Near term technicals are poor and the stock market has a slew of fundamental overhangs, adds Anthony Scaramucci. We've already got financial regulation hanging over the financials and now we have to worry about BP and the energy sector. I think we're looking at a world of pain for BP. However I do think BP shares rally on a dividend cut.
Any portfolio manager who bought BP between April 1st to May 31st is looking at an unrealized loss, muses veteran trader Gary Kaminksy. That alone I think generates net selling through the end of the quarter. And I expect there to be selling whether they cut the dividend or not.
I found it intriguing that despite rising tensions in the middle east oil didn’t rally on Tuesday, says Karen Finerman. Also new limits on drilling from the administration should have caused oil to rise. But they didn't. It could be a telling sign of a global slowdown.
I also noticed that despite tension in the middle east we didn't see oil pop nor did we see bonds move, adds Brian Kelly. If nothing else that suggests the longs are weak.
The pain in BP might be palpable, points out Rich Peterson of S&P in an e-mail sent to Fast Money during the show. However, he adds, there are many other energy companies that have suffered more with Baker Hughes, Noble Energy, Schlumberger and Smith International among the most notable.
As far as I’m concerned the environment warrants being defensive, counsels Joe Terranova. That means long positions in slow growth names such as Walmart, Johnson & Johnson or Kraft or even an IBM, he says. Take go-go names off your shopping list.
FUTURE OF DEEP-WATER DRILLING
In the wake of the gulf spill the future of deepwater drilling may be at risk all together.
The Obama administration has put deepwater exploratory drilling on hold for six months pending the findings and recommendations of a commission investigating the causes of the explosion that sank Transocean's Deepwater Horizon rig leased by BP .
What must you know?
- The six-month moratorium will apply to all new exploratory drilling at depths more than 500 feet.
- 33 rigs in the Gulf of Mexico will have to stop drilling operations as soon as safely possible and remain out of action for six months.
- Companies that have an approved permit to conduct exploratory drilling in deepwater, but have not started their project, will not be allowed to start drilling during the moratorium.
- As part of the ban, Royal Dutch Shell's proposal to drill exploration wells in the Arctic this summer has been postponed until 2011.
* Matthew Simmons of Simmons & Co. Intl is one of the most widely respected authorities in the oil industry. Find out what he has to say about the BP crisis. Watch the video now!
Meanwhile, China was also a big weight on the markets Tuesday after the country's latest PMI data showed factories scaled back production last month and slowed the pace of hiring.
What’s the trade?
If you think China’s economy is going to roll over and die you’re way off base, says Tim Seymour. I think the numbers are exactly what we want to see if you’re bullish slow and steady global growth.
STREET FIGHT: POPPING BUBBLES
The biggest threat to the world economy may not be a slowing Chinese economy but an overheating one.
Get all the details from CNBC senior economics reporter Steve Liesman.
Watch the video now!