Stocks closed at 14-month highs on Monday on the hope that more M&A was on the horizon after Exxon Mobil announced a $30 billion deal to take over nat gas supplier XTO.
The announcement sparked expectations of a wave of consolidation in the energy sector as cash-rich companies such as Exxon move to snap up smaller players with attractive assets.
What’s the trade?
Most traders will look at rival nat gas companies but I’m looking at BP , says Pete Najarian. They’re already positioning into nat gas.
Exxon’s move tells me a lot about the price of nat gas going forward, says Joe Terranova. Over the long term I expect nat gas to rally. I’m a buyer long term.
I find that after one energy company does a deal they all tend to do a deal, says Gary Kaminsky. We saw it a decade ago and we’ll likely see it again.
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MARKET BUZZKILL: CITI WEIGHS ON FINANCIALS
Shares of Citi weighed down the financials after the bank said it had laid out a plan to repay the TARP Money.
That plan includes a $20 billion secondary, which will significantly dilute current shareholders' stake in the company. Citi only has to pay back $20 billion because the remaining $25 billion was converted into a 34 percent ownership stake in the bank earlier this year.
The government plans to sell that entire stake — which has risen in value by more than 20 percent — during the next year at a profit of $14 billion.
What’s the bank trade?
Citi remains under the government’s thumb, says Tim Seymour. The move does not free them from the shackles.
Also, there’s skepticism in the market about whether the transaction happened too early, adds Gary Kaminsky. I don’t see the stock trading north of $5 until that skepticism goes away.
It seems to me that Citi’s move puts the pressure on Wells Fargo to get out of TARP sooner rather than later, adds Joe Terranova.
Still Under the TARP
What They Still Owe
WELLS FARGO $25B
PNC $7.5B
FIFTH THIRD $3.4B
KEYCORP $2.5B
SUNTRUST $4.9B
REGIONS FINANCIAL $3.5B
Source: FBR
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LONGEST LOSING STREAK FOR OIL IN 8 YEARS
Oil fell for the ninth consecutive day on Monday, below $70 a barrel, as weak fuel demand overshadowed gains in equity markets and a lower dollar.
Oil prices have fallen more than $8 a barrel since December 1 in the longest price slide since July 2001, as rising inventory levels in the United States showed a sluggish recovery in oil demand from the recession.
"The fundamentals of oil demand are weak, and as the year comes to an end, people have been paying more attention to them," says Gene McGillian, analyst at Tradition Energy in Connecticut. "After falling so much, the market is trying to stem the slide but it hasn't really happened yet."
What’s the trade?
It seems to me the chart is starting to bottom out, says Tim Seymour. I would not get short oil here.
I expect the spot price of oil to remain under pressure into MLK Day, says Joe Terranova. But I wouldn’t get short either.
If you’re looking to play energy, I’d do it with BTU, Cliffs and/or Walter Energy, says Pete Najarian; in other words companies with exposure to coal.
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MARKET BUZZKILL: AMAZON
Shares of Amazon traded lower after Barron’s said Wall Street may have set its expectations too high for online retailer.
At about $135 per share, Amazon is trading at 69 times 2009's estimated profit of $1.95 per share and 53 times 2010's projected $2.55 per share, Barron's said.
"The company's growth prospects are outstanding," Barron's said, citing the analysts note. "But they aren't limitless. Nonetheless, the company's current share price is starting to imply that they are."
What’s the trade?
I’m a buyer of Amazon’s pullback, says Joe Terranova.
Akamai is a stock I’d put on my radar, says Pete Najarian.
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UPS, FEDEX POISED TO HIT 52-WK HIGHS TOMORROW
Both UPS and FedEx are poised to hit 52-week highs this week as the shippers enter their busiest time of the year.
What’s the trade?
I’m a buyer of FedEx on any pullback, says Joe Terranova.
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Trader disclosure: On December 14th, 2009, the following stocks and commodities mentioned or intended to be mentioned on CNBC’s Fast Money were owned by the Fast Money traders; Pete Najarian Owns (AAPL) Calls; Pete Najarian Owns (DELL) Calls; Pete Najarian Owns (RIMM) Call Time Spread; Pete Najarian Owns (UUP) Call Spread; Pete Najarian Owns (CLF), Is Short (CLF) Calls
For Joe Terranova
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)
For Jon Najarian
Jon Najarian Owns (PXP)
Jon Najarian Is Short (CHK) Calls
Jon Najarian Is Short (DVN) Calls
For Pip Coburn
Coburn Manages And Invests In Coburn Ventures Buckeye Delta Fund
Coburn Ventures Buckeye Delta Fund Owns (GOOG)
Coburn Ventures Buckeye Delta Fund Owns (AAPL)
Coburn Ventures Buckeye Delta Fund Owns (RIMM)
Coburn Ventures Buckeye Delta Fund Is Short (NOK)
Coburn Ventures Buckeye Delta Fund Is Short (PALM)
Coburn Ventures Buckeye Delta Fund Is Short (LEAP)
Coburn Ventures Buckeye Delta Fund Is Short (GRMN)
Coburn Ventures Buckeye Delta Fund Is Short (SNE)
Coburn Ventures Buckeye Delta Fund Is Short (CTCT)
Coburn Ventures Buckeye Delta Fund Owns (SY)
Coburn Ventures Buckeye Delta Fund Owns (STRA)
Coburn Ventures Buckeye Delta Fund Owns (CRM)
Coburn Ventures Buckeye Delta Fund Is Short (IPG)
Coburn Ventures Buckeye Delta Fund Is Short (NYT)
Coburn Ventures Buckeye Delta Fund Owns Accenture
CNBC.com with wires
