'Fast Money' Recap: $200 Oil in 2012?

NEW YORK ( TheStreet) -- The markets closed higher on Monday with the start of a new earnings season.

The Dow Jones Industrial Average was up 32.77, or 0.27%, to 12,329.69. The S&P rose 2.89, or 0.23%, to 1,280.70. And the Nasdaq was up 2.34, or 0.09%, to 2,676, 56.

Melissa Lee, the moderator of CNBC's "Fast Money" TV show, started off the discussion with Juniper Networks ( JNPR), which cut guidance for revenue and EPS and indicated that router demand among service providers was softer than expected.

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 on TV

Guy Adami said his pick in the space would be Cisco ( CSCO), whose chart indicates it is on the verge of breaking out.

The other other stock that Lee guided the panel to was Liz Claiborne ( LIZ) , which was down 10% in afterhours trading on word that its CFO was leaving for another company.

Karen Finerman said the CFO did a lot to turn around the company and looked at the pullback as an opportunity to get into the stock.

In after-hours trading, Alcoa ( AA) reported a loss of $34 million, or 3 cents a share, from continuing operations that was in line with consensus analyst estimates.

Tim Seymour liked Alcoa's top line and said he would buy the stock at $8.50. Scott Nations, though, said Alcoa had an ugly chart and would have do a better job on margins, adding he didn't see "anything good here." Mike Murphy said Alcoa was a good way to play the global recovery and he would get into it on a pullback.

Lee asked the panel to provide their best picks in this market. Adami liked the rail sector, especially Kansas City Southern ( KSU), which he said still has more to run after hitting an all-time high today.

Murphy liked Cummins ( CMI), which he said had four "great quarters" last year.

Finerman liked the oil services space and JPMorgan ( JPM), whose tangible book value is well less than 10 times earnings.

Seymour said the money center banks look good, with signs of impressive revolving credit loan growth, loan growth and mortgage exposure. Nations favored Macy's ( M), saying its core customers are starting to spend again.

On the other hand, Adam Parker, of Morgan Stanley, provided a contrarian, bearish call on the markets. He sees the global economy decelerating in the months ahead that will affect all countries except for Japan. He said the combination of declining GDP, negative guidance and strong dollar will be a recipe for disappointing earnings.

Lee brought in Richard Pops, chairman and CEO of Alkermes ( ALKS) to talk about his company's outlook.

He said his company anticipates getting the OK later this month from the FDA on Budureon, a drug that treats Type 2 diabetes. The drug has already been approved for use in Europe.

In addition to five major commercial product areas, Pops talked about a number of later-stage drugs in the pipeline that will be attractive to big Pharma.

Lee brought in Michael Wittner, of Societe Generale, who said that Brent crude, which closed at $112 a barrel today, could jump as high as $200 a barrel if Iran closes the Straits of Hormuz, cutting off one-third of the globally traded volume of oil.

He said if Iran threatens to use missiles, mines and fast small boats to close the straits, it could lead insurers to halt covering tankers, effectively closing the straits without firing a shot.

He said the military response by the U.S. and NATO would be swift to reopen the shipping lanes.

According to Wittner, Brent crude could rachet up to $125 from a drop in spare capacity in the Saudis' efforts to compensate for the loss of oil from an EU embargo oil imports from Iran.

Is the worst over financials? Lee said Jamie Dimon, CEO of JPMorgan, noted in an interview earlier in the day that his firm would consider buybacks. Finerman said she would prefer buybacks over dividends, while Murphy complimented on Dimon on doing a great job steering a recovery of the financials and becoming the the face of the industry.

Shifting to tech, Lee said Apple ( AAPL) closed lower after a record high today, while Google ( GOOG) was down 4%.

Murphy observed that Brocade Communications ( BRCM), was up 2.47% today as reports surfaced that it is a buyout target.

Nations said the company has been looking to sell itself from some time. He said call volume in the stock was up through the roof, adding the list of potential suitors included IBM ( IBM) and Oracle ( ORCL).

Shifting to the currency trade, Amelia Bordeau, a director for Westpac Institutionl Bank, said she was short the Swiss franc as a result of the uncertainty created from the resignation of Phillip Hildebrand, the chairman of the Swiss National Bank. She said would short the Swiss franc against a commodity currency.

Lee brought in Larry McDonald, senior director for Newedge, who threw some cold water on the current rally. He said the risk-off event could come on Jan. 16 when the EU receives a report card on how well Greece is doing in tax collection and austerity. He said Europe will also be getting more clarity on the extent on private sector involvement in sovereign debt haircuts.

In the final moves, Seymour said to say in Vimpel Com ( VIP). Adami was sticking with Visa ( V) until it reaches $17.50. Finerman was reloading in Children's Place ( PLCE). Murphy favored Tyco ( TYC).

-- Written by David Tong in San Francisco.

>To contact the writer of this article, click here: David Tong.

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