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Stock Market or Government Data, Which is Right?

Employment numbers may suggest the economy is looking at a double dip, but but the stock market action still suggests a robust second half.

As you likely know by now, the economy added a scant 18,000 jobs in June - far, far below expectations of 125,000 jobs. Analysts and strategists immediately started chattering about a double dip and trouble for stocks.

But chatter on the trading floor was different - according to the Fast Money gang, it wasn’t terribly negative at all.

Market pros are talking about the Vix , ”which is not confirming the weakness,” says trader Patty Edwards. In fact, there's very little fear on the floor. "I'm using the weakness to buy," reveals trader Steve Grasso.

Both Grasso and Edwards say pros are much more focussed on the beginning of earnings season, which kicks off with Alcoa on Monday after the bell. Results from Corporate America are widely expected to be strong.

“I’m staying long into earnings,” Edwards says.

Kevin Kruszenski, head of listed trading, at KeyBanc Capital Markets in Cleveland, confirms what the Fast Money traders are saying. He deals with institutional clients and in a Reuters interview says "We are are buying more than we are selling.”

Trader Steve Grasso thinks the technicals tell the story. “1333 is soft support and 1325 should be stronger support. I added to a lot of my positions on Friday.”

On top of earnings, Grasso suggests bulls may quickly encounter another powerful catalyst - a resolution to the debt ceiling.

Although Grasso concedes that lawmakers in DC are jawboning about the debt ceiling in an attempt to score points politically – when push comes to shove he thinks politicians understand how serious the matter is – and will resolve it. “It might not sound like it now, but I’m hearing a debt ceiling resolution is probably around the corner,” he says.

The only Fast Money trader who’s even modestly skeptical of the rally is trader Zach Karabell. He says, “We needed a pullback and we got one. It could last into next week.”

But Karabell is hardly bearish. If you have a longer time horizon he thinks the global growth theme will dominate and push markets higher.

What do you think? We want to know!

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And on a related note, if you think the jobs data was just too bleak to place new bets, economist Joe LaVorgna tells us more job deterioration is unlikely, unless the economy rolls over completely.

He thinks next month at this time we hear the economy created 100,000 new jobs. "Companies have cut to the bone and we’re seeing productivity growth slow. As we get a replacement cycle, – inventory rebuilding, capital spending and consumer buying - we’ll see hiring. Eventually the cyclicality of the economy should return."

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NO $100 FOR YOU

After such a dismal jobs report, it comes as little surprise that investors slammed oil on growth worries.

But did they get it right? How should you trade it now?

Barring a crisis, all the Fast Money traders expect oil to remain range bound for quite some time - between $88 and $100.

Patty Edwards suggests playing it with long position in Chevron and Conoco Philips, because they also pay dividends. And she also has Halliburton and Schlumberger on her books because "over time we’re going to have to drill for more oil."

Pete Najarian shares Patty's outlook. He also likes Halliburton as well as Western Refining and Valero. "As long as oil stays between $90 - $100 they make money," he says.

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PICKUP OVERHANG FOR CARMAKERS

Putting our collective ear to the wall, we’re hearing that GM has 122 days of full-size truck inventory, 50% higher than normal.

How should you trade it?

As he's said many times in the past Steve Grasso just can't get excited about GM when GM is trading below its $33 IPO price.

If you're looking for a trade, Patty Edwards suggests looking at Autozone . "People are holding their cars longer and they’re going to have to fix them up."

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ITALY WORSE OFF THAN KAZAKHSTAN?

It seems investors can’t go 10 minutes without mentioning the crisis in Europe and here’s the latest take. As the situation stands on Friday, Italian CDS spreads were wider than Bulgaria and Kazakhstan.

Is that a problem?

Trader Patty Edwards thinks it is. "Price is truth," she reminds. "The spread has moved up since the beginning of the month. We’re seeing higher highs and higher lows – the trend is up and that is a problem."

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UNUSUAL ACTIVITY: OPTIONS BETTING AGAINST GLOBAL MARKETS

Think the emerging markets are a better bet than the slowing US markets? Options investors don’t.

Trader Pete Najarian has spotted an usually large volume of Aug 46 puts trading in the Emerging Markets ETF. "Very very active," he says. "It could be protection or it could be a bet that a further pullback is coming."

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MONEY IN MOTION HIT: DOLLAR STRENGTH ON JOBS REPORT?

Why is the dollar getting a lift after such a weak jobs report and a drop in rates? Is it just a defensive move?

Find out from Soc Gen’s Willie Williams. Watch the video now!


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Trader disclosure: On July 8, 2011, 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 (MRK); Pete Najarian owns (TEVA); Pete Najarian is long (F) bonds; Pete Najarian is long (V) calls; Pete Najarian is long (HAL) calls; Karabell owns (GS); Karabell owns (GE); Karabell owns (AAPL); Edwards owns (XLK), Edwards owns (PM), Edwards owns (FXC); Pete Najarian owns (AAPL); Pete Najarian owns (AKAM); Pete Najarian owns (C); Pete Najarian owns (MS); Pete Najarian owns (MOS); Pete Najarian owns (MRVL)

For Joseph Lavorgna
*No Disclosures

For Zachary Karabell
River Twice Capital is short (XLF)
River Twice Capital and Karabell own (BIDU)
River Twice Capital and Karabell own (POT)

For Patty Edwards
Edwards owns (AGNC) for clients
Edwards owns (AKAM) for clients
Edwards owns (ARW) for clients
Edwards owns (COP) for clients
Edwards owns (CTSH) for clients
Edwards owns (ED) for clients
Edwards owns (ES) for clients
Edwards owns (GLW) for clients
Edwards owns (HLF) for clients
Edwards owns (LECO) for clients
Edwards owns (MAT) for clients
Edwards owns (MCD) for clients
Edwards owns (NKE) for clients
Edwards owns (ORCL) for clients
Edwards owns (PCL) for clients
Edwards owns (PM) for clients
Edwards owns (POT) for clients
Edwards owns (QCOM) for clients
Edwards owns (SLB) for clients
Edwards owns (SLV) for clients
Edwards owns (SYT) for clients
Edwards owns (TAL) for clients
Edwards owns (TGT) for clients
Edwards owns (TTM) for clients
Edwards owns (UAN) for clients
Edwards owns (XLB) for clients
Edwards owns (BMY) for clients
Edwards owns (BMO) for clients
Edwards owns (ERF) for clients
Edwards owns (EXC) for clients
Edwards owns (HNZ) for clients
Edwards owns (HSY) for clients
Edwards owns (JNJ) for clients
Edwards owns (BKCC) for clients
Edwards owns (KMB) for clients
Edwards owns (KMP) for clients
Edwards owns (KO) for clients
Edwards owns (GLD) for clients
Edwards owns (LEG) for clients
Edwards owns (WDFC) for clients
Edwards owns (QQQ) for clients
Edwards owns (SPY) for clients



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