GO
Loading...

Heed UPS Caution and Takes Profits in Global Growth Trades?

On Tuesday, investors started to wonder if bullish bets on global growth might be premature after UPS voiced caution about economy.

As the world’s largest package delivery company, ’Brown’ is considered a economic barometer because its shipment trends provide insights into global demand. So it comes as no surprise that investors listen closely to what UPS says about the economic outlook. And on Tuesday it said the economic outlook was getting ‘a little muddier.’

During its earnings conference call with analysts, CEO Scott Davis also said the global economy was still recovering at an uneven pace and added that high unemployment, weak consumer confidence and U.S. debt issues are adding to the headwinds.

To make investors even more jittery, UPS said its business customers were keeping inventory thin until consumer confidence improves.

Considering UPS handles goods equal to 6 percent of the U.S. gross domestic product and 2 percent of global GDP in its trucks and planes – should you heed the company’s conservative comments and take gains on your global growth trades?

Although it's never wrong to book profits, Fast Money trader Joe Terranova remains confident that the global growth trades remain in tact.

He says before generating a trading thesis, it’s important for investors to dig down into the UPS earnings report and separate domestic results from the numbers generated by UPS’s overseas operations.

And Terranova finds overseas results bullish.

”They talked about the outperformance in Germany -- and China was so strong they’re going to add another flight into China,” he says. According to UPS CFO Kurt Kuehn, demand in Germany, France and Turkey helped boost international domestic shipments, In fact, international revenue at UPS climbed 13%.

”I don’t think investors should be concerned about global growth from these results.”

And to support his thesis he also points to the action in the railroad stocks. “The rails are still telling you growth is there.”

Trader Brian Kelly doesn’t quite agree with Terranova. After digging down into the earnings report, he didn't like what UPS had to say about the rest of Asia.

Specifically, the company said growth outside China was weaker than expected. ”The rest of Asia essentially exports goods into China and China re-assembles it. That’s a concern.”

Looking at UPS shares as well as rivals, trader Jon Najarian suggests staying away. “I’m not saying get short,” he clarifies, “but you might want to sell rival FedEx into its report. I think both of these stocks could be vulnerable.”

Vote
Vote to see results
Total Votes:

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

What do you think? We want to know!












----------

OIL STOCKS SLUMPING DESPITE EARNINGS

Elsewhere in the market, energy earnings were also on the trader radar after Occidental Petroleum and Valero disappointed investors with their results.

However Weatherford surged after the company beat expectations due to positive pricing trends.

What’s the play?

Joe Terranova believes that oil will continue to move north and says that should bode well for oil services names. "I like National-Oilwell Vargo and Weatherford or OIH," he says. Also he's a buyer of Occidental on the pullback.

Jon Najarian sees the space a little differently. Looking at the futures contracts trading between now and the end of the year, Najarian thinks they're signalling that oil remains range bound. He suggests playing the space with land based exploration drillers because deep water drillers are still struggling to get permits.

Hear more about the energy trade from Oppenheimer analyst Fadel Gheit. Watch the video now!

----------

BULLS DRIVING FORD?

Ford landed on the trader radar after the company’s quarterly profit topped Wall Street expectations due to higher North American vehicle sales.

Now investors are watching what happens as Ford begins talks on Friday with the United Auto Workers union for a new labor deal.

What’s the trade?

Terranova is a buyer with a $12.50 stop which is approximately the June / July lows.

Zach Karabell is much more skeptical. He thinks Ford is facing inventory management issues and has too many light trucks and SUVs, vehicles which aren't selling well. "That’s a rather disturbing trend," he says.



______________________________________________________
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 July 26th 2011, the following stocks and commodities mentioned or intended to be mentioned on CNBC’s "Fast Money" were owned by the "Fast Money" traders; Karabell owns (AAPL); Karabell owns (GOOG); Karabell owns (GS); Jon Najarian owns (AAPL) call spreads; Jon Najarian owns (AEM) call spreads; Jon Najarian owns (APKT) call spreads; Jon Najarian owns (CMI) call spreads; Jon Najarian owns (DANG) call spreads; Jon Najarian owns (SVU) call spreads; Jon Najarian is short (NFLX) call and put spreads; Terranova owns (VRTS); Terranova owns (IBM); Terranova owns (FCX) ; Terranova owns (CVI); Terranova owns (XOM); Terranova owns (DIS); Terranova owns (WFM); Terranova owns (LULU); Terranova owns (TM); Terranova owns (JWN); Terranova owns (MCD); Terranova owns (PEP); Terranova owns (MA); Terranova owns (BX); Terranova owns (GS); Terranova owns (DAR); Terranova owns (CAT); Terranova owns (AAPL); Terranova owns (F)

For Zach Karabell
Rivertwice Capital is short (FDX)
Rivertwice Capital is short (XLF)
Rivertwice Capital is short (SPY)
Rivertwice Capital is short (QQQ)

For Brian Kelly
Accounts Managed By Brian Kelly Capital Own (TLT) calls
Accounts Managed By Brian Kelly Capital Own (JJC) calls
Accounts Managed By Brian Kelly Capital Own (RTH)
Accounts Managed By Brian Kelly Capital Own (MOS) calls
Accounts Managed By Brian Kelly Capital Own (ATW)
Accounts Managed By Brian Kelly Capital Own (UGA)
Accounts Managed By Brian Kelly Capital Own the Australian Dollar
Accounts Managed By Brian Kelly Capital are short the U.S. Dollar

For Joe Terranova
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 (AMKR)
Virtus Investment Partners Owns More Than 1% Of Building Materials Holdings
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 (EXR)
Virtus Investment Partners Owns More Than 1% Of (FCFS)
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 (LHO)
Virtus Investment Partners Owns More Than 1% Of (NRCI)
Virtus Investment Partners Owns More Than 1% Of Sun Pharmaceutical Industries Ltd
Virtus Investment Partners Owns More Than 1% Of (DBV)
Virtus Investment Partners Owns More Than 1% Of (RLI)
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 (XLE)
Virtus Investment Partners Owns More Than 1% Of (XLF)
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 Domino's Pizza UK & IRL PLC






CNBC.com with wires.

Symbol
Price
 
Change
%Change
F
---
FDX
---
NOV
---
OXY
---
UPS
---
VLO
---
WFT
---

Contact Halftime Report

  • Showtimes

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