The story of the moment comes once again from the Gulf of Mexico as reports surface that one of Diamond Offshore's rigs is also leaking.
The first reports were largely generated by the website BusinessInsider.com which showed a photo and attributed what looks like an oil slick to the Ocean Saratoga rig owned by Diamond Offshore.
They go on to say, "a freelance pilot and photographer confirmed these rumors and a possible coverup."
Diamond Offshore, however, tells CNBC that the rig is a shallow-water rig that’s doing plug and abandonment work -- not drilling. A certain amount of oil naturally comes out of these rigs during the process.
What must you know?
The rig is working in less than 500 feet of water, explains Raymond James analyst Collin Gerry on Fast Money's Halftime Report. It’s not under the deep-water moratorium – so a cover-up seems unlikely.
Also plug and abandonment work means going back into older existing wells where production has started to decline and plugging it so it will go away permanently, he adds.
As far as I can tell, the risk of another gusher type event like the Deepwater Horizon is very low, Gerry concludes.
What’s the trade?
Investors need to trade the energy space carefully, but I like shallow water names, counsels Collin Gerry. Look at Rowan and Hercules.
If you’re looking for an energy trade, I’d look at nat gas, says Guy Adami. I think it’s starting to break out. I’d play it with royalty trust names that pay dividends. Or look at Apache . The right price for this stock is probably $105 in a benign tape.
I’m playing energy with ERF because it pays a high dividend, says Patty Edwards of Storehouse.
If there’s one takeaway it’s that there’s a lot of confusion in the space, adds Brian Kelly of Kanundrum. I don’t know if you should avoid the sector all together but the developments certainly illustrate what a difficult market this is.
FAST FX: 3M LEADS DOW LOWER ON CURRENCY CONCERNS
Investors punished shares of 3M on Tuesday after the company announced that its EPS will be affected by 5-cents due to recent currency fluctuations. McDonalds and Burger King also made similar comments earlier today.
What’s the trade?
Although McDonald's did say the weaker euro would take a bite out of profits, I thought their oversall sales numbers showed they were doing brisk business in Europe, muses Pete Najarian. They’re benefiting from the trade down.
Don't forget that the recent moves in the currency market have been huge - it's reasonable to think companies haven’t priced it all in, says Brian Kelly. That’s important to note.
Before you establish new positions it’s important to scour the 10K and check for exposure to Europe, adds Patty Edwards. Investors would likely be surprised at how many companies generate 30% or more of their revenues from Europe.
GOLD HITS RECORD
Gold futures hit a record high on Tuesday as investors sought the precious metal in a flight to safety.
It’s a move that commodities guru Dennis Gartman anticipated on Monday’s Fast Money. He said”
"I think what was surprising today was the gold was up $25 and no one paid attention. When gold goes up $25 its telling you something, there was very little news on it but it was up. You have to pay attention to that fact."
What’s the trade?
Right now, I can’t think of a scenario in which gold would go down, says Guy Adami, and that actually worries me. I fear this trade will end poorly.
If you're looking for a trade, gains in the Gold Miners ETF are currently trailing gains in the GLD, muses Pete Najarian. It stands to reason that they should catch up.
CHART OF THE DAY: S&P VS. FINANCIALS FROM ROQUE
In Fast Money’s chart of the day the traders look at the financials relative to the S&P 500. Analyst John Roque says the financials have started underperform significantly and patterns suggest that the trend will continue into the rest of the year.
What do the traders make of it?
Goldman has been a market tell and it’s trading lower on Tuesday, explains Guy Adami. However the S&P bounced off the technically important 1040 level. Though they’re conflicting signals; they’re both important.
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Trader disclosure: On June 8, 2010, the following stocks and commodities mentioned or intended to be mentioned on CNBC’s Fast Money were owned by the Fast Money traders; Adami owns (AGU), (BTU), (C), (GS), (INTC), (MSFT): Kelly owns (GS) puts; Kelly owns (SPY) puts: Pete Najarian; Pete Najarian owns (MCD) call spreads; Pete Najarian owns (AMD) calls
For Patty Edwards
Edwards owns (RIG) for clients
Edwards owns (NE) for clients
Edwards owns (SLB) for clients
Edwards owns (HAL) for clients
Edwards owns (DO) for clients
Edwards owns (MMM) for clients
Edwards owns (MCD) for clients
Edwards owns GOLD for clients
Edwards owns PLATINUM for clients
Edwards owns SILVER for clients
Edwards owns (JPM) for clients
Edwards owns (BAC) for clients
Edwards owns (C) for clients
Edwards owns (WFC) for clients
Edwards owns (MS) for clients
Edwards owns (INTC) for clients
Edwards owns (STM) for clients
Edwards owns (TXN) for clients
Edwards owns (NVDA) for clients
Edwards owns (AAPL) for clients
Edwards owns (HPQ) for clients
Edwards owns (MSFT) for clients
Edwards owns (GOOG) for clients
Edwards owns (VXX) for clients
Edwards owns (SPY) for clients
Edwards owns (QQQQ) for clients
For Brian Kelly
Kanundrum Capital is short (AMZN)
Kanundrum Capital is short (RCL)
Kanundrum Capital is short (XLY)
Kanundrum Capital is short (AFL)
Kanundrum Capital is short (EWI)
Kanundrum Capital is short (EWO)
Kanundrum Capital is short (GS)
Kanundrum Capital is short (HIG)
Kanundrum Capital is short (XLF)
Kanundrum Capital is short (FCX)
Kanundrum Capital is short (XLB)
Kanundrum Capital is short EURO
Kanundrum Capital is short POUND
Kanundrum Capital is short SWILL
Kanundrum Capital owns (GLD)
Kanundrum Capital owns (GDX)
Kanundrum Capital owns (GDXJ)
Kanundrum Capital owns (AUY)
Kanundrum Capital owns (GFI)
Kanundrum Capital owns (TLT)
Kanundrum Capital U.S. DOLLAR
Collin Gerry (RIG, DO)
Funds managed by tilson own (BP)
Funds managed by tilson own (XOM)
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