OIL SURGE WEIGHS ON STOCKS
The Dow and S&P 500rose on Thursday as surging oil prices drove up energy shares, though fresh fears of more credit losses on Wall Street kept gains modest.
CRUDE OIL SURGESU.S. crude oil jumped more than $5 a barrel on rising tensions between the United States and energy behemoth Russia and the weaker dollar. Shares of Exxon Mobil rose 2 percent and were one of the biggest boosts on the Dow and S&P.
The shorts got squeezed, says Joe Terranova. That’s the bottom line. My feeling is that oil will run higher and then fail about $4 or $5 higher.
LEHMAN REBOUNDS AFTER UPGRADE
Bank shares struggled for much of the session as analysts predicted more mortgage-related write-downs on Wall Street.
However, shares of Lehman recouped most of their losses after word of a Lehman upgrade hit the Street and CNBC brought you the first live interview with analyst Dick Bove in a First on Fast exclusive.
Bove said, “If you take a look at Neuberger Bergman (the asset management arm of Lehman that’s likely up for sale) and you make the assumption that at its low point it’s worth $9 billion and you subtract that from the market cap of Lehman, it means the rest of the company is worth less than zero. That suggests you get all the rest of Lehman for nothing.”
I disagree with Bove, says Pete Najarian. I think they get $5 billion for Neuberger Bergman.
Read the entire interview:
> Lehman Upgraded By Bove
Meanwhile, heightened expectations for a government bailout of U.S. home-funding giants Fannie Mae and Freddie Mac drove their debt prices higher on Thursday as investors bet the securities will be guaranteed by the U.S. government even if shareholders are wiped out.
Despite gains in Fannie, shares in both government-sponsored enterprises, which own or guarantee almost half of all outstanding U.S. mortgages, remain near their lowest levels in nearly two decades.
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BEST WEEK IN 33 YEARS?
Led by the surge in oil the commodities sector is headed for it’s best week in 33 years according to the Reuters/Jefferies Index.
I would buy stocks in the oil services sector , says Joe Terranova. I think what we’ve seen recently was a modest correction and the oil bull will start running again.
That’s a large load of bull something, counters Jeff Macke. The trend is broken!
I don’t think the trend is broken, Terranova adds. The fundamental supply story remains in tact.
Forget oil. If you want a commodities trade, play copper with Freeport McMoRan, counsels Guy Adami.
SURPRISING RETAIL REBOUND
Despite high oil (which suggests higher gas prices) the Consumer Discretionary SPDR stayed positive for the day. Home Depot , Target, and Amazon all drove the sector.
It’s not like the numbers were good, says Jeff Macke, they were just okay. People in a comma are stable too but it’s still not a good thing.
Keep an eye on the XLY, counsels Pete Najarian. I saw a lot of put activity in that name on Thursday.
I think investors should take profits in Children’s Place, adds Guy Adami.
CELGENE CANCER BREAKTHROUGH
Celgene received a green light from U.S. regulators to add information to the label of its drug Vidaza showing it prolonged life in some patients with myelodysplastic syndromes, or MDS, a group of blood disorders that can lead to leukemia.
I think Celgene is set up to move significantly higher, says Guy Adami.
I’d keep an eye on ImCloneand Genetech because they both rejected recent bids, says Pete Najarian. And also look at Amylin– it might have found a potential bottom.
DOWN WITH THE KING…BURGER KING DOWN 7%
Burger King posted a stronger-than-expected profit on Thursday, but its shares tumbled as renovations and higher food costs at the world's No. 2 hamburger chain eroded margins.
Burger King, which has more than 11,500 restaurants worldwide, has been sprucing up old outlets, adding value menu items and expanding business hours to catch up with rivals.
I thought the numbers looked fairly impressive, says Pete Najarian. This dip could be an opportunity.
In fast food stick with best of breed, counters Jeff Macke. And that’s McDonald’s .
BREAKING UP IS EASY TO DO
Sometimes you just need to go your separate ways. All 5 of the smaller companies that resulted from the breakup of Barry Diller's IAC/Interactive closed higher on Thursday, their first day of trading.
Those companies are IAC/Interactive, Ticketmaster , HSN , Interval Leisure, and Tree.com .
I wouldn’t buy any of these names, exclaims Jeff Macke.
Stay away, adds Joe Terranova. Don’t get involved!
ANALYZE THIS: THE MAN WHO MOVED THE MINERS
On Thursday UBS analyst Shneur Gershuni upgraded Arch Coal , and Foundation Coal from 'Neutral' To 'Buy' on valuations, sending shares of both companies surging.
Gershuni had been fairly bullish on the coal space earlier in the year. However, “heading into the summer months the stocks had run up significantly, he says on Fast Money. "And since then they’ve corrected quite severely and we thought this was a good opportunity to step in.”
Here’s his thesis: The fundamentals have not changed. Coal pricing remains strong, the outlook remains strong and the international market remains strong.
In conclusion Gershuni says “This looks like a great entry point.”
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Trader disclosure: On Aug 20, 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 (MSFT), (WMT); Adami Owns (AGU), (BTU), (C), (GS), (INTC), (MSFT), (NUE); Najarian Owns (MS), Najarian Owns (AAPL) And Is Short (AAPL) Call, Najarian Owns (ANR) And Is Short (ANR) Call, Najarian Owns (JOYG) Call Spread, Najarian Owns (LEH) Put Spread, Najarian Owns (NOK) And Is Short (NOK) Calls, Najarian Owns (XLY) Puts
Terranova Owns (AAPL), (BNI), (CME), (EOG), (FCX), (GS), (GOOG), (INTC), (KOL), (NOV), (POT), (RIMM), (SA), (XLF), (SU), (X), (VLO), (YHOO); Terranova Owns (AIG) Puts; Terranova Is Short Crude Oil Time Spread (Short Dec. 2009, Long Dec. 2012); Terranova Is Long Crude Oil Futures (Dec. 2012)
Terranova Is Chief Alternatives Strategist Of Phoenix Investment Partners, Ltd.; Phoenix Investment Partners Owns More Than 1% Of (ABD), (ARE), (BRE), (CNTY), (CLB), (OFC), (DLR), (ESS), (EXR), (FL), (IAT), (IGE), (LNET), (MAC), (OIIM), (PSPT), (DBC), (DBV), (SLB), (SKT), (BLV)
Terranova Is Co-Portfolio Manager Of The Phoenix Diversifier PHOLIO; Phoenix Diversifier PHOLIO Owns (IGE), (DBC), (DBV)
UBS Securities LLC Has Received Compensation From (ANR), (ICO), (JRCC) In Past 12 Months; (ANR) Is Or Within Last 12 Months Has Been An Investment Banking Client Of UBS Securities LLC; (ICO) Is Or Within Last 12 Months Has Been An Investment Banking Client Of UBS Securities LLC; (JRCC) Is Or Within Last 12 Months Has Been An Investment Banking Client Of UBS Securities LLC