JPM) In Next 3 Mos.; (BAC), (C), (JPM), (MER), (MS) Is A Client Of Sandler O'Neill And Was An Inv. Bank. Client Of Sandler O'Neill; Sandler O'Neill Was A Manager Or Co-Manager of A Public Offering Of Sercurities For (C), (JPM) In Past 12 Mos.; Sandler O'Neill Has Received Non-Inv. Bank. Comp. from (C), (JPM), (MER); An Affiliate Of Sandler O'Neill Has Recvd. Non-Inv. Bank. Comp. From (C), (MER), (MS); Sandler O'Neill Has Recvd. Non-Inv. Bani. Comp. From (LEH); (LEH) Is A Non-Inv. Bank. Client Of Sandler O'Neill; Sandler O'Neill Has Recvd. Non-Inv. Bank. Svcs. From (GS), (GS) Is A Non-Inv. Bank. Client Of Sandler O'Neill

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