Exchanging Views with Oppenheimer
Closing Bell continued our "Exchange" series Thursday, broadcasting live from the Oppenheimer & Co. trading floor.
On a busy day, 65 million retail and institutional trades are made, with technology, health care and consumer ranking as the most heavily traded sectors.
Big Opportunities in Oil
With oil prices bubbling 82% so far this year, Maria Bartiromo caught up with Oppenheimer's finest oil analysts - Fadel Gheit, Managing Director of Oil and Gas Research and Scott Burk, Senior Analyst of Oil Services and Ocean Shipping.
Gheit told Bartiromo that he expects "oil prices to remain inflated for the next few months." He is also in the camp that believes that this move in crude prices is "pure speculation", adding that supply and demand fundamentals "do not support $60 oil, let alone $80 oil."
Burk added that the weak dollar will be a positive for energy stocks, and that specifically for the offshore drillers, there is a "93% correlation between oil services and prices". Burk's top picks given the current weak dollar and high oil price scenario are Price International and Atwood Oceanics. (Disclosure: Burk has no disclosures)
Gheit meanwhile, is recommending "stocks that have the momentum". His favorites are DevonEnergy, Chesapeake Energy and Anadarko Petroleum.
(Disclosure: Gheit owns XOM and DVN)
Banking on Banks
Another sector that has been on a tear is the banks. The KBW banking index has surged more than 140% since March lows.
Chris Kotowski, Senior Research Analyst of Large Cap Banks and Brokers at Oppenheimer & Co., did not think this rally was a "head fake". He believed that stocks bottomed earlier in the year "because the Fed hung out the green flag, saying the water is safe with the stress test."
Kotowski's gauge - measuring the inflows of problem assets into the banking sector - has grown "steadily every single quarter." This quarter also saw record levels, but also marked the first time since the onset of the crisis, that "the net inflow of problem assets was flat." A peak in the rate of inflow problems, according to Kotowski is definitely a positive.
The technical perspective also confirms the positive outlook for banks. From his analysis of technical trends, Carter Worth, Chief Market Technician of Oppenheimer Asset Management said "financials are still underowned and it's alright to be overweight the group." Backing up his call with some market stats, Worth said that financials were 22% of the S&P at the start of 2007, hit a low of 9% in March and now it's back up to 15%. Worth thinks financials will "stabilize around 18% and that he expects the outperformance to continue.
Catch us Thursdays as we continue our "Exchange" series from Wall Street's top trading floors.
Liza Tan contributed to this article.
Questions? Comments? Write firstname.lastname@example.org