STOCKS REBOUND AHEAD OF GOLDMAN SURPRISE ANNOUNCEMENT
The S&P 500 closed modestly higher on Monday with investors betting that big banks will post at least decent quarterly results. And after hours Goldman did far more than that – they surprised the Street by reporting 1) earnings one day early and 2) results that were better-than-expected.
Also, the New York based bank announced a $5 billion offering of common shares to the public. The proceeds, plus additional funds, will be used to repay the $10 billion of capital it received from the U.S. government under the Troubled Assets Relief Program, pending the results of the government stress test.
Goldman was the proverbial icing on the banking sector cake; investor sentiment was buoyant in the financials all day due to surprisingly upbeat preliminary results from Wells Fargo late last week. In fact shares of Bank of America and Citigroup both soared as did Goldman Sachs.
"The market is cheering, not so much that the banks are on the mend, but that they are not going to die," says Les Satlow, portfolio manager of Cabot Money Management. "These are banks that are clawing their way back, literally from the brink of extinction. My view is that a key crisis phase of this economic downturn is behind us."
Strategy Session with the Fast Money Traders
Don’t chase Goldman bristles Jeff Macke. When smart companies start dumping stock it’s time to take profits.
I don’t think Goldman is just dumping stock, counters Pete Najarian. I don’t think the offering is a negative. Instead I interpret the move as Goldman saying 'we're the best traders on the planet.'
I don’t think Goldman can live with the compensation restrictions under TARP, adds Karen Finerman. That’s a big deal for them.
I wouldn't be jumping into Goldman at this point, counsels Sandler O'Neil analyst Jeff Harte. This really might be a good opportunity to take profits.
However, the Goldman news could reverberate with the Morgan Stanley stock, adds Tim Seymour.
COPPER BUSTING OUT
U.S. copper futures rallied to their highest levels in six months Monday, as falling inventories and signs of economic recovery in China, the world's largest copper consumer, brightened the red metal's demand outlook.
Copper has been absolutely on fire, exclaims Pete Najarian. It’s had a very fast run. Southern Copper might be worth a look.
It seems to me that Freeport , Teck Cominco and all the other copper producers are in play, adds Tim Seymour.
Unless they’re building big huge warehouses to store this stuff, where’s the copper going, bristles Jeff Macke. There’s no building going on.
OIL SLIDES 4%
Oil fell as much as 4 percent on Monday after the International Energy Agency slashed its forecast for oil demand, offsetting the impact of data showing China's crude imports rose to their second highest level ever.
The IEA said on Friday world oil demand would fall by 2.4 million barrels per day (bpd) this year compared with 2008 to 83.4 million bpd as the rate of contraction in fuel consumption reached levels last seen in the early 1980s.
Take the IEA forecast as you will, says Jeff Macke. I’m not a fan of long term forecasts.
In the space I still like the offshore drillers such as Transocean , says Tim Seymour.
Or look at Dupont and Ashland as downstream plays, adds Pete Najarian. They’re both making higher lows.
GOLD CLIMBS TOWARD $900
Gold rose on Monday with bargain-hunters snapping up the precious metal after it fell 1 percent last week.
"The momentum is being kept, and those who have gone short in Tokyo are being squeezed," says Kaname Gokon, deputy general manager at Okato Shoji Co's research section.
Behind the resilience in gold prices late last week was a fresh inflow of money underpinning the precious metal, Gokon said.
I think gold goes a couple dollars higher, says Tim Seymour, but then it will probably pull back. However long-term I'm bullish because inflation should become a big issue.
It’s a druid metal play, counters Jeff Macke. $900 is resistance.
I don’t like the straight gold play, adds Pete Najarian. Instead I’d go to Freeport McMoRan .
YAHOO HITS 6-MONTH HIGH
Shares of Yahoo jumped on Monday after All Things Digital reported executives met with Microsoft to discuss potential partnerships between the companies' Internet search and advertising operations.
I don’t see Microsoft buying Yahoo!, muses Karen Finerman. They’ve been flirting for far too long. I sold Microsoft on Monday on the bounce.
But the teaming up of the two names could be advantageous, counters Pete Najarian, if they really want to compete with Google .
HEALTH CARE MERGER OUTBREAK
Prescription benefits manager Express Scripts has announced plans to buy health insurer WellPoint's NextRX pharmaceutical benefit management subsidiaries for about $4.7 billion in cash and stock
The options market had signaled this, reminds Pete Najarian. And if you’re looking for a trade I think Johnson & Johnson is cheap.
I’d keep an eye on Aetna, says Karen Finerman. It moved in sympathy.
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Trader disclosure: On Apr 13th, 2009, the following stocks and commodities mentioned or intended to be mentioned on CNBC’s Fast Money were owned by the Fast Money traders; Seymour Owns (AAPL), (BAC), (BX), (EEM), (FXI), (F), (PBR), (TCK); Syemour's Firm Owns (RIG); Macke Owns (WFC), (AAPL), (WMT), (GS), (GE), (SDS); Najarian Owns (BX) CAll Spread; Najarian Owns (C) Call Spread; Najarian owns (GS) Call Spread; Najarian Owns (MAR) Calls; Najarian owns (PALM) Stock & Calls; Najarian Owns (RIO) Calls; Najarian Owns (XHB) Call Spread; Najarian Owns (PCU) Calls; FInerman's Firm Owns (AET), (AXP), (MSFT), (RIG), (PBR), (TBT), (UNH), (DYN); Finerman's Firm Owns (WFC) Preferred, (BAC) Preferred; Finerman Owns (BAC) Preferred; Finerman's Firm Is Short (IYR), (MDY), (SPY), (USO), (BAC), (BBT), (WFC)
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