IBM & GOOG SIGNAL MARKET DIRECTION?
Investors are scratching their heads over Friday’s market direction after strong results from IBM suggest one thing but weakness from Google implies another.
What’s the word on the Street?
AFTER HOURS ACTION: IBM
IBM reported second-quarter earnings that blew past what analysts were forecasting, and the company's shares rose in late trading.
The company reported a 13 percent fall in revenue amid a decline in corporate spending, but cost cuts and a shift to more profitable businesses helped it achieve the higher-than-expected earnings, and the company raised its outlook for the full year.
What’s the trade?
IBM is only up about 1% in extended trade, explains Tim Seymour. That's rather lackluster and it suggests to me the stock is a little tired. I don't think taking profits is a bad thing.
For me the results are bullish, counters Karen Finerman. I like that they’re playing it conservative.
With revenue from the service business robust at IBM, I interpret the numbers to mean corporations are spending, adds Joe Terranova. I like the stock.
I also like IBM long term, adds Jared Levy. But I’m not sure I’d buy it right here.
AFTER HOURS ACTION: GOOGLE
Google quarterly profit beat Wall Street expectations, but its revenue growth was not as stellar as some investors had hoped, sending shares down 2 percent after hours.
While Google's revenue growth of 3 percent was slightly above average analyst forecasts according to Reuters Estimates, expectations for a bigger beat had been built into the stock after Intel's strong report earlier this week.
What’s the trade?
It seems to me that Google is running out of gas, muses Tim Seymour. Although the numbers were encouraging it will take more to get this stock to the next level.
I think momentum players will get shaken out of this stock and when that happens, that’s a buying opportunity, counters Joe Terranova. I think this is a $500 stock, 3 months from now.
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JPMORGAN BEATS BUT SHARES FALL
JPMorgan Chase said record investment banking and trading results drove quarterly profit 36 percent higher, topping Wall Street forecasts, but reported a surge in consumer credit losses that foreshadows deeper problems on Main Street.
Though the second-largest U.S. bank is among the nation's healthiest major lenders, it more than doubled the amount set aside for bad loans, to $9.7 billion. JPMorgan expects its credit card business to lose money this year and next, and sees higher commercial real estate losses for several quarters.
What’s the trade?
I thought the stock hung in there very well, says Karen Finerman. What was most interesting to me was what they said about reserves for bad loans. They’ve built a nice big cushion.
It seems to me that Jamie Dimon’s negative comments about commercial real estate threw regional banks under the bus, adds Joe Terranova.
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ROUBINI MISQUOTED
In many published reports Nouriel Roubini, the economist whose dire forecasts earned him the nickname "Doctor Doom," was quoted as saying that the worst of the economic and financial crisis may be over. In fact, Roubini’s comments helped trigger a late rally in the stock market.
However he tells CNBC his comments were taken out of context and that he’s not nearly so bullish. “The recovery will be weak and at risk of a double dip,” he tells us.
Does this mean a weak open?
I wouldn’t put too much weight on Rubini, says Tim Seymour. I think the market moved on the dollar and earnings.
> Click here for all the details
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CIT GROUP IN LIMBO
CIT, the finance company struggling to avoid a Chapter 11 filing as soon as tomorrow, is seeking to line up between $2 to $3 billion in secured financing from private investors over the next day, according to people close to the situation.
According to CNBC’s David Faber a number of private equity firms and fixed income investors have expressed interest in talking to CIT about providing financing that would be secured by some of the company's currently encumbered assets, such as airlines and rail cars.
What’s the trade?
I'm not entirely sure except to say 3 months ago the same news would have rocked the market, muses Karen Finerman. Now it’s not having nearly the same impact.
> Click here to get the very latest on CIT
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Trader disclosure: On July 16th, 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), (FXI), (GE) Seygem Asset Management Owns (NOK) Calls; Finerman's Firm Owns (WMT), (MSFT), (NOK); Finerman's Firm Is Short (IYR), (IJR), (MDY), (SPY), (IWM), (XRT)
Finerman's Firm And Finerman Own (BAC) Preferred Shares, Finerman Owns (BAC); Finerman's Firm And Finerman Own (WFC) Preferred Shares, Finerman's Firm Is Short (WFC); Pete Najarian Owns (YHOO) Call Spread; Pete Najarian Owns (INTC) Calls, (IBM) Calls; Jon Najarian Owns (AGU), (IPI); Terranova Owns (TER), (MSFT), (RIMM), (INTC), (SUN), (FTO); Terranova Owns (CCE) Calls
GE Is The Parent Company Of CNBC
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)
Virtus Diversifier PHOLIO Owns (DBC)
Virtus Diversifier PHOLIO Owns (DBV)
Virtus Investment Partners Owns More Than 1% Of (ABD)
Virtus Investment Partners Owns More Than 1% Of (CBL)
Virtus Investment Partners Owns More Than 1% Of (CAL)
Virtus Investment Partners Owns More Than 1% Of (CLB)
Virtus Investment Partners Owns More Than 1% Of (DLR)
Virtus Investment Partners Owns More Than 1% Of (EXR)
Virtus Investment Partners Owns More Than 1% Of (IGE)
Virtus Investment Partners Owns More Than 1% Of (MEE)
Virtus Investment Partners Owns More Than 1% Of (DBC)
Virtus Investment Partners Owns More Than 1% Of (DBV)
Virtus Investment Partners Owns More Than 1% Of (DBA)
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
Virtus Investment Partners Owns More Than 1% Of (SKT)
Virtus Investment Partners Owns More Than 1% Of (TNB)
Virtus Investment Partners Owns More Than 1% Of (UA)
Virtus Investment Partners Owns More Than 1% Of (WBMD)
For Jared Levy:
Peak6 Investments Is Short And Has An Options Position In (CROX)
Peak6 Investments Is Short And Has An Options Position In (ESL)
Peak6 Investments Is Short And Has An Options Position In (FDX)
Peak6 Investments Is Short And Has An Options Position In (FTO)
Peak6 Investments Is Short And Has An Options Position In (FXI)
Peak6 Investments Is Short And Has An Options Position In (GE)
Peak6 Investments Is Short And Has An Options Position In (GILD)
Peak6 Investments Is Short And Has An Options Position In (GS)
Peak6 Investments Is Short And Has An Options Position In (HOT)
Peak6 Investments Is Short And Has An Options Position In (JPM)
Peak6 Investments Is Short And Has An Options Position In (KSU)
Peak6 Investments Is Short And Has An Options Position In (MOS)
Peak6 Investments Is Short And Has An Options Position In (NOK)
Peak6 Investments Is Short And Has An Options Position In (POT)
Peak6 Investments Is Short And Has An Options Position In (RIO)
Peak6 Investments Is Short And Has An Options Position In (SGP)
Peak6 Investments Is Short And Has An Options Position In (STLD)
Peak6 Investments Is Short And Has An Options Position In (XLF)
Peak6 Investments Is Short And Has An Options Position In (XLNX)
For Peter Jacobs:
Jacobs Owns (GE)
Wells Fargo Investments And/Or Affiliates Owns 1% Or More Of (GE)
Wells Fargo Investments And/Or Affiliates Owns 1% Or More Of (ESL)
Wells Fargo Investments And/Or Affiliates Owns 1% Or More Of (KSU)
Wells Fargo Investments And/Or Affiliates Owns 1% Or More Of (MMM)
Jacobs Owns (SLE)
Wells Fargo Investments And/Or Affiliates Owns 1% Or More Of (VWO)
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