'Fast Money' Recap: Crisis Investing

TSC Staff

Dylan Ratigan hosted CNBC's "Fast Money" show Friday night. He began the show with a discussion of the U.S. markets' issues with the largest credit crisis in American finance history. Ratigan mentioned that in the overnight session, the futures were "limit down," and there were expectations that the Dow would open down 1,000 points. Jeff Macke joked, "Life is like a singles bar; between 1 a.m. and dawn, no good decisions are made."

Pete Najarian says "there seems to be a level that people are starting to get comfortable with the material, agriculture and energy names." He pointed out that once Potash(POT Quote) hit $60 a share, the stock immediately spiked higher.

Ratigan asked the traders if they are more optimistic or pessimistic about their investment positions than in recent weeks. Karen Finerman said this is the most optimistic she has been. She says "we haven't seen the end of the redemption, but I have been taking back some of my hedges here."

Guy Adami said a company like Ingersoll-Rand(IR Quote) trading at four times forward earnings is "absurd." He also mentioned that he liked the price action in Microsoft(MSFT Quote) today.

Ratigan asked the crew if we will now see the insurance companies beg the government for capital. Adami said yes, we will. He pointed out that Hartford Financial Services(HIG Quote) is interesting from a valuation perspective.

Najarian told viewers to be cautious with JPMorgan Chase(JPM Quote), Wells Fargo(WFC Quote), US Bancorp(USB Quote), Morgan Stanley(MS Quote) and Goldman Sachs(GS Quote). He explained that people in the market are wondering where these banks will get their earnings from, now that the market has digested the government bailout capital.

Tim Seymour says, "I need to see volatility in emerging-market currencies come down dramatically before I can get comfortable about going into places where I think there is a great long-term story." Macke told viewers he's long the dollar through the PowerShares DB US Dollar Index(UPP Quote) and short the S&P 500 with the ProShares UltraShort S&P 500(SDS Quote).

Ratigan asked the crew if we have come to terms with the debt and housing problems. Finerman says "we aren't there yet, but there are some companies out there where you can pay nothing and get the rest of their business for free."

Adami said companies like Johnson & Johnson(JNJ Quote), Church & Dwight(CHD Quote) and Celgene(CELG Quote) have "done it right" but been unfairly punished. Najarian mentioned that Amgen(AMGN Quote) rose 15% on the week and reported unbelievable earnings.

Pimco Spots Value

The traders spoke with Mohammed El-Erian, Pimco co-CEO and CIO, about his view on how we get out of the credit crisis. El-Erian explained that we got to where we are today because there was structural failure at every level, combined with a global deleveraging process that caused major damage. He told viewers to look for high-quality names that were damaged by the overall environment but are likely to recover. He says "we are starting to form a bottom in this market, and there is starting to be some good value here."

El-Erian said he feels more "optimistic" than in the past, because we are starting to see the final stages of the deleveraging and we are starting to see policy go from "announcement" to "implementation." Finerman told viewers that Freeport McMoRan(FCX Quote) is trading at two times cash flow and is overdone on the downside. She also mentioned that RTI International(RTI Quote) is trading at one times net cash flow.

Rude Crude

Joe Terranova joined the traders to discuss the energy markets. He said crude oil is trading off the S&P 500 futures and is coming into a near-term bottom. He says "we're running out of sellers, and if you're short oil it might be time to cover." Seymour suggested that crude oil is simply following the dollar. He says "technically, support for oil is good around $62, and fundamentally the argument is decent when you look at demand." Terranova explained that hedge funds just aren't as actively involved in trading crude oil now. He says "there is nobody in there to drive it higher now."

Bear Battle

The gang talked about ways to battle the bear market. Adami explained that gold isn't working, but the infrastructure story will work at some point. Seymour recommenced viewers play gold names Gold Fields(GFI Quote) and Harmony Gold Mining(HMY Quote).

Najarian says "some of tech names with large cash positions like Microsoft, Apple(AAPL Quote), Intel(INTC Quote) and Dell(DELL Quote) will work. He also mentioned the Market Vectors Gold Miners ETF(GDX Quote) saw huge options activity and could bounce to the upside from current levels.

Final Trade

Macke said stay long the dollar with the PowerShares DB US Dollar Index. Adami picked Cisco Systems(CSCO Quote). Finerman selected Phillip Morris(PM Quote). Najarian recommended the Market Vectors Gold Miners ETF.

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