Best Gain of 2007:
The headline: Strong Retail Sales, Lower Interest Rates Push Dow to Biggest Gain since Last Summer
The word: The beige book report caught everyone by surprise, Eric Bolling says. He’s been running a short position with both the S&P and the Nasdaq but now he’s flattened it out.
“Yesterday no one wanted to buy and today no one wanted to sell,” Pete Najarian says. He expects the market’s volatility to continue for the next couple of weeks and he likes names that have international exposure like Fluor (FLR) and Caterpillar (CAT). These kinds of companies can maintain themselves despite market volatility and they continue to trend higher, he says.
With the market so unpredictable, Guy Adami recommends sticking with what’s working. He likes Hewlett-Packard (HPQ) and Dell (DELL) which have stood their ground even when it’s been shaky. Stacey Briere Gilbert, chief options strategist for Susquehanna Investment Group, is filling in for Jeff Macke tonight and she likes the large caps here. Eric Bolling reiterates that, with global tensions as they are, it’s a good time to have your money in oil and metals.
Built For the Road Ahead?:
The headline: Ford Shares Climbing on Possible Sale of Jaguar, Land Rover Brands
The word: Guy is positive on Ford (F). He thinks Alan Mulally, former CEO of Boeing, can help the stock in the short term. But if interest rates go up, automakers like Ford will be “dead money,” Eric says, because people won’t borrow to buy cars. Stacey thinks there are just better places to go. Even after rallying, Ford is still only an $8.50 stock.
ICE-ing on the Cake:
The headline:Intercontinental Exchange (ICE) Sweetens CBOT Offer in Order to Trump Chicago Merc
The word: Pete says it’s clear that ICE wants this deal done – but now it’s in the hands of the CBOT’s shareholders. And Eric, who works at and is a shareholder of the NYMEX (NMX), says he hears rumors that an acquisition – possible by the NYSE – could happen as soon as July 4. Guy thinks it won’t happen until Labor Day but either way, there’s a good chance the NYMEX gets taken out, they say.
Wall Street Earnings Parade:
The headline: Goldman, Bear Report Earnings Tomorrow as Wall Street Earnings Parade Continues
The word: Stacey thinks Goldman Sachs' (GS) earnings are already priced into the stock, but it’s a buy anyway on a long-term basis. Guy notes that Goldman is around its 52-week high, while Lehman Brothers (LEH) and Bear Stearns (BSC) are both off their 52-week highs. A short-term sell off in LEH is possible after the company reports, he says, and he thinks Bear’s earnings are priced into the stock.
If You Can’t Say Anything Nice:
The headline: Former Citigroup CEO Sandy Weil Fails to Compliment Successor Chuck Prince on “Squawk Box”
The word: Weil dodged the question, which is anything but a ringing endorsement of Prince. But what do you expect? Citigroup (C) stock hasn’t done anything for a long time, Guy says.
China Trade – Construction:
The headline: Caterpillar (CAT) Climbs After Reaffirming Outlook at Shareholders Meeting; Illinois Tool Works Surgues on Merrill Upgrade
The word: Caterpillar is “doing everything right,” Guy says. After not participating in last year’s rally, CAT is still playing catch up. Guy thinks there’s even more upside from here.
And when it comes to the China boom, Caterpillar (CAT) isn’t the only builder reaping the benefits. Pete likes Cooper Industries (CBE), Illinois Tool Works (ITW), Foster Wheeler (FWLT) and Aecom (ACM). He also likes diversified industrials like General Electric (GE), United Technologies (UTX) and Honeywell (HON). When companies like these are so internationally exposed, they become almost immune to volatility in the U.S. markets.
It isn’t just China, either. With India’s growth rate almost matching that of China, Eric thinks investors should remember the steel names, along with the producers of the iron ore used to make steel. He likes RIO (RIO) and Posco Steel (PKX). Growth expansion isn’t slowing, he says. “Let’s ride the wave.”
No Weight Loss Pill Yet:
The headline:FDA Says Today Not Sure That Sanofi Weight Loss Drug is Safe
The word: This was a “complete smackdown” for Sanofi-Aventis (SNY), CNBC pharmaceuticals reporter Mike Huckman says. The FDA panel voted 14-0 that it didn’t have enough data to say that Sanofi’s drug Acomplia was safe. Clinical trials showed potential side effects of depression and even a risk of suicide, Huckman says. Sanofi went down 5% in after-hours trading, but the bad news could spread to other Big Pharma names like Merck (MRK), Bristol-Myers (BMY) and Pfizer (PFE), he says, because all three companies are developing anti-obesity drugs that work similarly to Acomplia. And while GlaxoSmithKline’s (GSK) over-the-counter diet pill Alli is slated to go on sale this week, Huckman says analysts expect it to net between $100 million and $200 million, which is “small potatoes” compared to potential sales of a drug like Acomplia.
While Big Pharma wrestles with the development of a miracle diet drug, biotech companies are hard at work as well, Huckman says. Arena (ARNA) has a drug in phase three testing, which is typically the last stage before seeking FDA approval. And Nastech (NSTK) has a nasal spray compound in phase one testing.
Pete Najarian erroneously said Seagate (STX) could benefit from the iPhone release because it produces flash memory, but Seagate makes hybrid drives which will not be used in the iPhone. Pete apologizes for the mistake, but still thinks Seagate is a buy even without exposure to flash drives.
Stacey Briere Gilbert Is Chief Options Strategist For Susquehanna Financial Group, LLLP
Gilbert Is Head Of Market Intelligence Research For Susquehanna Financial Group, LLLP
Gilbert Does Not Cover Individual Securities But Does Recommend Trading Strategies; An Affiliate Of Susquehanna Financial Group, LLLP Is An Options Specialist In Certain Of The Stocks Discussed By Gilbert; An Affiliate Of Susquehanna Financial Group, LLLP Is A Market Maker In Certain Of The Stocks Discussed By Gilbert; Gilbert Owns (TIE); Susquehanna Financial Group, LLLP And Affiliates Own More Than 1% Of The Shares In (CAL); Bolling Owns Gold, (ICE), (NMX); Najarian Owns (STX), (MS), Is Short (AMR) and (CAL); GE Is The Parent Company Of CNBC
Bolling Has Closed Out Of His Short S&P Trade
Bolling Has Closed Out Of His Short Nasdaq Trade
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