Worst First Half Since '02
Stocks finished flat Monday, the last day of the first half of 2008.
That concludes a 6 month period dominated by the credit crisis and the soaring cost of oil. The major indexes are all down by double digits since Jan. 1.
WALL STREET WASHOUT
The chief executive of Bank of New York Mellon said on Monday he expected further losses from the banking sector and added that the U.S. housing market crisis could continue for some time.
Meanwhile after hours Morgan Stanley recommended investors buyLehman Brothers shares, setting a price target of $31, after the beleaguered investment bank's stock fell nearly 11 percent on Monday, on rumors that it would be bought out well below its current price.
Lehman shares were up 4.1 percent at $20.62 in extended- hours trading after Morgan's initiation of Lehman shares at an "overweight" stock rating.
I can’t see why they get an overweight rating, says Pete Najarian. That doesn’t make a lot of sense.
I’m also skeptical, says Karen Finerman. Might it help Morgan if Lehman does a little better?
Also in the space, I noticed interesting option trading in Washington Mutual , Najarian adds. Keep an eye on that. Also watch HSBC .
But don’t expect to see the financials turn until Freddie and Fannie turn.
OIL RECORD ABOVE $143
The price of crude oil hit yet another record on the last day of a tumultuous first half, spurting past $143 a barrel before ending lower on demand fears and a resilient dollar.
I think investors should look at oil services stocks such as Haliburton and Schlumberger, says Guy Adami. Yes they're getting a little rich but I still like them.
Or check out Diamond Offshore , counsels Pete Najarian. This is the one to watch for deep sea drilling.
I like integrated oil for the second half, says Joe Terraniva. Look at Petrobras and Chevron. I think they’re going higher.
THE END TO AG?
U.S. farmers braved the worst floods in 15 years to surprisingly plant the second largest corn crop in 62 years. The news sent corn prices tumbling to limit down. Damage to the crop, however, could remain uncertain for months.
I wouldn’t read too much into limit down, says Guy Adami. I think it could have been pension funds cashing out. I still believe in the ag story.
HIDE OUT IN HEALTH CARE?
Over the last 5 days the Health Care SPDR ETF has been outperforming the broader stock market. Meanwhile both Pfizer and Merck closed higher on Monday.
It seems like a safe place to hide, says Karen Finerman, when there are few places to hide.
I don’t think it’s investors looking for safety, counters Pete Najarian. This is investors putting money to work. I think Merck and Teva both have great catalysts that could boost their bottom line and keep an eye on Elan and Wyeth.
I agree that these stories are real, adds Guy Adami. I like Celgene .
TOPPING THE TAPE: TELECOM
Credit Suisse upgraded telecom to 30% from 5% overweight calling the sector a good defensive play as European earnings fall 20% in the next 2 years.
In telecom, I think the easy trade is AT&T, says Guy Adami. Bernstein put a $40 prices target on it. I think it’s a buy with a stop out below $32.50.
GO WITH GOOGLE
Citigroup named Google as it’s top Internet pick with a "buy" rating. It replaces Expedia in the top spot.
Analyst Mark Mahaney says Google is on track to meet his second-quarter estimates and he feels the 12-month outlook for the "PC Search" industry remains robust.
Google, he adds, has significant long-term option value with its mobile search and display advertising revenue streams and a highly favorable risk-reward outlook.
“I think there's money in the bank for Google in search if they can duplicate that on mobile," Mahaney says. That’s the homerun for them!"
Among the Fast Money traders Joe Terranova, Guy Adami and Pete Najarian all like Google.
Karen Finerman however isn't quite so bullish. She feels valuations are a bit rich.
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Trader disclosure: On June 30, 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 (AGU), (C), (GS), (INTC), (BTU), (MSFT), (NUE); Najarian Owns (AAPL), (AMLN), (ANR), (NOK), (NUE), (TSO), (XLF), (YHOO), (HD); Najarian Owns (MER) Puts, (WFMI) Puts, (HBC) Puts; Najarian Owns (MYGN) Calls, (SLB) Calls, (WM) Calls, (WLT) Calls; Finerman Owns (GS); Finerman's Firm And Finerman Own (FLS), (GLNG); Finerman's Firm And Finerman Own (C) And (C) Leaps; Finerman's Firm And Finerman Own (GE) And (GE) Puts; Finerman's Firm Owns (MSFT), (SUN), (TSO), (TWX), (VLO); Finerman's Firm Owns SPX Index Puts; Finerman's Firm Owns (HUN) Calls; Finerman's Firm Is Short (IYR), (IJR), (MDY), (SPY), (IWM); Terranova Owns (BNI), (YHOO), (LUV), (CME), (GOOG), (SU), (INTC), (FXC), (IYT), (XLF), (FCX); Terranova Owns Dollar Index Futures
Terranova is chief alternatives strategist at Phoenix Investment Partners;; Phoenix Investment Partners Ltd. Owns (RWX), (DBC), (DBV), (IGE), (AAI), (ALK), (AMR,) (APA), BP plc, British Airways plc, (CHK), (CVX), (COP), (CAL), (DAL), ENI SPA, (XOM), Gazprom, (HA), (HES), (HOC), (HSE), (JBLU), Lukoil, (MRO), (MUR), (OXY), Petrobras Intl Fin, Petro-Canada, (PBR), Petroleos De Venezuela, (QAN), (RJET), Royal Dutch Shell plc A Shares, (SKYW), (LUV,) (SU), (TSO), Texaco Capital, Total SA, (UAUA), (LCC), (VLO)
A Member Of Mahaney's Team Owns (GOOG); Citigroup Or Affiliates Has Received Comp. For Inv. Bank. Svcs. From (AMZN), (EBAY), (GOOG) In Past 12 Mos.; Citigroup Or Affiliate Received Non-Inv. Bank. Comp. From (AMZN), (EBAY), (GOOG), (YHOO) In Past 12 Mos.; (AMZN), (EBAY), (GOOG) Are Or Were In Past 12 Mos. Investment Banking Clients Of Citigroup; (AMZN), (EBAY), (GOOG) Are Or Were In Past 12 Mos. Non-Inv. Banking Clients Of Citigroup; Citigroup Is A Market Maker In (AMZN), (EBAY), (GOOG), (YHOO)