Fast Money: Halftime Report
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Halftime Pt. 2: Is Oil About to Make a Sharp Move Lower?
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Are the oil bulls about to get slaughtered?
Although they're not in the majority, analysts at JPMorgan Chase seem to think so. The price of oil is nearing August lows and will fall further, the firm said Monday. It lowered its price forecast and urged clients to sell oil, predicting prices could fall to around $65 a barrel by October.
China's manufacturing activity for August will be the "first tell," as to whether oil could drop to around $65, said Joe Terranova, chief market strategist at Virtus Investment Partners. The purchasing managers' index will be released Tuesday evening, he noted. If the People's Republic begins to soften, he thinks energy could soften too.
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Terranova recommends buying oil between $65 and $70 a barrel. He wouldn't short oil, but play it on the long-side with names like ConocoPhillips [COP
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], Chevron [CVX
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] and Suncor Energy [SU
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].
JJ Kinahan, chief derivatives strategist at TD Ameritrade, agreed that buying oil in the $65 range is a good idea. He said it's a "good bet" on China and also suggests that the US dollar won't significantly strengthen any time soon.
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TICK BY TICK: STRAYER EDUCATION
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Hedge fund manager Steve Eisman recently established a short position in Strayer Education [STRA
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], reported CNBC's Herb Greenberg Monday.
Jon Najarian, co-founder of optionMONSTER.com, is not surprised by the move. Najarian called Eisman a "smart investor," especially on the short-side. He doesn't, however, see Eisman's play translating into shorts of other education stocks. Both Corinthian Colleges [COCO
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] and Apollo Group [APOL
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] pushed higher Monday, so he thinks the call on Strayer is isolated.
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PLAYING RISING GRAIN PRICES
Grain prices continued to climb on concern that unfavorable weather could hurt this year's global harvest.
Brian Kelly, founder of Kanundrum Capital, noted that there has been too much rain in China. The US, however, has a bumper crop of corn and wheat that will need to be shipped overseas, Kelly said.
"All this grain has to get to the West Coast and they're going through those train tracks," said Kelly. He recommends Union Pacific [UNP
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] and The Andersons [ANDE
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].
The drought in Russia has supply and demand out of whack, said Jon Najarian, co-founder of optionMONSTER.com. A lot of wheat will need to be shipped to the East Coast, he said, where it can be sent to Russia. He recommends playing Norfolk Southern [NSC
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].
Elsewhere in the ag space, Joe Terranova of Virtus Investment Partners said that the fundamentals continue to suggest there will be a higher price of grain going forward. Don't lose your exposure, he said. Play Potash [POT
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], which will likely go north of $150 a share.
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GAMING FOREIGN EXCHANGE MARKETS
The yen is stronger against the US Dollar yet again, as the Bank of Japan's stimulus measure failed to impress markets.
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Brian Kelly, founder of Kanundrum Capital, is long the yen versus the Aussie Dollar. He said the Bank of Japan and Ministry of Finance didn't do anything. There is no chance they'll weaken this, he said. They need a coordinated effort. If they get one, China will "go crazy." The US has been "all over" China for manipulating their currency, so he doesn't think the US would get involved with the yen.
The US needs a lower dollar to get out of this crisis, said Joe Terranova of Virtus Investment Partners. He noted that the situation in Japan is similar to what the US is facing in that they could make some policy changes, but can't do anything in terms of fiscal stimulus because of an upcoming election on September 14.
Terranova would trade the US Dollar, which he thinks will only weaken toward the end of the year.
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DON'T 'TALK TO CHUCK'
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It's a hard day's night being a broker these days. Low volume continues to knock Charles Schwab [SCHW
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] and the stock hit a 52-week low again Monday.
Chuck is getting hit on both ends, said Brian Kelly, founder of Kanundrum Capital. Its Bank of Schwab is suffereing, he said, because net interest rates are getting squeezed by Fed action. It's also seeing the retail investor leave the stock market for bonds and thinks they're not likely to return to equities any time soon.
JJ Kinahan, chief derivatives strategist at TD Ameritrade, said the loss of volume isn't hurting SCHW as much as the rates are. He said brokers rely heavily on them for revenue.
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POLL OF THE DAY
TechCrunch is reporting that Cisco [CSCO
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] has made an offer to acquire Internet phone provider Skype before it completes its intial public offering.
That leads us to our "Fast Money" poll of the day—should Cisco buy Skype? Let us know by casting your vote.
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CALL THE CLOSE
JJ Kinahan, chief derivatives strategist at TD Ameritrade, would be a seller into the close.
Jon Najarian, co-founder of optionMONSTER.com, expects a "terrible" jobs number Friday. Investors, however, are pricing that in and he thinks the market could bounce.
Joe Terranova, chief market strategist at Virtus Investment Partners, said we're in a sideways market unless President Obama provides solutions instead of telling us who created the problem.
Brian Kelly, founder of Kanundrum Capital, remains a seller of the market.
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Trader disclosure: On Aug 30, 2010, the following stocks and commodities mentioned or intended to be mentioned on CNBC’s Fast Money were owned by the Fast Money traders; Terranova Owns (AXP), (GS), (IBM), (QCOM), (AAPL), (GOOG), (BRCM), (TER), (MSFT), (C), (MRVL), (BMO), (V), (POT), (OXY), (GLD), (SU), (FCX), (APA), (XBI); Kinahan owns (INTC), (SPY), (AKS), (CSCO)
For Brian Kelly
Accounts managed by Kanundrum Capital own (GLD)
Accounts managed by Kanundrum Capital own (GDXJ)
Accounts managed by Kanundrum Capital own (SLV)
Accounts managed by Kanundrum Capital own (ANDE)
Accounts managed by Kanundrum Capital own U.S. Dollars
Accounts managed by Kanundrum Capital own (TBT)
Accounts managed by Kanundrum Capital own (RGR)
Accounts managed by Kanundrum Capital own Japanese Yen
Accounts managed by Kanundrum Capital own Swiss Franc
Accounts managed by Kanundrum Capital is short (XLF)
Accounts managed by Kanundrum Capital is short (IAI)
Accounts managed by Kanundrum Capital is short (MCO)
Accounts managed by Kanundrum Capital is short (RTH)
Accounts managed by Kanundrum Capital is short (RSX)
Accounts managed by Kanundrum Capital is short the U.K. Pound
Accounts managed by Kanundrum Capital is short the Australian Dollar
For Joe Terranova
Terranova is chief market strategist of Virtus Investment Partners, LTD.
Virtus Investment Partners own more than 1% of (ABAX)
Virtus Investment Partners own more than 1% of (ALK)
Virtus Investment Partners own more than 1% of (AMKR)
Virtus Investment Partners own more than 1% of (CASS)
Virtus Investment Partners own more than 1% of (CSVI)
Virtus Investment Partners own more than 1% of (XLY)
Virtus Investment Partners own more than 1% of (XLP)
Virtus Investment Partners own more than 1% of (DRYS)
Virtus Investment Partners own more than 1% of (EXR)
Virtus Investment Partners own more than 1% of (XLI)
Virtus Investment Partners own more than 1% of (IGE)
Virtus Investment Partners own more than 1% of (LDR)
Virtus Investment Partners own more than 1% of (LPHI)
Virtus Investment Partners own more than 1% of (XLB)
Virtus Investment Partners own more than 1% of (MGRC)
Virtus Investment Partners own more than 1% of (NRCI)
Virtus Investment Partners own more than 1% of (DBV)
Virtus Investment Partners own more than 1% of (SUBK)
Virtus Investment Partners own more than 1% of (XLK)
Virtus Investment Partners own more than 1% of (XLU)
Virtus Investment Partners own more than 1% of (WDFC)
Virtus Investment Partners own more than 1% of (YDNT)
For Gary Shilling
Funds managed by Shilling own Treasurys
CNBC.com with wires.
Data is a real-time snapshot *Data is delayed at least 15 minutes
