IS THE RECESSION OVER?
The Dow industrials edged higher, while the S&P 500 and Nasdaq dipped on Friday as investors sorted through conflicting signals about jobs and the economy.
The latest data showed 345,000 jobs were lost last month, the smallest since September and far less than forecast. However, the unemployment rate raced to 9.4 percent -- the highest since July 1983.
But have stocks already price in the end of the recession?
Strategy Session with the Fast Money Traders
It feels like stocks have priced in the recession, says Guy Adami. And the action in Friday’s market suggests to me we might have put in the top.
It seems to me there's now uncertainty in the market. The question is now – can asset prices and the consumer fly on their own without the Federal Reserve supporting them, muses Joe Terranova.
I can’t help but wonder if companies can actually earn what they’re projected to earn now, adds Karen Finerman. In other words can earnings beat enough to catch up with the price momentum in the market.
I was impressed that commodities held their ground, adds Tim Seymour. That suggests there could be more life to this rally.
OIL TOPS $70
Positive aspects of the jobs report gave energy bulls a jolt – and they sent crude oil to a seven-month high above $70 a barrel.
However the gains didn’t hold because “the rate of unemployment rose more than expected," explains Addison Armstrong of Tradition Energy. Once that sunk in oil pulled back pretty fast.
Longer term I see the potential for oil to move up to about $79 this summer, he adds. That won’t be a good thing for consumers because that probably translates into prices at the pump of $3 to $3.25. In turn, that could put the breaks on the recovery people are looking for.
I’d keep an eye on Iran, adds Joe Terranova. It doesn’t seem to me that Israel and the US are on the same page and geo-political concerns could push oil higher.
I think you could see oil lower, counters Guy Adami, especially if the dollar continues to get stronger.
If you're looking to play the space I’m long Petrobras , reminds Karen Finerman. And I see huge potential in oil services but I took some off the table because of the huge run they’ve already had.
OUTSIDE THE STOCKS: DOLLAR SURGING
The better than expected jobs number also had a significant impact on currencies, commodities and the bond market.
It buoyed the dollar on hopes of a quick economic recovery -- and sent both gold and Treasuries tumbling as investors lost interest in their safe haven appeal.
In fact, appetite for Treasuries will be a matter of huge importance next week as a massive amount of debt comes to auction.
Next Week’s Treasury Auctions
Monday 3 Month Bills $31B
6 Month Bills $31B
Tuesday 3 Year Notes $35B
Wednesday 10 Year Bonds (3 1/8) $19B
Thursday 30 Year Bond (4.25) $11B
If we see rates move higher on the Treasury auction it could really put a lid on the broad stock market rally, speculates Karen Finerman.
Should the government have to increase rates to attract buyers it could mean higher borrowing costs down the road for consumers, reminds Guy Adami. That's a real concern.
I believe that Treasury yields are rising because the economy looks strong, says Tim Seymour – and not because people are running away from Treasuries.
In the gold market, remember that gold topped out at $1000 twice, says Guy Adami. I have a hard time getting long here. However if it gets above the double tops and holds then you can get long.
The reason gold is going up is because investors expect inflation long term, counters Tim Seymour. With the US issuing so much debt, gold is the play for the long-term.
TOPPING THE TAPE: TECH’S GREAT WEEK
The technology sector finished the week about 4% higher on takeover talk and excitement about the new PalmPre.
Earlier in the week, Intel said it would buy software maker Wind River Systems Inc. for $884 million in an all-cash deal to expand beyond the PC market.
Also Palm releases it’s highly anticipated new smartphone called the Pre on Saturday and the anticipation generated a strong catalyst for tech stocks -- and Apple’s developer’s conference is next week – another tailwind for the sector.
Although I advocated being long Palm ahead of the release, I think if you’re still in it now, you’re late, says Guy Adami.
If you’re looking to trade tech, I’d take a look at Google and Microsoft, adds Joe Terranova
I like Radio Shack, says Karen Finerman.
WAL-MART ANNOUNCES NEW $15 BLN. SHARE REPURCHASE PROGRAM
Shares of Wal-Mart popped Friday after the world's biggest retailer said its board of directors had approved a $15 billion share repurchase plan.
That’s a very big buy back in an economy where cash is king, says Karen Finerman. I think they’re showing us the power of their business. Their cash flow is enormous. I still like Wal-Mart.
I expect Wal-Mart to trade to $54.50, adds Guy Adami, but when it approaches that level I’d take some off the table.
BULL MARKET OR BS?
After another positive week for stocks, we can’t help but wonder, is the bull run for real? For insights we turned to Brian Overby, TradeKing senior options analyst.
Overby told us he’s concerned about the rally because both the Vix and S&P have moved in tanden over the past week -- when typically they move inversely. (Usually when the market runs up the fear index moves down.) The disconnect suggests to Overby that something is wrong in the marketplace -- that stocks are due for a short-term pull back.
As a result he believes this is still a stock pickers market. And a pick he likes is Visa because, “it can benefit from a bump up in retail sales,” he says.
To see Overby’s complete market analysis please watch the video
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Trader disclosure: On June 5th, 2009, the following stocks and commodities mentioned or intended to be mentioned on CNBC’s Fast Money were owned by the Fast Money traders; Adami Owns (AGU), (C), (GS), (MSFT), (NUE), (BTU); Finerman's Firm Owns (PBR), (PM), (TBT); Finerman's Firm Is Short (IJR), (MDY), (SPY), (IWM), (USO), (XRT); Finerman's Firm And Finerman Own (BAC) Preferred Shares And Are Short (BAC); Finerman's Firm And Finerman Own (WFC) Preferred Shares, Finerman's Firm Is Short (WFC); Finerman's Firm And Finerman Own (FLS); Finerman's Firm Owns (MSFT), (RSH), (FLIR), (CSCO), (NOK); Seymour Owns (AAPL), (BAC), (F); Terranova Owns (TER), (ABT), (XBI);
Terranova Owns (BTU) And Is Short (BTU) Calls; Terranova Owns (RIMM) And Is Short (RIMM) Calls; Terranova Owns (GENZ) And Is Short (GENZ) Calls ; Terranova Owns (X) And Is Short (X) Calls; Terranova Owns (MS) And Is Short (M)S Calls; Terranova Owns (JPM) And Is Short (JPM) Calls; Terranova Owns (POT) And Is Short (POT) Calls; Terranova Owns (BRCM) And Is Short (BRCM) Calls; Terranova Owns (HES) And Is Short (HES) Calls ; Terranova Owns (IBM) And Is Short (IBM) Calls; Terranova Is Short (XOM) Call Spreads ; Terranova Owns (DIS) Call Spreads; Terranova Is Short (FCX) And (FCX) Puts
Terranova Works For (VRTS); Terranova Is Chief Alternatives Strategist Of Virtus Investment Partners, Ltd.; Terranova Is Co-Portfolio Manager Of The Virtus Diversifier PHOLIO; Virtus Diversifier PHOLIO Owns (IGE), (DBC), (DBV)
Virtus Investment Partners Owns More Than 1% Of (ABD), (CAL), (CLB), (DLR), (EPR), (EXR), (IGE), (MEE), (DBC), (DBV), (DBA), (SKT), (UA), (WBMD); Virtus Investment Partners Owns More Than 1% Of St Mary Land & Exploration Co; Virtus Investment Partners Owns More Than 1% Of Seagate Tax Refund Rights
For Brian Overby:
Overby Owns (XLF)
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