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Halftime Report: Weak Morgan, Strong Market

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HALFTIME REPORT: WEAK MORGAN, STRONG MARKET

The S&P rebounded from a morning slide and was trading modestly higher around lunchtime Wednesday, despite a wider than expected loss from Morgan Stanley. Investors appear to have shrugged off comments from the bank, which said weakness stems in part from a deteriorating commercial real estate market.

Banks have helped lead the six-week rally that sent the broad S&P 500 up more than 26 percent from March's bear market lows.

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The S&P has been struggling around 855, muses Tim Seymour. I think it continues to struggle there partly because the banks probably can’t continue to fuel a run higher. I don't feel the banks and brokers can repeat the strong numbers in the next quarter.

I’m long Morgan Stanley, adds Joe Terranova. I see near-term negative but long-term positive.

Morgan Stanley has been resting on its 50-day moving average, adds Dan Fitzpatrick. I’m long and sticking with the stock as long as it holds above that level. But if it breaks, I’m gone.


TAKE YOUR POSITION: APPLE LEADS TECH HIGHER BEFORE EARNINGS

Investors bid shares of Apple higher, just hours before the maker of iMac, iPhone and iPod, reports fiscal second-quarter earnings.

Analysts surveyed by Thomson Reuters expect Apple to earn $1.08 per share on $7.9 billion in sales

The stock has run 46% year to date, explains Dan Fitzpatrick. I wouldn’t go near this stock but I wouldn’t short it either.

I think Apple is a buy on any dip, counters Jon Najarian. And I think you could get a dip tonight after earnings.

There are probably better places to play in this space, adds Tim Seymour. I’d get long Microsoft and be flat or even short Apple.

TOPPING THE TAPE: HOMEBUILDERS

A push by homeowners to lock in near record-low interest rates drove mortgage applications higher last week, as refinancing demand overshadowed a drop in loan requests to buy homes, the Mortgage Bankers Association said on Wednesday.

Average 30-year U.S. mortgage rates edged up 0.03 percentage point to 4.73 percent last week, slightly above the all-time low of 4.61 percent three weeks earlier.

Refinancings represented nearly 80 percent of all mortgage applications, the industry group said.

The data is pretty good, muses Tim Seymour. I think this means the consumer will probably have more spending power.

BREAKING NEWS: GENERAL MOTORS

In breaking news, CNBC’s Phil Lebeau reveals that GM isn’t going to make a $1 billion debt payment that’s due on June 1st.

Instread, Lebeau explains GM will offer a debt for equity exchange that will be offered in the next few days and end in late May. Either they will get the results they need or they likely go into bankruptcy court, he says.

Is there a trade here?

I think it has implications for the banks, says Tim Seymour. It’s the banks holding this debt.

Toyota is probably the way to play it, adds Joe Terranova. In the past Terranova has said GM's weakness should be Toyota's gain.

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Trader disclosure: On Apr 22th, 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), (BTU), (C), (GS), (INTC), (MSFT), (NUE); Seymour Owns (BAC), (EEM), (FXI), (TCK), (INTC), (FIC); Seymour Is Short (AAPL), (FCX), (POT); Finerman's Firm Owns (AXP), (RIG), (UNH), (TBT), (ELX); Finerman's Firm Owns (BAC) Preferred; Finerman's Firm Owns (C) Preferred; Finerman's Firm Owns(MSFT) & (MSFT) Put Spread; Finermans Firm Is Short (IJR), (MDY), (SPY), (IWM), (USO); Najarian Owns (PALM); Najarian Owns (BX) Call Spread; Najarian Owns (MCD) & (MCD) Calls; Najarian Owns (MS) & (MS) Calls; Najarian Owns (RHT) Call Spread; Najarian Owns (RIO) Calls; Najarian Owns (VAR) Call Spread; Najarian Owns (XHB) Cal Spread; Najarian Owns (XLB) Call Spread; Najarian Owns (ANR)

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