Dollar Back? - Fast Money Recap (7/23/08)

Recap of CNBC's Fast Money, Wednesday July 23. 

Financial Select Sector SPDR (XLF), Goldman Sachs (GS)

On Wednesday, Dylan Ratigan started off the Fast Money program by comparing the downward trend in oil as financials continue their upward momentum.  The stock market direction is driven by oil. Joe Terranova said he was proud to say he is long on Financial Select Sector SPDR, since he feels crude oil will continue with its current weakness. He pointed out a chart showing that oil and financials have an inverse relationship.  Pete Najarian added, “Financials work when oil goes down.” Jeff Macke said, “It would be a little cute to be short on financials,” stating it would be a risky move, since the sector is rising essentially every day. Jeff  said that he sold Goldman Sachs. He said he could not find a reason to continue holding the company after a “40 point rise” since he bought it. 

Conflicting Views: AT&T (T), Apple (AAPL)

Najarian said he is very bullish on AT&T. He said the company’s land line business is going down but the company showed tremendous strength in the wireless sector that “beat everyone's estimates.” He also mentioned that he sees more strength coming from the Apple's iPhone -- it sold 1 million units in one weekend. He said the iPhone “is where they are going to see their growth.”  Macke did not agree with Najarian and said he is quite bearish on AT&T. He would buy apple if he liked iPhone. 

Earnings Influence: Qualcomm (QCOM), Amazon.com (AMZN), Nokia (NOK)

Ratigan said that Qualcomm is up 11% to $49.50 after it announced it is postponing its earnings and conference call. Speculation is that it may be settling its suit with Nokia.

Ratigan brought up Amazon.com, which was down about 3% to $68.64 after hours upon reporting its second-quarter profit rose to $158 million, or 37 cents a share, from $78 million, or 19 cents a share, it earned in the same quarter last year, beating analysts' estimates by 11 cents. Macke mentioned that Amazon.com had a great quarter but said, “When you double earnings, people expect a great guidance.” He said the drop in the stock was the result of the tepid guidance that raised its revenue forecast from 20.0 billion to 20.1 billion. 

Costco Cuts: Costco (COST), Wal-Mart (WMT)

Finerman said, “I was surprised on Costco” when it lowered its earnings forecast today after saying inflationary costs will eat into the company's profits. Macke said what the warnings from Costco are nothing new, it is something that will affect other retailers. That is why he said he is sticking with best of breed, Wal-Mart. 

Oil Influences Trades: General Motors (GM), Royal Gold (RGLD), Wells Fargo (WFC)

Najarian said the rally in General Motors has nothing to do with its prospects getting better but rather the fact that oil has been trending downward.  Addison Armstrong, director of market research for Tradition Energy, said he believes oil will continue to trend downward, and that the price per barrel could fall as low as $105 by October. He said he sees serious demand destruction in China in the foreseeable future.  Katie Stockton, chief market technician MKM Partners, came on the show to give her expertise from a technical standpoint. She said that on a technical basis she is bearish on crude oil but is bullish on gold. A specific gold play she likes is Royal Gold, saying "I would take advantage on any pullbacks." She is also bullish on Wells Fargo. 

Casinos Surge: Wynn (WYNN), Las Vegas Sands (LVS)

Should you roll the dice on casino stocks ahead of Wynn (WYNN) earnings on Thursday.

It is a gamble, Wynn said earlier this month that second-quarter operating income for its Las Vegas property declined, while operating profit at its Macau property surged. BMO Capital Markets analyst Jeffrey Logsdon called the results a “tale of two cities” with Macau representing “the best of times” and Las Vegas facing a more difficult environment. Thomas Weisel Partners analyst Jake Fuller noted that top-line trends were actually worse than expected in Vegas. Oppenheimer & Co. analyst David Katz was slightly more optimistic. “Although we believe the scale and quality of Wynn's properties in Las Vegas should prove to more resilient than larger-scale properties, and the company's execution has proven to be superb, we believe the company is not completely immune to the weakening trends on the Strip and the prospect of reduced airline service.” I don’t think the back half of 2008 is going to be any better than the front half, says Jeff Macke on Fast Money. I’m a seller of anything up over two weeks. Joe Terranova concurs. I’d sell Wynn between $105 and $110. You might also want to be careful of another casino name. There’s huge put trading in Las Vegas Sands (LVS) explains Pete Najarian. I think it is investors seeking protection because the stock looks to me like it's way ahead of itself. 

Dollar Marching Up

Watch out world, the U.S. is on the march. The dollar hit a one-month high against the yen and a two-week high versus the euro on Wednesday, buoyed by a sharp slide in oil prices and a recovery in stocks. And there’s more reason to believe the dollar could become stronger. Philadelphia Federal Reserve President Charles Plosser, a known hawk, said on Tuesday that rising inflation could force the Fed to start raising interest rates even before labor and financial markets recover. 

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