GO
Loading...

Halftime: Forget QE2, Big Moves In 'This' Trade

Most investors spent Friday focused on the jobs report and whether the lousy numbers increased the likelihood of more quantitative easing.

However, the Fast Money spotted another catalyst entirely and it's led them to a slew of trades.

Specifically, they’re gaming the ag space after the government stunned the market with the latest harvest report – it showed the corn harvest will be much, much smaller than both analysts had expected and the government had previously forecast.

Where’s the Fast Money putting their dollars to work?

Instant Insights with the Fast Money traders

We’re talking about half a billion bushels less than expected, explains OptionMonster Jon Najarian. I think the way to play it is long fertilizer names such as Mosaic . (Higher corn prices give farmers more money to spend on fertilizer and encourage more planting of the crop.)

According to a note out of RBC, typically Intrepid Potash, Mosaic and Potash are the most correlated to the price of gains, adds host Melissa Lee.

There had been bearish fundamentals in place for corn but that worked off very quickly, says Joe Terranova. This suggests the ag trade has legs. It also suggests inflation is back on the table.

’Saying the ag trade still has legs’ is an amazing statement considering since June corn is up 33%, wheat is up 42% and soybeans are up 18%, muses Fast Money host Melissa Lee.

Farm equipment makers such as Caterpillar and Deere spiked on the news, adds Steve Grasso. Typically spikes in these stocks also trigger a lot of short selling, but we’re not seeing that right now. That too suggest the ag trade has legs.

Higher prices in soft commodities will likely to lead to margin compression for manufacturers, reminds Patty Edwards. That could send prices of things like cereal higher.

If you’re looking for a short look at Smithfield Fields, Tyson and other companies that are harmed by higher corn prices, adds Najarian. They feed grains to their livestock and as a result their inputs costs will likely go up.

If food prices go up sharply at the supermarket, then retailers could be challenged this holiday season as they try to squeeze dollars out of consumers, adds Edwards.

-------------

ANOTHER CRISIS COMING

The traders are also watching the action in bank stocks after Bank of America announced Friday that it will stop foreclosure proceedings in all 50 states.

As the housing market struggles to find its footing and the nation's largest loan providers deal with sorting out their documents, Chris Whalen of Institutional Risk Analytics think a new crisis is coming.

”Really what’s going on is that that banks can’t handle any more foreclosures. Their servicing departments don’t have the capacity to own and operate real estate.”

He goes on to say that ”in the 90’s this was a serious problem but where we are today and looking at the backlog of foreclosures the mind boggles.”

This is a conversation you won’t want to miss. Check out the whole thing in the video now.

Whalen is also the author of “Inflated: How Money And Debt Built The American Dream.”
-------------

DOW FLIRTS WITH 11,000

According to the Labor Department, the economy shed jobs in September for a fourth straight month – and in the wake of the report the market rallied somewhat sharply -- with the Dow trading above the psychologically important 11,000 level mid-day and the S&P continuing its march toward 1200.

Considering the recovery is hinged on job creation, the market’s positive response may seem surprising.

But stocks climbed as investors took the weak jobs report as a sign that the Fed is that much closer to another round of quantitative easing.

How should you position now?

Every time an investor tries to step infront of the market they get run over, says Steve Grasso. As long as the S&P can stay above 1131 the squeeze should be higher.

-------------

A CONVERSATION WITH ROVI

Based in Santa Clara, Calif., Rovi is a technology company that provides digital entertainment technology products.

CEO Alfred Amoroso spoke with the "Fast Money" desk on Friday's "Halftime Report."

Watch the video to see the full interview.

-------------

POLL OF THE DAY


What do you think? We want to know!

Vote
Vote to see results
Total Votes:

Not a Scientific Survey. Results may not total 100% due to rounding.



______________________________________________________
Got something to to say? Send us an e-mail at fastmoney-web@cnbc.com and your comment might be posted on the Rapid Recap. If you'd prefer to make a comment, but not have it published on our Web site, send those e-mails to fastmoney@cnbc.com.

Trader disclosure: On Oct. 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; Jon Najarian Owns (POT) Call Spreads; Jon Najarian Owns (MOS) Call Spreads; Jon Najarian Owns (ADBE) Call Spreads; Jon Najarian Owns (GS) Call Spreads; Jon Najarian Owns (MS) Call Spreads; Jon Najarian Owns (JCP) Call Spreads; Jon Najarian Owns (IMGN) Cal Spreads; Jon Najarian Owns (AAPL) Call Spreads; Jon Najarian Owns (NYX); Jon Najarian Owns (CME); Jon Najarian Owns (CBOE); Jon Najarian Owns NYSE Euronext, CME Group, CBOE Seats; Terranova Owns (APA), (AAPL), (IBM), (EOG), (HES), (OIH), (OXY), (ORCL), (RSH), (UPL), (SU), (VRTS), (XBI), (FTO), (JOYG), (RIG), (C), (PEP); Terranova Owns (TGT) Calls; Grasso owns (ASTM), (BA), (BAC), (C), (CSCO), (JPM), (LPX), (MO), (MOT), (NDAQ), (PFE), (PRST)

For Patty Edwards
Edwards Owns (GLD) For Clients
Edwards Owns (PGM) For Clients
Edwards Owns (SYT) For Clients
Edwards Owns (MSFT) For Clients
Edwards Owns (AMZN) For Clients
Edwards Owns (BAC) For Clients
Edwards Owns (JPM) For Clients
Edwards Owns (C) For Clients
Edwards Owns (CME) For Clients
Edwards Owns (INTC) For Clients
Edwards Owns (GOOG) For Clients
Edwards Owns (AAPL) For Clients


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 (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 (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 (XLB)
Virtus Investment Partners own more than 1% of (XLP)
Virtus Investment Partners own more than 1% of (XLY)
Virtus Investment Partners own more than 1% of (XLF)
Virtus Investment Partners own more than 1% of (XLI)
Virtus Investment Partners own more than 1% of (XLU)
Virtus Investment Partners own more than 1% of (SUBK)
Virtus Investment Partners own more than 1% of (WDFC)
Virtus Investment Partners own more than 1% of (YDNT)
Virtus Investment Partners own more than 1% of (DRYS)

For Steve Grasso:
Stuart Frankel & Co and it’s partners own (AMGN)
Stuart Frankel & Co and it’s partners own (COG)
Stuart Frankel & Co and it’s partners own (CUBA)
Stuart Frankel & Co and it’s partners own (GERN)
Stuart Frankel & Co and it’s partners own (HPQ)
Stuart Frankel & Co and it’s partners own (HSPO)
Stuart Frankel & Co and it’s partners own (MERC)
Stuart Frankel & Co and it’s partners own (NWS.A)
Stuart Frankel & Co and it’s partners own (NYX)
Stuart Frankel & Co and it’s partners own (PDE)
Stuart Frankel & Co and it’s partners own (PFE)
Stuart Frankel & Co and it’s partners own (PRST)
Stuart Frankel & Co and it’s partners own (RDC)
Stuart Frankel & Co and it’s partners own (TLM)
Stuart Frankel & Co and it’s partners own (XRX)
Stuart Frankel & Co and it’s partners own (SDS)
Stuart Frankel & Co and it’s partners are short (QQQQ)

CNBC.com with wires.

Contact Halftime Report

  • Showtimes

    Halftime Report - Weekdays 12p ET
    Fast Money - Weekdays 5p ET