'Fast Money' Recap: Darkening Clouds
NEW YORK (
) --The markets opened the week on a sour note.
The
Dow Jones Industrial Average
fell 141.22, or 1.39%, to 10,009.73. The
S&P 500
lost 15.67, or 1.47%, to 1,048.92, while the
Nasdaq
dropped 33.66, or 1.56%, to 2,119.97.
Pete Najarian said on
CNBC
's "Fast Money" show that the financials were underperforming on a day when the trading volume was paltry.
Guy Adami said
Goldman Sachs
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has been trading poorly and that it may be time to pull the "rip cord."
Joe Terranova said the market is confronted with a lot of headwinds including the Institute of Supply Management report, the U.S. jobless report and China's PMI. He also noted today's reversal in the Treasury market.
Brian Kelly noted how the M&A activity is not lifting the markets and the absence of a catalyst to take the financials higher.
For a breakout of some stocks from a recent "Fast Money" TV show,check out Dan Fitzpatrick's "3 Stocks I Saw on TV."
3 Stocks I Saw onTV |
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Adami said the S&P is approaching a precarious point at 1,040. However, Najarian said he was encouraged by the Shanghai index, which traded up, and the price of copper, which rose to $3.40 a pound.
Michael Block, of Phoenix Partners, said he's not buying anything, adding stocks are going to get cheaper with "dangerous times ahead of us."
Michael Darda, an economist with MKM Partners, took the contrarian view, saying equities are the best place to be and predicting an improving economic outlook for the remainder of the year.
He said equity earnings are yielding 7 to 9 percent. He said U.S. and global equity markets look good. His best bet? Cyclical equities.
Terranova said utilities, copper and technology are providing tailwinds for the markets.
Simon Hobbs, the moderator of the show, shifted the discussion to the heightened M&A activity in technology. Terranova said
Intel
's
(INTC) - Get Intel Corporation Report
pursuit of German chipmaker Infineon represents an acknowledgement that something is wrong with its business model and the need to get more exposure in enterprise.
Kelly discussed the rapid shift in storage to cloud computing and the desirability of stocks like
Rackspace Hosting
(RAX)
. He said storage is growing at 60% annually.
Along the same vein, Najarian mentioned names like
F5 Networks
and
Akamai
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as tech stocks with solid growth potential.
Hobbs asked Terranova to comment on a forecast that oil may be down to $65 a barrel by October. Terranova, though, said oil traded well today on a bad tape, adding China's PMI report Tuesday will help determine where it goes. "If the PMI is below 50, oil will soften," he said.
Hobbs brought in Mark Schoenebaum, an ISI Group analyst, to comment on
Sanofis-Aventis
's
(SNY) - Get Sanofi Report
$18.5 billion offer for
Genzyme
(GENZ)
that was rejected. He expects the offer to rise to $75 and $80, with nothing happening in September.
His best out-of-favor stock? It's
Gilead Sciences
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.
Looking at tomorrow headlines, Hobbs brought in Richard Volpe, trading co-head with RBS USD Rates, to comment on the possible end of the bond bull market.
Volpe said he's see a short-term pullback in the bond market as a lot of the forces that propelled bonds higher start to dissipate. Terranova said equities will play well if that scenario unfolds. Adami disagreed, saying he still sees a lot of money moving into the bond market as the markets decline.
Is the GOP set to take both houses in the mid-term elections? Edward Mills, a financial policy analyst for FBR, said the Democrats will maintain a majority in the Senate and President Obama will retain his veto power.
He said it's a "jump ball" as to taxes for the top two income brackets. He also said the dividend tax remains a wildcard.
Looking at the deal-making swirling in tech, Hobbs wondered whether the PC business is dead.
CNBC
correspondent Jon Fortt said he wouldn't go that far. He said it was more like a mid-life crisis. He said Intel needs Infineon because it needs a wireless baseband business for its Atom chip.
Commenting on
Hewlett-Packard
's
$10 billion stockback, Gary Kaminsky said history has shownthat companies usually underperform after announcing buybacks. He called it a "bad allocation of capital."
Like others in the panels, he was concerned with the direction of the market. He said the economists are too optimistic about the fourth quarter. He expects for GDP revisions to the downside in the future.
In the final trades, Block said he was shorting
Mosaic
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. Terranova was long Potash while Adami like
Human Genome
(HGSI)
. Kelly liked
SPDR S&P Biotech
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. Najarian liked
Amgen
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.
--Written by David Tong in San Francisco.
To contact the writer of this article, click here:
David Tong.
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.
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