STOCKS DRIFT LOWER
The Dow fell modestly in choppy trade with Big Pharma shares tumbling after Merck proposed a $41 billion takeover of Schering-Plough. Large deals are generally viewed positively by investors, but analysts said in this environment it suggested trouble could lie ahead for the sector considering President Obama’s intense interest in reforming health care.
Meanwhile, comments from billionaire investor Warren Buffett also dragged down sentiment on Monday. During an interview on CNBC he said the current environment was an "economic Pearl Harbor." But he added that over a 10-year period, investors will do "considerably better owning a group of equities" rather than U.S. Treasury securities.
Financial stocks were a bright spot in Monday’s trading and rose as investors bet on the potential for more clarity from Washington. Also Merrill Lynch said the S&P 500 is likely to bottom at 600 points in October, with financial stocks pointing the way out of the current bear market six months ahead of that.
Strategy Session with the Fast Money Traders
The stock market went down because the credit markets deteriorated significantly, explains Karen Finerman.
The world bank is saying there’s a lot of corporate debt that will have to be refinanced, adds Tim Seymour.
The Nasdaq slid to a fresh 6 and 1/2-year low on Monday and I think investors rotated out of tech shares and into cash out of fear, says Pete Najarian. But at current levels, I’d look at Google and Apple, he says.
Also, the most impressive thing to me was that the banks didn’t get clobbered today, Najarian adds. I'm long financials as well as puts ahead of the mark-to-market meeting scheduled for March 12th in Washington DC.(Click here for Jon Najarian's bank trade ahead of the meeting.)
If I were long financials I would be out before the hearing, counters Tim Seymour. I don’t think that meeting does anything.
Meanwile, more M&A news hit after hours.... Dow Chemical agreed to go through with its purchase of Rohm & Haas. Under the terms of the deal, Rohm & Haas shareholders will still receive $78 per share, plus a ticking fee agreed upon in the original deal. But Rohm's two largest shareholders -- the Haas Family Trust and Paulson & Co -- will take up to $3 billion owed them from the deal in the form of preferred equity securities in Dow
The agreement is “amazing,” says Karen Finerman. Also I expect to see Genentech and Roche arrive at a deal.
OIL GAINING MOMENTUM?
Oil jumped more than 3 percent to over $47 a barrel on Monday on speculation producer group OPEC may cut output again and a naval incident between the United States and China, sparked fear of geo-political tensions.
Relative value in the space is alive and well, says Tim Seymour. (Click here to read about Tim Seymour’s oil trade.)
Looking at other commodities, copper is forming a base, reminds Pete Najarian. I think we’re starting to see stabilization. Also, Arch Coal just inked a deal on Monday that I find interesting. Bur rather than chase energy names I’d look at engineering firms such as Flour and Foster Wheeler.
GOLD SHEDS 2.6%
Goldprices dropped more than 2 percent on Monday, despite reports that hedge funds are diving into this precious metal trade. In fact, gold is reportedly the largest investment in the portfolio of billionaire investor David Einhorn.
I like gold long-term, says Tim Seymour. But in the short-term the chart is questionable.
I don’t know about gold, counters Zach Karabell. It has no intrinsic value.
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Trader disclosure: On Mar. 9th, 2008, the following stocks and commodities mentioned or intended to be mentioned on CNBC’s Fast Money were owned by the Fast Money traders; Najarian Owns (GDX); Najarian Owns (DNA) Calls; Najarian Owns (FCX) Spread; Najarian Owns (MS) & (MS) Calls; Najarian Owns (MSFT) & (MSFT) Calls; Najarian Owns (PNC) Put Spread; Najarian Owns (X) Call Spread; Najarian Owns (V) & (V) Calls; Najarian Owns (MOS) Call Spread; Najarian Owns (GD) Long Calls; Finerman's Firm Owns (MSFT); Finerman's Firm Owns (DNA) & (DNA) Calls; Finerman's Firm Own (RIG); Finerman's Firm Owns (WFC) Preferred; Finerman Owns (WFC) Preferred; Finerman's Firm Is Short (IYR), (IJR), (IWM), (MDY), (SPY), (USO), (BBT), (VNO); Seymour Owns (BIDU), (EEM), (FXI), (RIG), (BAC), (CHL); Karabell Owns (AAPL), (BHP), (FCX), (GOOG), (GLD), (GE), (JPM)
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