On the final trading day of the year, the Dow lost over 100 points to trim total yearly gains to 19%, 2009 has allowed investors to recover at least some ground lost during the recession. But the traders aren't looking back! They're pushing forward to give you their take on the best places to put your money to protect 2009 gains... and the biggest threats to come in the market. It certainly won't be easy sailing with uncertainty over higher rates, a volatile dollar, global credit concerns, unemployment and inflation. But not to worry, the Fast Money traders have your back!
2010 Fast Money Strategy Session
Worried about interest rates? Steve Cortes of Veracruz doesn't think an increased rate situation will be as bad as many are making it out to be, for three reasons. First, he thinkis unemployment will stay persistently high, which will serve to keep rates artificially low. Second, the recent government bond auctions have performed very well over the past few weeks, which encourages people worried about treasurys. Third, he says, everyone is expecting a rate hike. Harkening back to Gordon Gekko, he recommends not following the herd, because the consensus is "too unanimous." Cortes expects rates to stay virtually flat.
Even if rates were raised by 100 basis points, Steve Grasso doesn't think such a hike would take the legs out of 2009's stock market rally, although a hike may not be as kind to the housing market recovery, he says. Unemployment and the lagged US housing market will be the biggest concerns for the markets in 2010, he says.
Besides interest rates, a stronger dollar could stand to hinder an economic recovery, but Brian Kelly of Kanundrum Research doesn't think this necessarily means a downturn in the market. If the dollar goes up, it means the economy is getting better, and the stock market could be getting better as well, he says, noting that investors should be keeping an eye on interest rate differentials.
But on more of the short term, what parts of the market should you be looking at? The first thing on Joe Terranova's list is the numbers out of China's PMI report, and the ISM report domestically, which will give investors a picture of manufacturing. After that, the biggest news is on Friday, where the market will get updated numbers on unemployment.
Another major headwind in 2010 will be the possibility of sovereign debt defaults, along the lines of Greece, Dubai and Iceland. It will be one of the key issues next year, says Steve Cortes, who thinks other countries that may be at risk are Italy, Spain and even Japan.
Both inflation and unemployment are both also potential headwinds, as Steve Cortes looks at the new health care bill as being a "job killer" by burderning companies with heavier health care obligations, while the tightening slack in the economy could potentially unleash more rapid inflation.
Overall, Joe Terranova thinks that this will be the decade of the emerging market consumer, which he believes will become more and more important to global growth than the American consumer in years to come.
Best of '09: Apple
Apple was in the spotlight again on Thursday's trading day as reports surfaced that the company may be set to release its much-anticipated tablet as early as January. Will this new device help the tech giant dominate the next decade the way it has in the past? Fast Money brings on Nehal Chokshi, senior analyst at Southridge Investment Group to get his take. To make the product a revolutionary device, this will have to include multimedia, not simply print media content, he says, highlighting the potential for the device to not only be an e-reader, but also a mobile internet and television device as well. Although he doesn't think all these features would be presented all at once, he believes it's possible for it to develop into a true game-changer over the next 12 months. For Chokshi's full analysis as well as his take on the new Google phone and a range of possible 'Apple Killers', check out the video!
So what's the trade on Apple? Joe Terranova points out that they report earnings on Jan 21, and he expects the company to have its best quarter... ever. "You need to know this coming into earnings season," he says.
Best of '09: Commodities
One of the best performing sectors of the year, with Copper, Oil and Gold popping throughout the year, can you keep riding the commodity train to new heights into 2010? Joe Terranova is confident that you can, as the rise in prices is related to emerging market demand, and will center on the "4 C's," he says, which are Coal, Copper, Crude and Corn.
But what about Nat Gas? Everyone expected as spike, says Steve Grasso, who says that now producers are looking for long term contracts, which may serve to keep a lid on prices, at least for a while.
On a more obscure trade, Platinum and Palladium have both performed well in the past few weeks, and Brian Kelly suggests that because these metals have much greater applications in the real world, they stand to have a gold-like run, if not better. Speaking of the gold trade, Steve Cortes thinks it's "overcrowded" and set for a drop, while it just may be the "tip of the iceberg" for other commodities.
Come-Back Story of 2009: Financials
No sector was hit harder than the banks, but they came bouncing back from the March bottom by nearly 130%, begging the question of whether the financials are out of the woods in 2010. To answer this question, Brad Hintz of Sanford Bernstein talked with the traders. He sees Goldman Sachs as the "best in breed" for 2010, because he believes that rates will not be raised, and with a steep yield curve, Goldman looks quite attractive. The company is just "making money and throwing their balance sheet at fixed income," he says, expecting the fixed income cycle to continue much longer than the street has been predicting.
A Surprise for 2010?
Joe Terranova has identified one possible big surprise in 2010, and he thinks it could be in the form of failed treasury auctions. $2.5 trillion in US treasurys will be auctioned in 2010, he says, which will bring with it an increased occurrence of failed treasury auctions. To trade off this, he suggests buying into gold, which stands to rise when treasury auctions slump.
For the traders' complete analysis and strategies for 2010, check out the video!
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Trader disclosure: On December 31st, 2009, the following stocks and commodities mentioned or intended to be mentioned on CNBC’s Fast Money were owned by the Fast Money traders;
Cortes Is Long S&P 500; Cortes Is Long U.S. Dollar vs. AUD, MXN; Cortes Is Short Gold; Cortes Is Short Crude Oil; Cortes Is Long T-Bonds; Cortes Owns (GD); Cortes Is Short (PHM); Cortes Is Short (TOL)
Kelly Owns (PAL); Kanundrum Capital Owns (AA); Kanundrum Capital Owns (BAC); Kanundrum Capital Owns (C); Kanundrum Capital And Kelly Own (FCX); Kanundrum Capital Owns (FXI); Kanundrum Capital Owns (FXY), Kelly Owns (FXY) Puts; Kanundrum Capital Owns (GLD); Kanundrum Capital Owns (GLW); Kanundrum Capital Owns (JPM); Kanundrum Capital Owns (SSO); Kanundrum Capital Owns (TBT); Kanundrum Capital Owns (USO); Kelly Owns (UUP)
Terranova Works For (VRTS); Terranova Is Chief Market Strategist Of Virtus Investment Partners, Ltd.
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 (XLY)
Virtus Investment Partners Owns More Than 1% Of (DBV)
Virtus Investment Partners Owns More Than 1% Of (UA)
Grasso Owns (APK); Grasso Owns (AAPL); Grasso Owns (ASTM); Grasso Owns (BAC); Grasso Owns (BGP); Grasso Owns (C); Grasso Owns (COST); Grasso Owns (CSCO); Grasso Owns (FAZ); Grasso Owns (PFE); Grasso Owns (PRST); Grasso Owns (WMT); Grasso Owns (V)
Stuart Frankel & Co. And Its Partners Own (AIZ)
Stuart Frankel & Co. And Its Partners Own (CUBA)
Stuart Frankel & Co. And Its Partners Own (GERN)
Stuart Frankel & Co. And Its Partners Own (GLG)
Stuart Frankel & Co. And Its Partners Own (HSPO)
Stuart Frankel & Co. And Its Partners Own (NWS.A)
Stuart Frankel & Co. And Its Partners Own (NXST)
Stuart Frankel & Co. And Its Partners Own (NYX)
Stuart Frankel & Co. And Its Partners Own (PDE)
Stuart Frankel & Co. And Its Partners Own (PRST)
Stuart Frankel & Co. And Its Partners Own (RDC)
Stuart Frankel & Co. And Its Partners Own (ROK)
Stuart Frankel & Co. And Its Partners Own (TLM)
Stuart Frankel & Co. And Its Partners Own (XRX)
Stuart Frankel & Co. And Its Partners Own (SDS)
Stuart Frankel & Co. And Its Partners Are Short (QQQQ)
Stuart Frankel & Co. And Its Partners Are ShorT (CL)
JIM IUORIO
Iuorio Owns (TBT)
Iuorio Owns (FXA)
Iuorio Owns (FXC)
Iuorio Is Long Equity Volatility With A Negative Bias
Iuorio Owns (GLD) Puts, Is Short (GLD) Puts
***IUORIO DOES NOT HAVE DISCLOSURES ON TYH, SHY
SCOTT BURNS
Morningstar ETF Research Team Owns (XLP), (IEO), (XLU), (PGF), (WIP) In Its Model Portfolios
Barnes Owns (XLP), (PGF)
Morningstar Licenses Indexes To Blackrock/iShares
BRAD HINTZ
Hintz Owns Morgan Stanley And Discover
Hintz Owns (CME)
Accounts Over Which Bernstein And/Or Affiliates Exercise Investmet Discretion Own More Than 1% Of (GS), (MS)
(GS), (MS) Are Or In Past 12 Months Were Clients Of Bernstein (Non-Investment Banking-Securities Related Services)
An Affiliate Of Bernstein Received Non-Investment Banking Compensation From (GS), (MS) (Securities Related Services)
JIM SUVA
Citigroup Global Markets Or Affiliates Owns 1% Or More Of (PALM)
Citigroup Global Markets Or Affiliates Has Received Investment Banking Compensation For Services Provided In Past 12 Months From (MOT), (GLW)
Citigroup Global Markets Or Affilate In Past 12 Months Received Non-Investment Banking Compensation From (MOT), (PALM), (GLW)
(MOT), (GLW) Are Or In Past 12 Months Were Investment Banking Clients Of Citigroup Global Markets
(MOT), (PALM), (GLW) Are Or In Past 12 Months Were Non-Investment Banking Clients Of Citigroup Global Markets (Non-Securities-Related Services)
Citigroup Global Markets Or Affiliate Received Compensation In Past 12 Months From (MOT)
Citigroup Global Markets Is A Market Maker In (RIMM), (PALM)
Citigroup Global Markets And/Or Affiliates Has A Significant Financial Interest In Relation To (MOT), (GLW)
***JIM SUVA HAS ADDITIONAL DISCLOSURES -- WILL UPDATE IF APPLICABLE
NEHAL CHOKSHI
***NO DISCLOSURES