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Halftime Report: Europe Stabilizing Or Getting Worse?

Published: Tuesday, 16 Feb 2010 | 1:20 PM ET

Text Size

By: Lee Brodie
Producer

Halftime Report

The Dow [.DJIA Loading... () ] jumped more than 100 points on Tuesday as regional manufacturing data and solid earnings from Merck [MRK Loading... () ] and Abercrombie [ANF Loading... () ] fueled investor optimism.

However it's the action in the currency markets that has really captured the attention of the Fast Money traders.

New plans by EU leaders to control the crisis in Greece generated a tailwind for the bulls; it gave the euro [EUR=X Loading... () ] a boost against the greenback; putting weak dollar trades back in play.

With the euro moving higher, is it time to bet big that the global commodity trade is back on?

Instant Insights with the Fast Money traders

If you believe that EU has put a backstop on Greece, then I think you can play the global growth trade, says Tim Seymour. I do think that demand is returning to the commodities space. In India we’re hearing there’s a real shortage of fertilizer. But you have to trade carefully. Demand isn’t consistent across the whole space. Copper still seems challenged at $3.10. And make no mistake about the euro / dollar move – the move is euro short covering.

As far as I'm concerned, the situation in Europe is bad and getting worse, adds veteran trader Gary Kaminksy. What’s happening with the dollar [US@DX.1 Loading... ()] on Tuesday is a short term phenomenon. I think the dollar will continue to strengthen long-term. Place your bets accordingly.

If you’re a short term trader, I think we have a trade-able rally in the euro [EUR=X Loading... () ], counsels Brian Kelly of Kanundrum. But I’m using the strength to add to my short position.

I don’t think strength in commodities is a function of the dollar; instead I think it’s demand driven, muses Jon Najarian. If you're looking for a play, I’m watching $75 in Freeport [FCX Loading... () ], he says. If it can violate through to the upside I see a very good trade there.

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FAST FLASH: BARCLAYS SURGING AN AMAZING 10%

Banks [XLF Loading... () ] are another group blamed for correction fears, but it appears the sector is coming back with Barclays [BCS Loading... () ] surging higher on Tuesday.

Is this reason to buy the financials?

Barclays may be up on Tuesday, but I think English banks as well as other banks across Europe will have trouble as the EU weakens further, says Gary Kaminksy. I can't get on board.

I’d take profits in this space, counsels Jon Najarian. I’m reducing my position in UBS [UBS Loading... () ] and Barclays. Over the next 30 days I think these stocks have a tough time.

I disagree on Barclays, says Tim Seymour. They didn’t take a bailout so I don’t think they’re facing the same headwinds. They don’t have the same regulatory pressure on them.

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WHO'S EXPOSED TO GREECE?

A report in the New York Times and carried by CNBC.com suggests that Wall Street helped cover up Greek debts, fueling crisis.

The report points the finger squarely at Goldman Sachs [GS Loading... () ].

"One deal created by Goldman Sachs helped obscure billions in debt from the budget overseers in Brussels," writes the Times.

Considering the developments, what other American banks may have big exposure to Greece?

It’s possible that BofA [BAC Loading... () ] bought into the problem via their acquisition of Merrill Lynch, explains Bernstein analyst Brad Hintz. Also Morgan Stanley [MS Loading... () ] and Citi [C Loading... () ] are believed to have exposure. If credit default spreads open up it’s going to impact them.

But with that said, I would not sell out of my position in any of these stocks, adds Hintz. I think this is going to be a short term issue.

If you're looking for a short term trade and believe the US is stronger than Europe, you might consider a pairs trade, he adds. I’d consider long BofA and go short Deutsche [UBS Loading... () ] against it.

> Click here to read the entire New York Times Report “Wall Street Helped Cover Up Greek Debts, Fueling Crisis”

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BIG MONEY: BIG BLOCK TRADE IN AUTODESK

Autodesk [ADSK Loading... () ] is on the Fast Money trader radar after Goldman upgraded the stock to 'Buy' from 'Neutral' and increased its price target to $30, from $27.

What’s the trade?

I think this is a great play going forward, says Jon Najarian.

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THE OBAMA TRADE

Promising "this is only the beginning," President Barack Obama announced more than $8 billion in federal loan guarantees Tuesday for the construction of the first nuclear power plant in the United States in nearly three decades.

On the news shares of and uranium producer Cameco [CCJ Loading... () ] jumped.

What’s the trade?

I’d keep an eye on Cameco as well as Jacobs [JEC Loading... () ], McDermott [MDR Loading... () ] and USEC [USU Loading... () ] , says Tim Seymour.

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TAKE YOUR POSITION: WHOLE FOODS

With Whole Foods [WFMI Loading... () ] scheduled to report earnings on Tuesday after the bell, how should you trade?

If you want to play the space, I’d do it with Supervalu [SVU Loading... () ], says Brian Kelly.

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CALL THE CLOSE

Tim Seymour: I’m watching 1089 as a critical level in the S&P.
Jon Najarian: I’m a buyer into the close.
Brian Kelly: I’m a buyer.
Gary Kaminsky: I think the market will hold but expect euro weakness to return Wednesday.

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TAKE YOUR POSITION: NAHB

Housing stocks [XHB Loading... () ] could be big movers on Tuesday with the February NAHB Housing Market Index due this afternoon – according to estimates it’s expected to fall 1 point to 14.

What must you know to trade the space?

Find out from Hovnanian CEO Ara Hovnanian. Watch the video now!

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Trader disclosure: On February 16, 2010, the following stocks and commodities mentioned or intended to be mentioned on CNBC’s Fast Money were owned by the Fast Money traders; Finerman's Firm And Finerman Own (GGWPQ); Finerman's Firm Owns (BAC), (BAC) Leaps; Finerman Owns (BAC), (BAC) Preferred, (BAC) Leaps; Finerman's Firm Is Short (IJR), (MDY), (SPY), (IWM), (UNG), (USO); Finerman Owns (AAPL); Finerman's Firm And Finerman Own (GOOG); Finerman's Firm Owns (KFT); Finerman's Firm Owns (NOK), (TGT), (WMT); Seymour Owns (AAPL), (AA), (CCJ), (FXE), (INC). (VALE), (X); Terranova Owns (AAPL), (GOOG), (RIMM), (JPM), (QCOM), (IBM), (MSFT), (DELL), (EMC), (PALM); Terranova Is Long Dec. 2010 Crude Oil Futures; Terranova Is Long Dec. 2011 Crude Oil Futures; Grasso Owns (ABK), (AAPL), (ASTM), (BAC), (BGP), (C), (COST), (CSCO), (FAZ), (PFE), (PRST), (WMT), (V); Seymour Owns (X); Jon Najarian Owns (AMR), (BAC), (BCS), (C), (GS), (HD), (MS), (SPG), (UBS), (TRA), (WFMI)

For Tim Seymour
Seygem Asset Management Owns (POT)
Seygem Asset Management Owns (GFI)
Seygem Asset Management Owns (POT)

For Joe Terranova
Terranova Works For (VRTS)
Terranova Is Chief Market Strategist Of Virtus Investment Partners, Ltd.
Virtus Investment Partners Owns More Than 1% Of (CLB)
Virtus Investment Partners Owns More Than 1% Of (DLR)
Virtus Investment Partners Owns More Than 1% Of (EXR)
Virtus Investment Partners Owns More Than 1% Of (IGE)
Virtus Investment Partners Owns More Than 1% Of (XLY)
Virtus Investment Partners Owns More Than 1% Of (DBV)
Virtus Investment Partners Owns More Than 1% Of (XLP)
Virtus Investment Partners Owns More Than 1% Of (XLB)
Virtus Investment Partners Owns More Than 1% Of (XLI)
Virtus Investment Partners Owns More Than 1% Of (SKT)

For Steve Grasso
Stuart Frankel & Co. Inc And Its Partners Own (AIZ)
Stuart Frankel & Co. Inc And Its Partners Own (ABX)
Stuart Frankel & Co. Inc And Its Partners Own (CUBA)
Stuart Frankel & Co. Inc And Its Partners Own (GERN)
Stuart Frankel & Co. Inc And Its Partners Own (GLG)
Stuart Frankel & Co. Inc And Its Partners Own (HSPO)
Stuart Frankel & Co. Inc And Its Partners Own (NWS.A)
Stuart Frankel & Co. Inc And Its Partners Own (NXST)
Stuart Frankel & Co. Inc And Its Partners Own (NYX)
Stuart Frankel & Co. Inc And Its Partners Own (PDE)
Stuart Frankel & Co. Inc And Its Partners Own (PRST)
Stuart Frankel & Co. Inc And Its Partners Own (RDC)
Stuart Frankel & Co. Inc And Its Partners Own (ROK)
Stuart Frankel & Co. Inc And Its Partners Own (TLM)
Stuart Frankel & Co. Inc And Its Partners Own (TOL)
Stuart Frankel & Co. Inc And Its Partners Own (XRX)
Stuart Frankel & Co. Inc And Its Partners Own (SDS)
Stuart Frankel & Co. Inc And Its Partners Are Short (QQQQ)
Stuart Frankel & Co. Inc And Its Partners Are Short (CL)

For Toni Sacconaghi
Sacconaghi Owns (PLMO), (STX)
Accounts Over Which Bernstein And/Or Affiliates Exercise Investment Discretion Own More Than 1% Of (DELL), (HPQ)
Bernstein Is A Market Maker In (DELL)
(DELL), (HPQ) Are Or In Past 12 Months Were Clients Of Bernstein (Non-Investment Banking, Securities-Related Services), Bernstein Recieved Compensation
An Affiliate Of Bernstein Received Compensation For Non-Investment Banking-Securities Related Services From (DELL), (HPQ)
Bernstein Or Affiliate Expects To Receive/seek Investment Banking Compensation From (DELL), (HPQ) In Next 3 Months

For Brian Kelly
Kanundrum Capital Is Short (TAO)
Kanundrum Capital Is Short (EWY)
Kanundrum Capital Is Short EURUSD
Kanundrum Capital Is Short GBPUSD
Kanundrum Capital Owns (SVU)
Kanundrum Capital Owns USDJPY
Kanundrum Capital Owns USDSGD
Kanundrum Capital Owns USDCHF
Kanundrum Capital Owns (C)
Kanundrum Capital Owns (JPM)
Kanundrum Capital Owns (NBG)
Kanundrum Capital Owns (EWP)
Kanundrum Capital Owns (HOV)
Kanundrum Capital Owns (TOL)
Kanundrum Capital Owns (PHM)
Kanundrum Capital Owns (WY)
Kanundrum Capital Owns (RYN)
Kanundrum Capital Owns (EWA)
Kanundrum Capital Owns (EWJ)
Kanundrum Capital Owns (EWC)
Kanundrum Capital Owns (POT)
Kanundrum Capital Owns (MOS)
Kanundrum Capital Owns (IPI)
Kanundrum Capital Owns (ELX)
Kanundrum Capital Owns (QLGC)
Kanundrum Capital Owns (VMW)
Kanundrum Capital Is Long USDJPY
Kanundrum Capital Is Long USDSGD
Kanundrum Capital Is Long USDCHF
Kelly Owns (HOV) Calls
Kelly Owns (ELX)
Kelly Owns (QLGC) Calls
Kelly Owns (FXE) Puts
Kelly Owns (HOV) Calls
Kelly Owns (AMZN) Calls
Kelly Owns (ELX) Calls
Kelly Owns (QLGC) Calls
Kelly Owns (FXE) Puts

For Brad Hintz
Accounts Over Which Bernstein And/Or Affiliates Exercise Investment Discretion Own More Than 1% Of (BAC)
(BAC) Is Or In Past 12 Months Was A Client Of Bernstein (Non-Investment Banking-Securities Related Services), Bernstein Or Affiliate Received Compensation For Investment Banking Services From (BAC) In Past 12 Months
Bernstein Or Affiliate Expects To Receive/Seek Investment Banking Compensation From (BAC) In Next 3 Months
Accounts Over Which Bernstein And/Or Affiliates Exercise Investment Discretion Own More Than 1% Of Barclays PLC, Credit Suisse Group, (C), (GS), (JPM), (MS)
Barclays PLC, (C), Credit Suisse Group, (GS), (JPM), (MS), UBS AG Are Or In Past 12 Months Were Clients Of Bernstein (Non-Investment Banking-Securities Related Services), Bernstein Received Compensation
An Affiliate Of Bernstein Received Compensation From Barclays PLC, (C), Credit Suisse Group, (JPM), (GS), (MS), UBS AG (Non-Investment Banking-Securities-Related Services)
Bernstein Or Affiliate Received Investment Banking Compensation From (C) In Past 12 Months
Bernstein Or Affiliate Expects To Receive/Seek Investment Banking Compensation From Barclays PLC, (C), Credit Suisse Group, (GS), (JPM), (MS), UBS AG In Next 3 Months
Hintz Owns Morgan Stanley And Discover
Hintz Owns (CME)
Accounts Over Which Bernstein And/Or Affiliates Exercise Investmet Discretion Own More Than 1% Of (GS), (MS)
(GS), (MS) Are Or In Past 12 Months Were Clients Of Bernstein (Non-Investment Banking-Securities Related Services)
An Affiliate Of Bernstein Received Non-Investment Banking Compensation From (GS), (MS) (Securities Related Services)
Accounts Over Which Bernstein And/Or Affiliates Exercise Investment Discretion Own More Than 1% Of (IBM)
(IBM) Is Or In Past 12 Months Was A Client Of Bernstein (Non-Investment Banking-Securities Related Services), Bernstein Received Compensation
An Affiliate Of Bernstein Received Compensation For Non-Investment Banking-Securities Related Services From (IBM)
Bernstein Or Affiliate Intends To Receive/Seek Investment Banking Compensation From (IBM) In Next 3 Months

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