Oil Demand Down, Services Are the Way to Go
Oil has been trading in no clear direction for about a month hovering at around $50, as global demand is in decline and OPEC cuts its forecast for an eighth successive month.
Demand will contract by 1.37 million barrels a day this year, or 1.6 percent according to the producer group.
Joe Terranova points out that while OPEC is reducing supply, emerging market producers in Brazil and Russia are actually increasing production. But with the OIH up Tuesday, he said, money is moving into the services sector.
Tim Seymour’s picks include Diamond Offshore Drilling (DO), National Oilwell Varco (NOV) and Brazil's Petrobras (PBR), which recently signed a deal with Greek dry bulk carrier DryShips Inc to explpore drilling in the Black Sea, which he calls a “must needed boost in the arm.”
A Glimmer of Hope for the Tech Industry?
Intel beat Q1 expectations and CEO Paul Otellini said in a conference call that they are "seeing signs that a bottom in the PC market segment has been reached."
The news from Intel seems to have boosted some global tech stocks. In Taiwan, Seymour sees two reasonably priced semiconductor leaders: Taiwan Semiconductor (TSM) as well as Siliconware Prescision Industries (SPIL).
A Slow and Steady Strategy
Dennis Gartman, founder of the Gartman Letter, suggested strategies for two big commodities Tuesday, liking both copper and aluminum -- specifically Alcoa (AA).
He expects increased imports of and demand for copper in China, which should keep it on the upward trend even after a 6 month gain.
But Seymour is concerned that copper is more of a seasonal trade, with big sell-offs after April.
They both agree U.S. steel is the next big thing, but have another difference of opinion on gold.
Gartman said he has a propensity to short sell if the price rises a bit more, but Seymour says hold on gold, thinking it will go a little higher.
Going Green
In the clean trade, Seymour says one name he both owns and likes is Chinese solar company Suntech Power Holdings (STP). While solar orders have been slow in light of the credit crunch, Suntech just announced a supply deal with Germany's Soleos Solar.
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