Dow Drops 205
DOW DROPS 205
Despite their record breaking profits, on Thursday Exxon Mobil dragged the Dow lower after its earnings fell short of Wall Street's expectations. Also weak economic data and comments from Alan Greenspan made on CNBC while the market was open added to the downward momentum.
In an exclusive interview on CNBC, Greenspan said the US is “nowhere near the bottom” of the housing slump and is “right on the brink” of a recession.
Good-bye July, exclaims Jeff Macke on Fast Money. I’m glad to see it go.
A RECORD DISAPPOINTMENT...EXXON DRAGS DOWN DOW
Exxon moved lower despite reporting record profits of $11.68 billion, the largest quarterly profit ever by a U.S. corporation. Analysts had been expecting that record crude prices would push earnings even higher.
Meanwhile, crude prices fell more than 2 percent on Thursday, capping the oil market's worst month in more than three years, as weak U.S. economic data reinforced worries about shrinking demand in the world's top energy consumer.
I like Exxon right here, right now, says Guy Adami. It’s a value.
If you think oil is going lower, I’d play Exxon too, says Tim Seymour.
I don’t think oil is going anywhere, exclaims Jeff Macke. This is just a ridiculously hard market
TOPPING THE TAPE: WAMU...WAMU SHARES SURGE 12%Washington Mutual surged on Thursday after word hit the Street that Tosca, a $7 billion hedge fund firm run by former Tiger Management trader Martin Hughes held a 6% stake in the bank. Investors took that to mean WaMu might have bottomed and/or a management shake-up could be at hand.
If you look at the risk reward around Washington Mutual, I think it’s ridiculous, just ridiculous, says an exaspirated Karen Finerman. Unless they go out of business (which she thinks is unlikely) there’s a lot of money to be made in this stock.
In the financial services sector I’d look at Merrill for a short term trade, adds Guy Adami.
I’m more bullish on Deutsche Bank , HSBC , and Barclay’s , says Tim Seymour. It doesn’t seem their write-downs will be that bad.
I don't like the financials, counters Jeff Macke. I don’t think we have a bottom in.
GOLD UP THE MOST IN 3 WEEKS.
Concerns about the economy sparked a rally in gold on Thursday. The precious metal touched a session high of $925.20 as investors bought into gold as an alternative to the dollar.
I don’t really understand the gold story, says Guy Adami. I still think the dollar in the second half will go higher and gold could tank.
In the space, I think coal and steel are the commodities to watch, Adami adds. On a pull back I’d buy US Steel or Cleveland Cliffs .
Also watch AK Steel , advises Tim Seymour. The Russians are looking at this company, closely.
IF ONLY MARTHA HELD ON
Bristol-Myers Squibb, the US pharmaceuticals group, said Thursday it has offered to buy its biotechnology partner ImClone Systems in an all-cash deal worth around 4.5 billion dollars. This is the stock that was at the heart of the Martha Stewart investment scandal a few years back.
> Click here to read "Bullish On Biotech" and find out how Guy Adami recommends trading the biotech space.
DISNEY DROPS 4%
The Walt Disney Company seems to do it every time. Once again its quarterly numbers beat Wall Street expectations. And this time they overcame the economic downturn and the pullback in consumer spending. Despite all of that the Street took the stock lower.
I fully expected Disney to do well, says Jeff Macke. But it’s hard to predict if the consumer will hold up for them.
GM CLOSE TO UNLOADING HUMMER
General Motors is in talks with firms in India, China and Russia in an attempt to unload its Hummer brand. The nation’s largest automaker has lost over $51 billion in the past 3 years.
I think the buyers from India are most likely to close the deal, speculates Tim Seymour.
GREENSPAN LEANING TOWARD RECESSION
Former Federal Reserve Chairman Alan Greenspan said the US is “nowhere near the bottom” of the housing slump and is “right on the brink” of a recession.
As we menionted above, in an exclusive interview on CNBC former Federal Reserve Chairman Alan Greenspan said the US economy is “nowhere near the bottom” of the housing slump and is “right on the brink” of a recession.
“I’d be more surprised if we didn’t than if we did, given the financial state,” he said.
Keeping Americans employed is one of the larger challenges. Economists are expecting a slide of 75,000 jobs when the Labor Department releases its employment report On Friday.
For further insights on the economy we turn to Deutsche Bank chief U.S. economist Joe LaVorgna.
“I think the jobs market has been weak since last December. The good news is we’re not down as much as we usually are when the economy goes into recession but we’re not generating many jobs so consumers aren’t doing great,” says LaVorgna on Fast Money. “We’re hanging in but it’s not great.”
Joe LaVorgna's Predictions
Joe's Estimate: -85,000
Reaction: Stocks Rally, Treasuries Sell Off
Biggest Mover: Financials Pop
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Trader disclosure: On July 31, 2008, 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 (EMC), (DIS), (ATVID), (MSFT); Adami Owns (C), (AGU), (BTU), (GS), (INTC), (MSFT), (NUE); Finerman Owns (GS); Finerman's Firm Owns (MSFT), (SUN), (TSO), (TYC), (VLO), (RIG), (UFS); Finerman's Firm And Finerman Own (C) Leaps; Finerman's Firm Is Short (XLF), (BBT), (IYR), (IJR), (MDY), (SPY), (IWM), (COF); Seymour Owns (AAPL), (CSCO), (F), (MER), (MSFT), (INTC); Seygem Asset Management Owns (VIP), Gazprom; Seygem Asset Management Is Short (RSX)