Move Over Federal Reserve, There's a New Central Bank in Town

NEW YORK (TheStreet) -- The Federal Reserve has officially ended quantitative easing and the S&P 500 and Dow Jones Industrial Average continue to make new all-time highs on Thursday. But Gillian Tett said that Thursday rise is because there's a new central bank in town. 

Tett, the U.S. editor for the Financial Times, said during CNBC's "Fast Money Halftime" that Mario Draghi of the European Central Bank has given investors optimism by hinting the central bank is gearing up for more balance sheet expansion, possibly to the tune of 1 trillion euros.

The stock market generally performs well during November and December, according to Mike Murphy, founder of Rosecliff Capital. The labor market is doing well and lower gasoline prices will help both businesses and consumers. 

Stephanie Link, chief investment officer of TheStreet and co-manager of the Action Alerts PLUS portfolio, agreed that lower gasoline prices will help the economy. The stock market will likely go in the same direction as corporate earnings, which seem poised to go higher. If the ECB does introduce another form of stimulus, that will also help the stock market, she said.  

Health care, technology and financial stocks seem the most likely to outperform the broader market going forward, according to Pete Najarian, co-founder of optionmonster.com and trademonster.com. 

"I'm so bullish it hurts," said Jon Najarian, co-founder of optionmonster.com and trademonster.com. The stock market will continue to move higher, while the ECB seems likely to initiate some form of quantitative easing by early 2015. 

"I'm still very, very bullish," Paul Richards, a managing director at UBS, said of the U.S. stock market. The euro is likely to continue moving lower, especially if the ECB announces some form of quantitative easing. 

Former hedge fund manager Michael Karsch, who is also the founder of KCM Consulting, says investors can still find opportunities in the market but need to be more selective. He likes stocks in the cable industry, the consumer sector and the pharmaceutical industry. Specifically, he likes Pfizer (PFE) and Valeant Pharmaceuticals (VRX) . 

The traders provided their top consumer staples plays as well their "turbo-charged" picks headed into year's end.

For the last two months of the year, Murphy is buying Halliburton (HAL) , Link is a buyer of Coach (COH) and Jon Najarian said to buy Michael Kors (KORS) . 

For their consumer staples plays, Murphy likes PepsiCo (PEP) on the long side, Link is buying Unilever (UN) , Jon Najarian said to buy Molson Coors Brewing (TAP)  and Pete Najarian is a buyer of Costco Wholesale (COST) . 

The discussion turned to earnings, with Whole Foods Market (WFM) trading higher by roughly 11% following positive earnings results and Qualcomm (QCOM) trading lower by 11% following disappointing earnings results.

Fundamentally, Whole Foods reported a strong quarter, Murphy said. Technically, the stock can continue to climb higher, likely to $50 per share. Link disagreed, arguing that shares of Whole Foods still seem expensive given that gross margins are still under pressure. She thinks investors should consider Kroger (KR) , which has a lower valuation, improving margins and solid comp-store sales.

Qualcomm looks "awfully cheap," Jon Najarian said. All the bad news seems priced into the stock following Thursday's decline. Investors can look for the stock to get back above $70. 

"Why should investors buy shares of Qualcomm when they don't know what will happen to its position in China?" Murphy asked. There's plenty of better chip plays besides Qualcomm. 

Tesla Motors (TSLA)  reported earnings Wednesday and the stock is now up 5%. Jon Najarian said the company is trying but can't keep pace with the high level of demand. As long as the company's lower-than-expected vehicle deliveries guidance is due to supply constraints and not demand issues, Murphy said the stock is likely headed higher. 

For their final trades, Murphy is buying CBS Corp. (CBS) and Jon Najarian is a buyer of Discover Financial Services (DFS) . Pete Najarian said to buy Microsoft (MSFT) and Link is a buyer of United Technologies (UTX) .

-- Written by Bret Kenwell

Follow @BretKenwell

 

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