Halftime Report: Use Goldman As Road Map For Bank Earnings
By lunchtime stocks had barely budged higher despite an impressive earnings report from Goldman Sachs.
Before the bell the Wall Street titan said quarterly earnings surged 33 percent on strong trading results, trouncing expectations.
Considering Bank of America and JPMorgan report later in the week, do the Goldman results suggest more strong earnings lie ahead?
Instant Insights with the Fast Money Traders
I don’t think investors can draw any conclusions about banks from Goldman earnings, muses Joe Terranova. All you can say is Goldman is back and they’re back in a big way.
I really don’t think any other bank performs at the same level as Goldman, adds Dennis Gartman of The Gartman Letter. Goldman really is just a big hedge fund while the others are hedge funds wrapped around banks.
I would take profits in banks, adds Patty Edwards of Storehouse. They've run quite a bit and I don’t think investors can glean anything about the sector in general from Goldman earnings.
In the options market, I’m seeing out of the money call buying in the XLF , adds JJ Kinahan of Think of Swim. I think Goldman has given hope to investors that maybe banks can beat expectations and that the markets are functioning as they should.
JOHNSON & JOHNSON EARNINGS
Shares of pharma giant Johnson & Johnson moved higher after the firm's profits and revenue beat analyst forecasts helped by surprisingly resilient pharmaceutical and consumer product sales.
"They went through a cost-cutting exercise about a year and a half ago, and it's definitely helping them with their earnings to date," says Jan Wald, an analyst with Noble Financial Group. "The surprise is more on the revenue side ... and that bodes well."
What’s the trade?
Revenues are being generated by Neutragena and Listerine, adds Joe Terranova. I don't like that revenues in generic drugs are dropping. I’d be careful with J&J and all pharma.
I’d look at Colgate and Avon , adds Patty Edwards. These are places where consumers are spending money.
TAKE YOUR POSITION: INTEL
Tech investors are eager to hear from Intel after the bell hoping their results reveal that Corporate America has, in fact, started to invest more in IT in anticipation of a recovery.
What should you look for?
The market heard strong guidance from rival Novellus yesterday and now investors are hoping for strong numbers out of Intel, explains Pete Najarian. I think we’ll see drivers from netbooks but that’s the cheaper end of the market. However, if there’s an upgrade in the PC cycle it could be great for Intel.
Oil hovered around $60 a barrel Tuesday, leaving some traders to wonder if crude’s sharp decline had slowed, at least for now. The price of oil has been dropping since June 30th due to doubts about the strength of the economy.
I think you'll see oil futures and energy equities start to decouple, muses Joe Terranova. The futures may well trade lower because of looming regulations, but I think hedge funds will drive energy equities higher as they seek allternative exposure to the space.
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Trader disclosure: On July 14th, 2009, the following stocks and commodities mentioned or intended to be mentioned on CNBC’s Fast Money were owned by the Fast Money traders;
Gartman Is Long (JNJ)
Gartman Is Long (GS)
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