tv Fast Money CNBC July 5, 2013 5:00pm-5:31pm EDT
great. they say financing is hard to come by. and a sales jump in the northeast was anticipated after snowstorm sandy never materialized. what has materialized, though, is an improvement in the servicing businesses. boat owners look to improve or repair those boats that were damaged by sandy. but keep in mind, as the economy improves, so, too, should boat sales. back to you. >> mary thompson, thanks very much. thanks for being with us. have a good weekend. >> thank you, bill. >> that'll do it for us on "closing bell". >> "fast money" starts right now. live from the nasdaq market site in new york city, it's times square, i'm melissa lea. our traders tonight are pete grasso, stephanie brown, and enis taner. let's get story we're following tonight and that is rising rates. better than expected balance reports sending yields into rally mode, with the ten-year yield nearing a two-year high. so we're giving you rising rate playbook for these sectors. we kick it off tonight with
banks and insurers. yes, we had a very nice rally, closed above the 50-day moving average for the s&p 500, but the banks and insurers even really outperformed that. >> literally, the regionals will benefit from a steeper yield curve. and not only that, a steeper yield curve implies better growth. so you should have better loan growth. i don't think you're going to see it this quarter, but i do think in the second half of the year, you will see a pick up in loan growth. and if cni loans are any indication, that, actually, is a leading indicator going forward for consumer loans. and that's very important. insurers, also, the books are obviously very impacted by the rate, the yield curve, and the steepening of rates. and i lake hartford, i like aig. believe it or not, aig has actually lagged the group. and i think you have a catalyst there with the sell of ilfc. ilfc, and their aircraft leasing business, and i think that that will be a positive catalyst when they ipo it or they get to sell it. >> at the same time, a lot of these stocks, you take a look at a sun trust, at a zines, at a
huntington bank shares, they're all multi-year highs. >> it's not easy to buy those names that you mentioned, but the regional bank group is very, very wide and very, very deep. there are a lot of different names here. depends on how far you want to step out in terms of midcap into small cap. for a lot of people, the simple solution is to get long with kre. this is the etf that owns the whole basket. it's not a bad option, if you think this is a two to three-year period of time where you think banks continue to do more lending, and the yield curve stays where it is, so money can be made on all these deposits, versus the very small sliver they've been able to make over the past five years. that's the bet you want to make. don't be afraid to go with the basket. i think it's definitely a good option. >> and you can do the basket, but bb&t, that chart, steph, do you like that? >> i do. >> outrageous on the chart. >> and they were at morgan stanley saying loan growth is actually going to be better than expected. >> for me, i saw a lot of people front running next week's earnings, buying jpmorgan.
>> big rise today. >> buying citi, buying u.s. bank, buying a lot of these names. because in a rising rate environment, those are the three names that stand to do the best. >> how are the banks positioning? >> it was quite week overall, but relative to puts, on the other hand, i think the rate sensitive sectors, which we're going to touch on a little bit, dividend yielders are really in trouble now. the ten-year yield is 1% higher than it was just two months ago in may. that is a huge move. >> the no-growth areas especially, like the utilities. that was the substitute for treasu treasuries. and if you don't need to substitute anymore. >> are these dividend yielders, is that a dead trade? is this dead money, as we're seeing rates higher? >> for the same reason as that, i don't love the home builders. they kind of got smacked up a little bit, historically. that's been a classic by the dip sector. but melissa, i've got to tell you, we're not going to know the impact of this rate, of this
drastic jump in rates that we've had over the last months for like two or three months. case-shiller. we've got lagging data. i don't know what the impact is. i don't think it curtails the housing recovery. >> i think those are separate questions, right? i mean, rising yields may not necessarily kill the housing recovery, but in terms of the hold building stocks, that could be a completely different story. >> i think they started at too high of a valuation to begin with. they've came down quite a bit, but i would rather -- if you want to play the home building recovery, i think you stick with region fall banks, wells fargo even. but i do think all the utilities, the consumer staples, reits, these rg sectors you stay away from. >> but how long? i understand the no growth angle to it, but how long? the people that are coming out of bonds, i find that they'll be more attracted to a utility for that little bit of consistent earnings space. >> but utilities are valued at 16, 17 times with 3% earnings growth. i think that trade's already happened. >> i think some of the staples are actually interesting.
some of them have come down quite a bit, coke, pepsi, procter & gamble. these are high-quality companies, fabulous balance sheets, and very good global franchise. you watch them, i'm not saying you buy them right now. you watch them. those are the ones that will grow dividends over time, and i think that is a very attractive data point. >> what concerns me most about the consumer staples, is because they're so reliant on global growth, the dollar's rise is going to hurt their earnings. >> and i would look for that pullback, if you see numbers coming down, to be buying those stocks. >> skpo get back to home builders, we all make it a lot more difficult, including myself. home depot has been so consistent, and we have discussed this. whether it was the new construction or whether it was the fixer-upper. and in their numbers, it's a little bit of both. you can see where they've been more of the building side when they need to be, and more of the fixer upper when you need to be. if you need to stay in that space, home depot. >> there are no beliefs in the home builders continuing their rally. >> i would say that toll brothers is your best in breed
company. and if it gets below 30, the valuation is actually much more interesting than a pulty or lennar. >> 20% ripped out of its market cap in a very short period of time. >> and he was very bullish on cnbc a couple of weeks ago about the environment. >> his market is okay. i just don't know if investors are going to continue to push that price to earnings multiple higher, given the fact that it's not such an automatic, that everyone's able to go out -- >> i want to button up this conversation, in terms of southern, you still a holder there? >> i'm still a holder. just under 5%. i still need yield. it would have sto wash out a lot more than it has right now to flush me out. that's one of my longer term holdings. that's my slower money, hold versus a fast money. >> let's get more on how soaring yields would affect fed policy and stocks. let's bring in cnbc contributor, dan greenhouse. dan, always good to speak with you. >> my pleasure, as always. >> consensus now is that taper is in september. what happens then? are we going to be in for
volatility in the month of august? >> everybody here knows that the summer is a more difficult period of time for trading. and we've seen that already, with the sell-off that occurred in the past couple of sessions. our view is that that's likely to view. right now, you're in front of earnings season, in front of the september fed meeting. you really don't have too much information about what the back half of the year is going to look like. so we favor waiting, as opposed to trying to pile in here. >> dan, it's josh brown. given the fact that the nikkei has been leading the u.s. markets to some extent, and they're all kind of seen as this play on central banks, as ridiculous as that sounds, now that we've got some strength there, is it possible that the u.s. can follow that higher this summer, or is it going to kind of be a little bit more independent on its own data? >> i think it's its own story. i mean, we know that we have the elections on july 21st. i think we've been one of those people who have taken a broader view of the japanese equity market and the economy. and we think that if they get this right, there is reason to believe in the short-term that
things could be up. i don't necessarily think that at least btig's clients are necessarily more optimistic about u.s. equities because of what's happening in the nikkei. >> dan, you like several of the cyclical sectors. do you think that these companies are going to be able to deliver on earnings? and more importantly, on earnings guidance going forward? is it going to be -- are they going to say good enough things to support the valuations of where they are today? >> yeah, listen. i think the guidance that's going to come out of this earnings season is obviously crucially important. i think as was alluded to earlier, it's probably too early to judge the impact of rising rates. but i think, looking historically, from a top-down standpoint, there's two clear winners and losers with respect to rapid rises in interest rates. on the one hand, as i believe josh mentioned, utilities almost always do terribly and it's not a surprise to us at all that they're doing terribly now. and then conversely, when a rate rises, almost always the leading sector is technology. and interestingly, i don't think people realize this, during the
'94 massacre which had the stock market down for the year, tech was the best performing sector. it was up something like 16% for the year. which obviously had you been exposed there, you were quite happy with what was a pretty terrible time to invest. >> so continuing in that theme in terms of sectors being impacted here, dan, we saw a big hung rise in financials. we've seen that for quite some time. where do you stand on home builders? >> with respect to financials, we advise on a couple of name. in particular, went cno financial and the bancorp are two areas that investors might want to look at with respect to being positively impacted by higher rates. generally speaking, also, i just want to be clear. it's not just higher interest rates that are good for banks. it's a steepening of the curve that is generally good for interest rates. because, obviously, '94, just to return off the top of my head here, that was a terrible time to be in banks, obviously, though, interest rates were moving higher. what you want to see is a continuation of the yield curve
steepening, which all else equal, is probably good for the banks. and with respect to home builders, we put a note out in february, saying that we thought that that trade had run its course, and we're sticking with that now. i don't think that the rise in interest rates is going to kill the housing recovery, necessarily, but neither do i think that all else equal, i would rather have a 5% mortgage rate than a 3% mortgage rate. >> dan, i'm going to leave it there. thanks a lot and have a great weekend. now let's hit or top three trades for today. first up, the gold miners getting taken to the woodshed after better than expected jobs report. barrett all falling more than 5% here. grasso? >> this is another space where i'm still long gdx. it's a very small portion of my portfolio, because i want to be exposed to gold. i would rather be exposed here, because i think the miners have more production ability, or they have the ability to cut production. they're more masters of their own destiny. we've seen lately, as gold rallied, the miners actually rallied 2 to 1 better than the actual metal. >> next up from gold to tech, let's talk about samsung, warning a weaker than expected
second quarter earnings over concerns of lagging sales for its galaxy s-4 smartphone. pretty slow. >> and blackberry, there's a serious concern here, i think, about the high-end smartphone being saturated. that end of the market, being oversupplied. one, we've had blackberry, we had htc, we had samsung today. but on top of that, if you look at the price in qualcomm, this stock has not been able to rally with the market over the last two weeks. and that is the chipmaker for the smartphone area. i think apple in the second half, you might have some difficulties selling the iphone 6, unless they can get the china deal done. i think china is crucial for apple in the second half. >> finally, let's talk crude, soaring above $103 a bare. tensions in egypt and june's employment report helping out those gains here. >> certainly political tensions. maybe to a lesser degree, the comments yesterday putting a put on the market. i think that you have to stick with kind of special situations
in the energy environment, because you're subject to this volatility of the commodities and the gyrations. i like the special situations in occidental, i like conocophillips, i like the deeper water market, that's where you have pricing power. you've got schlumberger. i think national oil well kb embarko is a good name. so should tensions go down, i think the stock goes up. coming up next, we have given you the fundamental take on the markets on the back of that better than expected june employment report. right after the break, we'll talk the technical side of the equation with louise yamada. and later, earnings season officially kicking off with alcoa. back in two.
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the market seeing some volatile swings in today's session on the back of that nonforeign payrolls number. we've given you our fundamental take, so now it's time to get the technicals. let's go off the charts now with louise yamada, managing director of yamada technical research advisers. it's always great to see you. the s&p 500 managed to close above a 50-day moving average. how important is that given the volume in today's session or
lack of? >> i think it was a good thing to have happen. it's usually a slow day, the day after the fourth. so i think what we want to see is if it can get even higher, back up above the 2012 uptrend line that was violated there and possibly above the june peak that came into play at around 1650. the possibility we end up with aid traing range between 1670 and and the 1550, where we came down is very real. i mean, there's no guarantee here that we're going off to new highs, but i think that it's an improved rally. the only caveat would be if we came under that recent low. >> louise, i know you're looking at 1550, you just stated that, but for fast traders, should we be looking at closer to the 1600 range to alleviate ourself there's holding that little bit of a ticking time bomb for 50 handles? >> sure. as a quick support, yes.
yeah, 1,600 would be fine. >> all right, louise, let's move on to bonds here. obviously with yields nearing two-area highs, everybody wants to know what's going to go on with the ten-year. >> well, you have penetrated a sev seven-year downtrend here, which is very impressive. there's a 2 1/2 year base in place already, two-year base in place. and bond cycles, they're 22 to 37 years, we really think that we are almost 33 years into this, that this is the beginning of a reversal into a new rising rate cycle. so we would be eliminating long-end positions. and if one needs to hold, move into the short end, but you push through 25, which is one of our targets. 3 would be next. 350, and then you move into a fair amount of resistance up here around 4. but take one at a time. ening it's going higher. >> hi, louise, it's enis. i'm curious. obviously, you think it's a
long-term breakout for rates. do you think the dollar is on the cusp of a long-term breakout as well? do you think that's going to translate for the dollar? >> it's possible. you certainly moved out here to a new reaction high. 8 is our next target on the dollar. we'll see how far that can go. >> all right, louise, let's talk gold. what's the downside here? >> well, we're close to our measured move. the measured move from the larger triangle here suggested about 1155. we came very close. i think what's interesting is that none of the rallies have been able to get back to the prior breakdown levels, which have become resistance now, a form of support. so 1155 is as far as we can get on a measured move, but the possibility of going lower is always there. we suggest you don't want to try to catch a falling sword. >> louise, it's josh brown. so on gold, this is clearly a very emotional trade for people, and because there's no way to truly value it intrinsically, we almost have to use technicals here.
let's imagine a worst-case scenario. how important is the thousand level? i know, psychologically, it's important. but technically, should 1155 not hold, which, obviously, let's hope it does for the people that are long the trade, but where are the next levels below there? >> well, yeah, a thousand would be next, and progressively lower. >> so it's not mathematical, below that level? then it's a whole new ball game? >> yeah. we'd have to see if there's some stabilization so we can get another measured move. but, basically, i mean, you hate to say it, but it could go all the way back to the 2008/2009 breakout level at a thousand. >> a thousand. all right, louise, we're going to leave it there. thank you for your time. have a great weekend. louise yamada, yamada technical research. grasso, 1155 or even downside possibly 1,000. does that change your view of the gold miners? >> yeah, because they're going to take a lot more of a beating on the way down. that's usually the case. it becomes just a percentage move. am i going to get out of it?
no, because it's a very small position. >> so you're willing to catch a falling sword. >> i've already caught it. look. it's in my chest. >> and he's bleeding right now. >> among the gold miners, with i think it makes sense to differentiate. a name like barrick is very distressed. goldcorp has much lower cash costs. that's the name i would -- this is if you believe what management says is their acquisition cost, which we have learned recently, is a very, very tough thing to -- >> the price action, though, on goldcorp is also showing -- >> but you also have to ask, is there going to be consolidation in that whole space? and if there is -- >> that's a long ways off. that's a long ways off. >> and write-downs. all right. let's move on here. next week, officially marks the kickoff to earnings season, with alcoa set to report monday after the bell. let's go around here and talk expectations, and steph, you're the only one here who really cares about alcoa, which is often, you know, cited a it has beginning of earnings season,
but no one really cares about it, but you do. >> i do, really for the conference call. i think the ceo does a very good job at going through the geographic regions, where they're seeing demand, where they're seeing growth. but more importantly, the end markets. because i own some truck companies. i own some packaging companies, aerospace, and auto, and this company has a lot of exposure in all of those areas. so for me, i want to know, you know, do i get a feel for is eaton on the truck side going to be able to put up the numbers i think they can do? and he does a very good job going through all of the end markets. >> in terms of things like defense and the auto sector, they've already done very well. we don't need alcoa, do we, as any sort of indicator? >> we don't, but it's nice to get kind of confirmation, and they do give out forecasts. and the forecasts have actually been pretty accurate over the years, absent, you know, the big meltdown in the economies. but, honestly, they do a very good job breaking it down. and more importantly, it's more geographic areas as well.
we know china's weak. how weak? maybe they don't think it's as weak as the stocks are projecting. >> let's talk banks. wells fargo, jpmorgan friday, enis? >> the whole sector has been rallying over the last couple of weeks. and generally, financials actually rally into earnings. and then it gets a little bit trickier. i still prefer the commercial and regional banks like wells fargo, who are going to benefit from the rates going higher in the future. but i think the investment banks might be a little bit more difficult, off a the volatility that we've seen globally. investment banks generally are much more correlated to global volatility and european banks have not been acting well. i really don't like that space. >> still ahead, we have done the math and we have calculateded some of the biggest movers and shakers in this week's shortened holiday trading session. we'll take a look at the biggest pops and drops for the week and that's next. "fast money" means trading. everybody's got to bring their best information each and every night. the entire trading day is the preparation for the show that night. >> it's idea generation. it's all about giving you a framework for how to look at the
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time now for pops and drops, the biggest movers of the week. a pop for ford, up 8%. grasso? >> we just got a little bit of insight from the numbers today. construction jobs, they added 13,000 jobs. that's the most in three months. that's why ford was killing it on that f-series. i still like ford. >> japan hedge dxj, up 5%. >> that is up 6.5% this week. they called the japan trade over. unfortunately, the nikkei is now up its third week straight. and technically speaking, this thing has recovered very nicely. i wouldn't be shocked to see even more longs join in next week. >> best buy, a pop for the week. >> this stock is unbelievable. it was upgraded at two different spots this week. i think they're late, though. the stock is up $11 to up to near $30. the risk/reward doesn't make sen. >> drop for cliffs natural, down 3%. stephanie? >> the entire complex got hit
this week and this was no exception. if people are trying to bottom this space, this would not be the name. their balance sheet is suspect. that is not what i would buy. >> all right. last 30 seconds of the show, final trade time, grasso? >> i'm still a holder of sprint, fcc already gave approval for soft bank to take over 78% of them and they have the approval for clear wire as well. >> josh? >> i like ford. >> i like meghna. >> enis? >> buy u.s. dollars. >> i'm melissa lee. thanks for watching. "options action" begins right after this break. honey, is he too into this car thing? [ mumbling ] definitely the quattro. ♪ honey? huh? a5. what? [ sighs ] did you say something? ♪ easy-to-use platform.
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this is "options action." tonight, is gold's national nightmare over? the man who called gold's collapse is back with a bold contrarian gold call. you won't want to miss it. plus, is the hollywood blockbuster dead? a string of box office duds has hollywood running scared. but mike khouw is looking at one trade that could be an overnight sensation. he'll break it down. and onyx pharmaceutical shares jumped 50% this week. so why do options traders see even more gains? it's a sweet drug deal that only scott nations can explain. the action begins right now.