HIGHEST INTEREST RATES IN 5 YEARS
The headline: The Benchmark 10-Year Treasury Yield Climbs as Much as 5.27% Today, the Highest Since 2002.
What's the Trade After Surging Interest Rates Keep Weighing Down Stocks? Will Higher Interest Rates Kill Consumer Spending and Corporate Dealmaking?
Jeff Macke is concerned. He thinks the market is getting to a tipping point where rates will impact equities, because he says there are a lot of financial models dependent on cheap money – which isn’t so cheap anymore.
Pete Najarian says the speed of the increase is the real issue. Not that we’re at 5.25%, he explains but how fast we got there.
Eric Bolling says 5.25% isn’t horrible. He thinks deals will still get done.
Guy Adami compares interest rates to higher gas prices. He says people will get used to it.
Sullivan & Cromwell M&A Attorney Frank Aquila joins the guys. He says rates have moved further and more quickly than he would have liked. He adds if the market is at 6 by the end of the month he sees a real problem. At that level, he anticipates deals won’t be able to be financed. However, he makes it clear the market is not there now.
BIG PHARMA, BIG BUYOUTS?
The headline: The Financial Times Reports Private Equity Now Looking At Big Pharma Players Such As GlaxoSmithKline (GSK)
Pete Najarian thinks a private equity buyout of a pharma company is quite possible. He thinks either Bristol Myers Squibb (BMY), Eli Lilly (LLY) or Schering Plough (SGP) might be “do-able.”
Guy Adami says “GSK will become very compelling very quickly.”
CHIPPING AWAY AT PRICES:
The headline:Intel (INTC) Shares Jump On Report It Will Cut Chip Prices By 50%
Jeff Macke says the news dragged shares lower and he recommends buying INTC on the dip.
ANTITRUST, PRO EXCHANGES:
The headline: Justice Dept. Gives Regulatory Approval To Proposed CME-CBOT Merger... Electronic Brokerage ITG Surges After Hedge Fund Pressures For a Sale
Eric Bolling feels the DOJ cleared the way for consolidation in the sector. Eric thinks NYMEX (NMX) will make an acquisition.
Pete Najarian tells the panel to keeps an eye on ICE which he thinks will make an acquisition.
On a related note, Pete says Investment Technology Group (ITG), Jefferies (JEF) and Knight Capital (NITE) all performed well in a bad tape, which suggests to him there will be more consolidation in the space.
Guy Adami predicts NYMEX goes by Labor Day.
TRADE UPDATE: WORSE COFFEE, BETTER STOCK:
The headline:McDonald's (MCD) Replaces Starbucks (SBUX) On Goldman Sachs Conviction Buy List
Jeff Macke says GS is late to this call. He adds negativity on SBUX has been building and eventually that momentum will present a trade.
Guy Adami likes MCD providing the fast food giant continues to do well overseas.
NETFLIX UNDER FIRE:
The headline:Netflix (NFLX) Shares Plunge After Blockbuster (BBI) Unveils Cheaper Mail-Order Plan
Dylan Ratigan explains Netflix CEO Reed Hastings was scheduled to appear on Fast Money and canceled at 4pm ET.
All the guys agree the news warrants a response from Hastings and he should not have canceled the interview.
Jeff Macke adds NFLX has an obsolete business model and Reed Hastings is invited onto Fast Money anytime to explain how he’s going to generate future profits. Until then, Jeff says he’s out of this stock.
Trader disclosure: On June 12 2007, the following stocks and commodities mentioned or intended to be mentioned on CNBC’s Fast Money were owned by the Fast Money traders: Macke Owns (ATVI), Najarian Owns (NITE), (GS), (STX), (AAPL); Bolling Owns (ICE), (T), (DIS)(NMX); Bolling Is Short S&P Futures; Bolling Is Short Nasdaq Futures
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