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Halftime—Dennis Gartman: China Not Likely to Raise Rates This Weekend

Friday, 10 Dec 2010 | 1:33 PM ET

Considering China's central bank on Friday increased the amount of money that lenders must keep on reserve, Dennis Gartman doesn't think the People's Republic will raise interest rates, too.

China's decision to raise reserve requirements as a way of mopping up excess cash in the economy and also rein in inflation will likely be enough for them, said Gartman. China's central bank tends to prefer this milder form of monetary tightening over raising interest rates, he noted.

Gartman: China Not Likely to Raise Rates
Renowned currency and commodities trader Dennis Gartman explains why he doesn't think China will raise interest rates.

"A reserve requirement increase is like a 2X4 to the forehead of a recalcitrant mule," Gartman said with a wink. In other words it gets the job done.

That analogy may be a little confusing but Gartman couldn't be more clear about his expectations over the weekend. "I don't think they're going to do anything to move interest rates up."

Wall Street will closely be watching China's consumer price inflation, which is due to be published on Saturday. CPI may have hit 5.1 percent in the year to November, a 28-month high, state media reported on Friday. If the number is high, it may be that China will need to raise rates to fight inflation.

Meanwhile, Gartman remains bullish of gold. Gartman is buying the precious metal and shorting the euro, yen or sterling against it to hedge out US dollar risk.

For Gartman's top three trades for 2011, read this story.

With more than 30 years of experience as a currency and commodities trader, Gartman is a "Fast Money" contributor and publisher of the widely read "The Gartman Letter."

Watch the videoto see the full conversation with Gartman.

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POPS & DROPS

After the government on Friday said the U.S. trade deficit fell to its lowest level in nine months in October, most stocks went higher in midday trading. The "Fast Money" traders thought these names to be most interesting:

Pops (stocks that went up)

Halftime Pops & Drops
The midday market movers.

DryShips (DRYS) popped 6%: The Athens, Greece-based owner of deepwater drilling rigs caught an upgrade from Credit Suisse, which raised it to 'outperform’ from ‘neutral.' Pete Najarian, co-founder of optionMONSTER.com, noted there has been considerable options activity in this name. He expects it to have more upside.

SandRidge Energy (SD) popped 4.89%: The oil and natural gas producer said it sold its bone spring assets for $110 million. Joe Terranova of Virtus Investment Partners, however, is long Ultra Petroleum. He thinks it's "your better trade," but didn't say why.

Airgas (ARG) popped 3%: The industrial distributor's stock rallied after being upgraded to ‘outperform’ from ‘neutral’ at RW Baird on valuation. Stuart Frankel's Steve Grasso thinks this stock could go higher.

Drops (stocks that went down)

Borders Group (BGP) dropped 10%: The bookstore chain reported it is in talks to refinance and if negotiations fail, said it may end up in violation of its credit agreements in the first-quarter.

"Borders is just one of those train wrecks that you like to watch from the side of the road," said Patty Edwards, chief financial officer of Trutina Financial. "You don't want to be involved in it. Just move along."

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CALL THE CLOSE

With only hours left in the trading day, here's what the "Fast Money" crew is anticipating for Friday's close and how they're playing it:

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Vote to see results
Total Votes:

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

Being as the S&P 500 index was finally able to close above the 1,228 level, Grasso also thinks the market could end higher. Terranova agreed.

"I'm hearing some of the bears growling out there and that just makes me want to buy more," said Edwards.

Najarian is slightly concerned that volatility is starting to rise on a positive tape, but because the financials and industrials are going up, he thinks the market could too.

For the best market insight, catch 'Fast Money' each night at 5pm ET, and the ‘Halftime Report’ each afternoon at 12:30 ET on CNBC.

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Trader disclosure: On December 10, 2010, 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 (YHOO), (F), (C), (CNI) and (CRUS). Pete Najarian owns (MSFT) call spreads. Pete Najarian owns (DRYS) call spreads. Pete Najarian owns (SMH) call spreads. Pete Najarian owns (MCD) call spreads. Pete Najarian owns (RAX) call spreads. Terranova Owns (C), (GS), (NKE), (OXY), (PEP), (PFE), (VRTS), (UPL), (IBM) and (RSH). Terranova Owns (FCX) calls. Terranova Owns (GLD) puts. Grasso owns (ASTM), (BA), (BAC), (BWC), (C), (CSCO), (JPM), (LIT), (LPX), (MOT), (MHY), (NDAQ), (PFE), (PRST), (S) and (X). Dennis Gartman is long gold in euro terms. Dennis Gartman is short the euro.

Terranova is Chief Market Strategist of Virtus Investment Partners, LTD
Virtus Investment Partners Owns More Than 1% Of (ABAX)
Virtus Investment Partners Owns More Than 1% Of (ALK)
Virtus Investment Partners Owns More Than 1% Of (AMKR)
Virtus Investment Partners Owns More Than 1% Of (CCG)
Virtus Investment Partners Owns More Than 1% Of (CASS)
Virtus Investment Partners Owns More Than 1% Of (CSVI)
Virtus Investment Partners Owns More Than 1% Of (EPR)
Virtus Investment Partners Owns More Than 1% Of (EXR)
Virtus Investment Partners Owns More Than 1% Of (FCFS)
Virtus Investment Partners Owns More Than 1% Of (IGE)
Virtus Investment Partners Owns More Than 1% Of (KRC)
Virtus Investment Partners Owns More Than 1% Of (LDR)
Virtus Investment Partners Owns More Than 1% Of (LPHI)
Virtus Investment Partners Owns More Than 1% Of (MGRC)
Virtus Investment Partners Owns More Than 1% Of (NRCI)
Virtus Investment Partners Owns More Than 1% Of (DBV)
Virtus Investment Partners Owns More Than 1% Of (XLB)
Virtus Investment Partners Owns More Than 1% Of (XLV)
Virtus Investment Partners Owns More Than 1% Of (XLP)
Virtus Investment Partners Owns More Than 1% Of (XLY)
Virtus Investment Partners Owns More Than 1% Of (XLE)
Virtus Investment Partners Owns More Than 1% Of (XLI)
Virtus Investment Partners Owns More Than 1% Of (XLK)
Virtus Investment Partners Owns More Than 1% Of (XLU)
Virtus Investment Partners Owns More Than 1% Of (SUBK)
Virtus Investment Partners Owns More Than 1% Of (WDFC)
Virtus Investment Partners Owns More Than 1% Of (YDNT)
Virtus Investment Partners Owns More Than 1% Of (CLB)
Virtus Investment Partners Owns More Than 1% Of (DRYS)

PATTY EDWARDS
Edwards Owns (AAPL) for clients
Edwards Owns (GS) for clients
Edwards Owns (C) for clients
Edwards Owns (CME) for clients
Edwards Owns (AMZN) for clients
Edwards Owns (COST) for clients
Edwards Owns (MCD) for clients
Edwards Owns (F) for clients
Edwards Owns (TTM) for clients
Edwards Owns (MSFT) for clients
Edwards Owns (GLD) for clients
Edwards Owns (SLV) for clients
Edwards Owns (INTC) for clients
Edwards Owns (SBUX) for clients
Edwards Owns (CYH) for clients
Edwards Owns (BKCC) for clients
Edwards Owns (BMO) for clients

STEVE GRASSO
Stuart Frankel & Co and it’s partners own (AAPL)
Stuart Frankel & Co and it’s partners own (CSCO)
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 (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 Its Partners Own (UNM)
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)

MICHAEL PACHTER
Wedbush Securities Is A Market Maker In (NFLX)

DENNIS GARTMAN
Funds Managed by Dennis Gartman are long gold, short Euro

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