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Halftime: 5 US Companies That May Have Big Europe Risk

The Dow dropped sharply on Tuesday; with its biggest slide since February 4th largely triggered by fears the debt crisis in Europe may be spreading.

At least part of the sell-off was triggered by a market rumor suggesting Spain might soon follow Greece and ask the EU for a massive bailout – to the tune of for 280 billion euros.

Spanish Prime Minister Jose Luis Rodriguez Zapatero denied the claims calling the chatter "complete madness."

Nonetheless, investors dumped stocks worried that problems in Europe were far from solved; the euro tumbled to a one-year low against the dollar.

What must an investor know?

With concerns about the sovereign debt crisis escalating, the Fast Money traders wanted to know which companies had the most exposure to Europe. The following list was compiled by S&P and shows US firms with sales generated in Europe between 2003 – 2008.

These may be the companies that could feel the most pain next earnings season, reminds host Melissa Lee, due to the weaker euro.

Company *% Sales From
**Schering-Plough 48%
Flowserve 47%
Paccar 47%
Owens-Illinois 44%
Pall Corp 43%
Source: S&P
*Sales between 2003-2008
** Schering-Plough was acquired by Merck

Strategy Session with the Fast Money traders

It’s important to know where companies are making their money and I’d avoid any multinational with big exposure to Europe, says Patty Edwards of Storehouse.

Meanwhile, as mentioned above, the euro hit a one year low against a dollar, explains Oppenheimer’s Carter Worth, but I don't think it stops there. Charts suggest the euro is an established downtrend trend. I have no reason to believe the selling is over.

I’m watching the Vix which has spiked, says Pete Najarian. And I suspect it could go even higher. I don’t think there’s any area of complete safety, but perhaps a safer play is in the health care space, he adds. I’d look at Pfizer, Merck and Teva .

Hedge funds are also looking at more defensive plays, explains Anthony Scaramuuci of Skybridge If you’re looking for a long play, I'd also look at Pfizer.

Charts in the health care space are so bad in many cases they’re good, adds Carter Worth. In other words, some of these stocks may be due for a bounce.

My concern is the UK, says Brian Kelly of Kanundrum. They have a lot more debt than Spain. I’d be short the British pound going into the end of the week because of elections coming up. The belief is that a new coalition government will have a harder time getting Britain’s debt under control.

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BROAD MARKET

Wall Street's major indexes slid more than 2 percent on Tuesday as investors sold first and asked questions later.

Some technical analysts are watching 1,181 on the S&P 500, the intraday low hit last week.

What do the charts say?

Charts of the S&P look okay, explains Carter Worth. I think we’re playing for the January highs which were 1150. I’d use those tops as a reference point.

*It’s worth noting that all the trader expect selling pressure to remain dominant through the close.

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GOLDMAN SAGA CONTINUES

The Goldman saga continued on Tuesday with six private lawsuits brought against the firm.

What’s the trade?

Goldman doesn’t seem like they’re in settlement mode, says Anthony Scaramucci, which means litigation risk remains a concern.

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TRADE TO GO: APPLE

I’d put Apple on the radar, says Patty Edwards. They’re a best in class company. I think around $250 the stock makes a lot of sense and I’d add to my position.

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CALL THE CLOSE

Carter Worth: I think the market closes lower.

Anthony Scaramucci: I’d expect to see selling pressure.

Patty Edwards: I’d make a shopping list but I’m not a buyer, yet.

Pete Najarian: If Goldman turns I think the market has a chance to turn, as well.


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Trader disclosure: On May 4, 2010, 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 (PFE); Najarian Owns (GS) Calls; Najarian Owns (MS); Najarian Owns (C) Calls; Najarian Owns (SFD) Calls; Najarian Owns (TEVA); Adami Owns (AGU), (C), (INTC), (GS), (NUE), (MSFT), (BTU); Finerman's Firm Is Short (IYR), (IJR), (MDY), (SPY), (USO); Finerman's Firm Is Long S&P Puts; Finerman Owns (AAPL); Finerman's Firm Owns (AEO), (ARM); Finerman Owns (BAC), (BAC) Preferred; Finerman's Firm Owns (BAC), (BAC) Calls; Finerman's Firm And Finerman Own (CVS); Finerman's Firm And Finerman Own (JPM); Finerman's Firm And Finerman Own (RIG), (RIG) Calls; Finerman's Firm Owns (WFC) Preferred; Terranova Owns (PFE), (SWN), (XCO), (TER); Terranova Owns (C) May Calls; Terranova Is Long Gold June 2010 Futures; Terranova Is Short (CMA); Edwards Owns (VXX); Kelly Owns (FXE) Puts; Kelly Owns (FXB) Puts; Cortes Is Long Treasuries; Cortes Is Long U.S. Dollar; Nations Owns (SPY)

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 (AMKR)
Virtus Investment Partners Owns More Than 1% Of (IGE)
Virtus Investment Partners Owns More Than 1% Of (DBV)
Virtus Investment Partners Owns More Than 1% Of (XLB)
Virtus Investment Partners Owns More Than 1% Of (XLV)
Virtus Investment Partners Owns More Than 1% Of (XLP)
Virtus Investment Partners Owns More Than 1% Of (XLY)
Virtus Investment Partners Owns More Than 1% Of (XLI)
Virtus Investment Partners Owns More Than 1% Of (XLU)
Virtus Investment Partners Owns More Than 1% Of (DRYS)

For Whitney Tilson
Funds Managed By Whitney Tilson Own (BUD)
Funds Managed By Whitney Tilson Own (BRK.A)
Funds Managed By Whitney Tilson Own (BRK.B)
Funds Managed By Whitney Tilson Own (MSFT)
Goldman Sachs Is A Prime Broker For Funds Managed By Whitney Tilson

For Anthony Scaramucci
Scaramucci Owns (WMT), Skybridge Owns (WMT)
Scaramucci Owns (PFE), Skybridge Owns (PFE)
Scaramucci Owns (MRK), Skybridge Owns (MRK)
Scaramucci Owns (GS), Skybridge Owns (GS)
Scaramucci Owns (MS), Skybridge Owns (MS)
Scaramucci Owns (JPM), Skybridge Owns (JPM)

For Patty Edwards
Edwards Owns (SPY) For Clients
Edwards Owns (QQQQ) For Clients
Edwards Owns (WMT) For Clients
Edwards Owns (PFE) For Clients
Edwards Owns (MRK) For Clients
Edwards Owns (BMY) For Clients
Edwards Owns (AAPL) For Clients
Edwards Owns (MS) For Clients
Edwards Owns (JPM) For Clients
Edwards Owns (BAC) For Clients
Edwards Owns (C) For Clients
Edwards Owns (WFC) For Clients
Edwards Owns (EEM) For Clients
Edwards Owns (GLD) For Clients
Edwards Owns (PGM) For Clients

For Brian Kelly
Kanudrum Capital Is Long U.S. Dollar
Kanudrum Capital Owns (TLT)
Kanudrum Capital Owns (GLD)
Kanundrum Capital Owns (GFI)
Kanundrum Capital Owns (AUY)
Kanundrum Capital Is Short (DE)
Kanundrum Capital Is Short (NUE)
Kanundrum Capital Is Short (FDX)
Kanundrum Capital Is Short (XOM)
Kanundrum Capital Is Short (HES)
Kanundrum Capital Is Short (IBM)
Kanudrum Capital Is Short Euro
Kanudrum Capital Is Short British Pound
Kanudrum Capital Is Short Yen
Kanudrum Capital Is Short Swiss Franc


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