MICROSOFT LOSES 6%
The headline:Microsoft Weighs on Nasdaq After Weaker-Than-Expected Sales, Forecast
Guy Adami isn’t backing down from his Microsoft recommendation. Next year’s guidance is fantastic, he said, and at 14 times earnings it’s a “screaming buy.”
The traders were in agreement that the stock was unjustly ravaged – perhaps due to anxiety about the Yahoo merger. Jeff Macke, who just traded out of his Yahoo position, said MSFT shareholders shouldn’t worry about whether the YHOO deal happens or not. Microsoft is still best of breed.
Karen Finerman said that what Microsoft should do as the Yahoo deadline comes this weekend is an exchange offer. That would be where Microsoft offers stock and cash directly to Yahoo shareholders in an attempt to get the deal done. That way, it would quantify to the Yahoo board how many of its shareholders want to accept the acquisition.
In the meantime, the bottom line on Microsoft, everyone agreed, is that it’s too cheap here. Macke even bought some Friday.
OIL SPIKES ON IRAN INCIDENT
The headline: Crude Oil Surges as High as $119.55 on Reports U.S. Cargo Ship Fired at Two Iranian Boats, Finishes Week Up 2% to $118.52
Fast Money favorite Addision Armstrong said that the Iran incident was 24 hours old and was still able to move crude higher, showing how sensitive this market is. Armstrong, the director of market research at Tradition Energy, said he believes crude oil will remain strong in the weeks and months to come thanks to supply interruptions and demand picking up as we head into summer. Natural gas looks “incredibly strong,” as well, he said.
The trade? Oil services, as far as Pete Najarian is concerned. There’s a much-talked-about deepwater discovery off Brazil that could benefit oil service stocks such as Transocean , Pride (PDE) and Noble (NE). The high-flying oil service ETF is a play too, Najarian said, as it looks like it’s settling into a range.
WILL THE BUCK STOP HERE?
The headline: Dollar Sees Best 3-Day Gain Against Euro Since June 2005; Gold Snaps 2-Day Losing Streak
The dollar should reverse “big time” in the second half of the year, Guy Adami said. For that reason, he would not be a buyer of gold stocks, which would get crushed on a dollar reversal.
Jeff Macke believes the commodity fever has finally broken. The fact that the dollar showed strength on Friday, when there were a million reasons for it to go down, is extremely bullish for the market, he said.
FROM FALLOW TO FERTILE
The headline: Potash , Ag Stocks Roar Back After Sharp Retreat This Week
Potash went down for one day and people were screaming that the run was over. That’s ridiculous, Pete Najarian said. POT, along with Mosaic (MOS), Monsanto (MON) and the rest of the bunch, are far from done. As long as the food inflation crisis continues, the world will need these companies.
WORKING ON THE RAILROAD
The headline:Union Pacific (UNP), Rail Shares Continue to Work This Week
As Burlington Northern prepares to report earnings Tuesday, Guy Adami recommended taking some money off the table since the stock has had such a massive run. Wabtech , the company that services trains, and Trinity , the company that makes the cars, are both moving higher almost daily, he noted.
IS WALL STREET OVER SUBPRIME?
The headline: American Express (AXP), Goldman Sachs (GS), Merrill Lynch (MER) Lead Financials Comeback This Week
American Express’ “very surprising” earnings bode well for Mastercard , according to Guy Adami.