GO
Loading...

Halftime: Weak Dollar Fails To Lift Stocks

Weakness in the market prevailed on Thursday despite better than expected jobs data and more important -- a weaker dollar.

As the Fast Money desk has been saying for quite a while, for the past three months the S&P and the greenback have traded in an almost perfect inverse relationship.

Is this an early sign that the relationship has finally started to break down?

Instant Insights with the Fast Money traders

Although the action is noteworthy, I would not say that the inverse correlation between the dollar and the S&P has broken down due to a one day move, explains Steve Cortes. But I do feel the recent rise in equities was far too based on dollar depreciation. It’s one of the reasons I don’t believe in the rally.

Also a survey done by the NY Fed estimating the needed size and scope of QE2 rattled forex traders, adds host Melissa Lee. And Goldman issued a note saying dollar needs to fall a lot further -to get inflation to the Fed's desired levels. All that may have dragged the dollar lower.

(Fast Money executive producer wrote about the Goldman note at length in his daily post. Click here to go to Stimulus to Total $2 Trillion, Causing Dollar to Fall ‘a Lot’)

I suspect that QE2 is fully priced into the market, adds Steve Grasso. It would have to be ‘a whole bunch bigger’ if it’s really going to have any more impact. I think we’re at a level in the S&P where it’s time to get short. The gains have probably been made.

No doubt, there are a lot of cross currents in this market, adds Guy Adami. I’ve been bearish on the market. Gains to the upside have probably been made.

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

RARE EARTH MINERALS: BUBBLE OR NOT?

Moving on to the massive surge in rare earth prices: is it a bubble, or not a bubble?

When we asked the CEO of rare earths producer Molycorp about the price run up in a live interview last week he told us, “We think there may be a form of a bubble occurring because of all of the news and the frenzy.”

(We wrote about his commentary at length on Thursday October 21st. Click here to go to 'There May Be A Bubble Occurring,' Says Rare Resource Chief)

Vote
Vote to see results
Total Votes:

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

But in an interview with Bloomberg TV on this week, that very same CEO seemed to change his tune. Now, he says, “I don't believe that there is a bubble...These prices are absolutely sustainable and that's really based upon the very simple facts of supply and demand.”

What should you make of it?

It concerns me that the CEO changed his position in a week, says Jon Najarian. I suspect Melissa's question caught him off-guard and what he told Fast Money was probably the truth. That says to me, if you’re in this space, proceed with caution.

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

ANDROID VS APPLE:

Shares of Motorola popped Thursday after the firm posted its first operating profit in over 3 years on strong sales of smartphones that use Google's Droid software.

Meanwhile, Apple shares traded lower after the company warned that gross margins were likely to decrease in the future.

What’s the trade?

If you have profits in Motorola, I’d take them, says Steve Grasso. I see headwinds.

I think both Google and Motorola win at Apple’s expense, says Steve Cortes. I’d think about pairs trades against Apple.

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

EXXON EARNINGS TOP EXPECTATIONS

The traders are closely watching the action in the oil majors after Exxon Mobil posted better than expected earnings on higher crude prices and better refining margins.

What’s the trade? You tell us!



______________________________________________________
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. 28, 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), (NUE), (C), (GS), (INTC), (MSFT); Adami’s wife works at Merck Cortes owns (K), Cortes owns (TSN); Cortes is short crude oil; Cortes is short gold; Cortes is short (AAPL); Cortes is short (RSX); Cortes is short the U.K. Pound; Cortes owns the S&P 50; Grasso owns (ASTM), (BA), (BAC), (C), (CSCO), (JPM), (LPX), (MO), (MOT), (NDAQ), (PFE), (PRST); Jon Najarian owns (ABX) short stock; Jon Najarian owns (COP) short stock; Jon Najarian owns (FCX) short stock; Jon Najarian owns (LVS) short stock; Jon Najarian owns (MSFT) call spreads; Jon Najarian owns (RIMM ) call spreads; Jon Najarian owns (WMB) call spreads

For Steve Grasso:
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 (HSPO)
Stuart Frankel & Co and it’s partners own (MCD)
Stuart Frankel & Co and it’s partners own (MERC)
Stuart Frankel & Co and it’s partners own (MGM)
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 (OPEN)
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 own (UAL)
Stuart Frankel & Co and it’s partners are short (QQQQ)

For Walter Pritchard
Citi makes a market in (MSFT)
Within the past 12 months, has acted as manager of an offering of securities of (MSFT)
Citigroup has received compensation for investment banking services from (MSFT) within the past 12 months
Citigroup received compensation for non-investment banking services from (MSFT) in the past 12 months
Citigroup has or had within the past 12 months (MSFT) as investment banking client
Citigroup has, or had within the past 12 months (MSFT) as a non-investment-banking client
Citigroup has, or had within the past 12 months (MSFT) as a non-investment-banking, non-securities-related client





CNBC.com with wires.

Symbol
Price
 
Change
%Change
S&P 500
---
MC
---
AAPL
---
GOOGL
---
XOM
---

Contact Halftime Report

  • Showtimes

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