'Fast Money' Recap: Oil's Not Done Yet
U.S. stocks got their groove back Thursday, as all three major indices finished with gains. The Dow was up 0.2%, the S&P 500 added 0.3%, and the Nasdaq grew 0.7%.
On
CNBC's
"Fast Money" TV show, the traders discussed a reprieve from the climb in crude oil prices and an ensuing rally in stocks. Jeff Macke said he doubts oil has topped. He said he believes the price will make new highs within a week.
Guy Adami said people hate being in commodities over a long weekend. He said investors may sell out of oil because they're scared to be long over the weekend.
Tim Seymour pointed out that U.S. consumption looks to be down year over year. He said to watch
Exxon Mobil
(XOM) - Get Exxon Mobil Corporation Report
here. He said there are a lot of dissenters in the company, and the stock's chart looks tricky. He also pointed out recent oil discoveries from
PetroBras
(PBR) - Get Petróleo Brasileiro SA Report
.
Jon Najarian said today marked a chink in the armor for crude's rally. He said it's smart to watch for a situation when oil sells in the face of good news. He said there was a prominent
Wall Street Journal
article touting oil's rise. He said it broke below $131. He said there is aggressive put activity in the
PowerShares DB Commodity Index
TheStreet Recommends
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3 Stocks I Saw on TV |
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Macke said that it's possible to short oil here, but investors should beware that they are fighting a trend.
On the possibility that speculators are driving oil's rally, Najarian said that speculation isn't possible without fundamentals behind it. He said the oil market is driven primarily by supply and demand, and right now there is real demand in spite of weakness in the U.S.
Macke said that there is speculative action going on, which means that all bets are off concerning where the commodity "should" trade.
Fender Bender
Ford
(F) - Get Ford Motor Company Report
and
UAL
( UAUA) offered bearish news. Ford said it will not make a profit this year, and United said it may begin charging $15 for the first checked bag passengers bring on.
Adami said that some transports are good and some aren't. He said he has liked Ford as a turnaround story, but the stock keeps getting knocked down when it looks like it's ready for a rally.
Macke said Ford is making the wrong product at the wrong time. He said he doesn't want to hear management complaining about steel prices. Najarian pointed out that Ford makes SUVs, and with oil this high, consumers don't want what Ford is selling.
Of the airlines, Adami said "they're trading vehicles." He said that investors can get long
AMR
(AMR)
with a stop at a close below $6. Macke said that any rally in the airlines is a selling opportunity and even a shorting opportunity.
Generating a Merger
NRG Energy
(NRG) - Get NRG Energy, Inc. Report
made a $9.1 billion unsolicited bid for
Calpine
(CPN)
today. Jon Najarian said investors can buy both.
Seymour said this deal is an amazing turnaround for Calpine. He predicted that other bidders may come into play and outbid NRG. He advised viewers to watch
Dynegy
(DYN)
.
Game Over?
In retail,
GameStop
(GME) - Get GameStop Corp. Class A Report
produced solid earnings, but the stock suffered. Macke said investors should sell the news in video games because the market is maturing and can't sustain previous growth.
Adami compared GameStop to
Starbucks
(SBUX) - Get Starbucks Corporation Report
in that it's building stores quickly. He pointed out that GameStop doesn't appear to have much in the pipeline to support the growth.
Najarian said investors would be wise to remain on the sidelines.
Careful How You Play
Children's Place
(PLCE) - Get Children's Place, Inc. Report
produced an upside surpise. Macke said the retailers are largely facing "rock-bottom" expectations. He said there were tons of short-siders in Children's Place, and they got hurt.
Trouble on the Playing Field
Shares of
Dick's Sporting Goods
(DKS) - Get Dick's Sporting Goods, Inc. Report
took a drubbing today. The traders welcome Dick's CEO Ed Stack to the show to discuss his company.
Stack said the price of gasoline and food is affecting the consumer. He said his company is trying to provide unique and exclusive products, such as baseball cleats tied to stars David Ortiz and Alex Rodrigues. It's a tough environment, he said. He said
Under Armour
(UA) - Get Under Armour, Inc. Class C Report
sales have been great in the first quarter, but other areas were softer.
The traders then discussed which companies were losers to $135 oil. Najarian said the casino business is in big trouble because the U.S. consumer is strapped and can't fly. He told investors not to buy airlines, because they can get in lower.
Seymour said
PetroChina
(PTR) - Get PetroChina Co. Ltd. Report
is providing a refined product to a national audience. He said the company is losing a lot of money on spreads.
Let Them Eat Steak
Adami picked high-end steak houses like
Ruth's Chris
(RUTH) - Get Ruth's Hospitality Group, Inc. Report
and
Morton's
(MRT)
.
Macke said that no one is going to be renting cars, so avoid
Hertz
(HTZ) - Get Hertz Global Holdings Inc Report
.
The traders then discussed the power of OPEC to potentially bring down the price of oil. They welcomed John d'Agostino, hedge fund and private equity consultant, to discuss the matter. He said that the Saudis have shareholders, and they act on the behalf of those people. He said people shouldn't be surprised that they are maximizing value.
Seymour pointed out that there isn't much supply in non-OPEC producers like Russia and Kazakhstan. He said that OPEC pumps 40% of daily production but controls 80% of the swing supply of oil. For this reason, he said, OPEC is the only entity that has the power to provide oil to the market at this point.
On global infrastructure, Seymour said that the companies are able to pass on price increases. He said this story will continue to be strong and pointed out that rails have been "ripping." Adami pointed to enormous buildout in China. He said the country is building entire cities across the country. He said steel names still have pricing power.
Ship Shape
Najarian said
DryShips
(DRYS) - Get DryShips Inc. Report
and
Eagle Bulk Shippers
(EGLE) - Get Eagle Bulk Shipping Inc Report
are buys here. He said the Baltic dry shipping rates are increasing.
Macke said he thinks the shippers' pricing model doesn't make sense, because companies like
Wal-Mart
(WMT) - Get Walmart Inc. Report
won't be able to buy goods shipped across the globe at exorbitant shipping prices.
Trader Radar
Micron Technologies
(MU) - Get Micron Technology, Inc. Report
traded on unusual volume today.
For some more summer trades, Macke selected Wal-Mart and
Disney
(DIS) - Get Walt Disney Company Report
, saying consumers aren't going international for their vacations.
Adami recommended
Priceline.com
(PCLN)
on a high-volume dip.
Seymour said that international luxury money is fueling earnings at
Marriott
(MAR) - Get Marriott International, Inc. Class A Report
, so the stock is a buy.
Jon Najarian said cruise lines have passed though energy costs. He said that companies like UAL are also figuring out ways to pass on price increases.
Final Trade
Macke selected the
U.S. Oil Fund
(USO) - Get United States Oil Fund LP Report
. Adami picked AMR.
