GO
Loading...

Halftime: S&P Gains Mean Ben Did Right Thing?

Stocks touched new bull market highs this week with optimism prevailing on Wall Street after the GOP gained control of the House and - perhaps more influential - the Fed provided details on the size and scope of QE2.

Adding to the massive market tailwinds, Friday’s job report showed employers added more jobs than expected last month. It’s a surprising gain that fueled hopes that the U.S. economy is on a faster pace to healthier growth.

Considering these developments make it seem like the sky's the limit for stocks - is it safe to say Bernanke did the right thing?

Not so fast. Some vocal strategists don’t like what they see. Peter Schiff of Euro-Pacific Capital is among them.

”I’m very concerned about the long-term impact of QE2 on the economy,” says Schiff during a live interview on the Halftime Report. ”When the government does QE2 it’s not just the stock market that’s going up. Everything goes up.”

He’s talking higher prices at the pump as well as the supermarket.

”So even though QE2 will push the stock market higher – people who own stocks aren’t any richer,” Schiff says. “When they sell those stocks and go to buy food or gasoline it’s going to be more expensive. It’s an illusion created by the Fed.”

Vote
Vote to see results
Total Votes:

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

He also didn't like the results of the job report - though they were stronger than expected.

"We created the wrong kinds of jobs," Schiff says. "We lost manufacturing jobs and we need to create manufacturing jobs. The service sector jobs we created are just going to result in a bigger trade deficit because we’re creating consumers but we’re not creating producers. We’re adding to our imbalances."

We know that Schiff is a perma-bear and an outspoken critic of the Fed but it seems a growing chorus of market watchers are saying similar things.

Our news partner Reuters writes, “Inside and outside the U.S. central bank, critics have said QE2 could lead to high inflation and low interest rates that could create asset bubbles as investors seek returns by piling into riskier asset classes.”

Also, there's concern that the Fed isn't evaluating inflation properly.

Axel Merk of Merk Mutual Funds says, "The trouble is Bernanke writes off commodity inflation, claiming our economy is no longer very dependent on commodity prices."

What do you think? We want to know! Answer the poll above.

-----------


MARKET ON BRINK OF CORRECTION

With Peter Schiff and other investors expressing caution about the longer term effects of QE2 on the economy – will investor euphoria start to evaporate?

How should you position?

I still think the market is due for a pullback, says Steve Grasso. Right now we’re just a little above the April highs. It seems the big catalysts – the election and the Fed meeting – are priced in. I can’t get behind the rally unless we hold this level. If this is the next bull, let it sink in for a week or so.

The market seemed quiet on Friday, muses Pete Najarian. Typically big investors don’t like to sell into quiet markets so I’d expect stocks to climb or close flat. Also the Vix failed at the 200-day moving average up toward 23.5, he reminds. Puts are relatively cheap and the action in the Vix suggests to me the market wants to climb further.


If you’re long, I’d buy some protection, says Joe Terranova. Puts are very cheap right now.

--------

PENDING HOME SALES

In breaking news CNBC’s Diana Olick tells the desk that after two months of gains, on Friday new data showed pending home sales fell 1.8% in October. The report is based on contracts signed in September, not closings, making it a forward indicator.

The index is also nearly 25% below its year ago level.

Realtors say the foreclosure moratorium is likely to cause disruption in the market and contribute to an uneven sales performance in the months ahead.

Also tight credit and appraisals coming in below the negotiated price continue to constrain the market.

The index fell 1.7% in the Northeast, 5.7% in the Midwest, 3.5% in the South and rose 3.5% in the West.

What’s the trade?

Seems like a good time to watch the XHB, says Pete Najarian.




______________________________________________________
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 November 5, 2010, the following stocks and commodities mentioned or intended to be mentioned on CNBC’s "Fast Money" were owned by the "Fast Money" traders; Pete Najarian owns (BAC); Pete Najarian owns (MS); Pete Najarian owns (LVS) call spreads & calls; Pete Najarian owns (MRVL) calls; Pete Najarian owns (F) bonds; Terranova owns (APA), (AAPL), (AXP), (C), (GOOG), (GS), (FCX), (HES), (IBM), (MCD), (NKE), (ORCL), (PCP), (PEP), (UPL), (VRTS), (XBI); Terranova owns (FCX) puts; Terranova owns (FFIV) puts; Terranova owns (SLB) puts; Terranova owns (SPX) puts; Grasso owns (ASTM), (BA), (BAC), (C), (CSCO), (JPM), (LPX), (MO), (MOT), (NDAQ), (PFE), (PRST)

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 (CMS)
Virtus Investment Partners own more than 1% of (CSC)
Virtus Investment Partners own more than 1% of (CSVI)
Virtus Investment Partners own more than 1% of (FCFS)
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 (SOA)
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 (WMB)
Virtus Investment Partners own more than 1% of (YDNT)
Virtus Investment Partners own more than 1% of (DRYS)

For Brian Kelly
Accounts managed by Kanundrum Capital own (TLT)
Accounts managed by Kanundrum Capital own (TIP)
Accounts managed by Kanundrum Capital own (JEF)
Accounts managed by Kanundrum Capital own (TD)
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 (CLF)
Accounts managed by Kanundrum Capital own (ANDE)
Accounts managed by Kanundrum Capital own (GPRE)
Accounts managed by Kanundrum Capital own (JJG)
Accounts managed by Kanundrum Capital own (HD)
Accounts managed by Kanundrum Capital own (PCL)
Accounts managed by Kanundrum Capital own (XHB)
Accounts managed by Kanundrum Capital own (FCX)
Accounts managed by Kanundrum Capital own (JO)
Accounts managed by Kanundrum Capital own (EWH)
Accounts managed by Kanundrum Capital own Euros
Accounts Managed By Kanundrum Capital Own (POT) Calls
Accounts managed by Kanundrum Capital are short Japanese Yen

For Steve Grasso:
Stuart Frankel & Co and it’s partners own (AAPL)
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 (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)
Stuart Frankel & Co and it’s partners are short (MCD)
Stuart Frankel & Co and it’s partners are short (AAPL)
Stuart Frankel & Co and it’s partners are short (RHI)

For Peter Schiff
***No Disclosures***


CNBC.com with wires.

Symbol
Price
 
Change
%Change
S&P 500
---
VIX
---
SPDR SP HB
---

Featured

Contact Halftime Report

  • Showtimes

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