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Halftime Report: Betting On Interest Rates

FED PRES. ON INTEREST RATES

Investors are hoping to get a better handle on the direction of interest rates after St. Louis Fed president James Bullard spoke with CNBC. When asked about rising interest rates he said “it’s a little bit of the economy and a little bit due to fears of inflation,” says host Melissa Lee.

What does that mean for borrowing costs?

I don’t know if the rising yields in Treasurys are correct or not correct, muses Fast Money trader Joe Terranova. Personally, I don’t expect the government to raise rates in the face of a weak economy and struggling consumer.

I think it all boils down to the next Fed meeting on June 23rd and 24th, he adds. The question is – does Bernanke come in and buy more Treasuries?


COMMODITY STOCKS LEAD MARKET LOWER

Meanwhile, both the S&P 500 and Dow were trading lower after retreating commodity prices drove a sell-off in that space and after Goldman Sachs' downgraded Wal-Mart. Also, investors hammered technology shares.

"It seems to me what's going down the most is the stuff that's gone up the most. There's been enormous moves both in equities and in commodities recently," says Eric Kuby, chief investment officer at North Star Investment Management Corp in Chicago.

"A lot of people have had nice profits, and if the trade is over they want to exit the trade. Of course, that may change this afternoon or tomorrow."

How should you trade?

It seems to me the S&P is doing what it should be doing and that’s consolidating, explains Dan Fitzpatrick of StockMarketMentor.com. Resistance remains 944 but I’m cautiously bullish. As a result I’d buy the dips.

THE OBAMA TRADE: HEALTH CARE

President Obama pushed hard Monday for a health care overhaul, saying the system is "a ticking bomb" for the budget and could propel America down "the route of GM" without a legislative fix.

Obama went before the American Medical Association in Chicago to declare anew that the existing system leaves too many uninsured and forces "excessive defensive medicine" by doctors worried about malpractice suits.

The news makes me simply want to stay away from this group, counsels OptionMonsster Jon Najarian. I don’t think investors will commit capital to the space until the Presidents speaks again.

FAST & FURIOUS: THE KEY QUESTIONS INTO THE CLOSE

BUY FINANCIALS? The financials all traded to the downside today after Capital One said defaults rose in May.

I wouldn’t touch these until after Obama speaks on Wednesday, counsels Jon Najarian.

HIDE IN GOLD?U.S. gold futures fell toward $930 an ounce on Monday largely due to strength in the dollar; is the pullback a buying opportunity?

I think gold goes lower, muses Dan Fitzpatrick

BUY DOLLAR? The dollar gained against a basket of major currencies on Monday after Russia expressed confidence in the greenback

I’m not a buyer, says Mike Khow.

BUY OIL?Oil fell more than 3 percent to below $70 a barrel on Monday, largely due to the stronger dollar.

I’d get flat but not short, counsels Joe Terranova.


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