'Fast Money' Recap: Waiting on the Fed
NEW YORK (TheStreet) -- The S&P 500 climbed 0.22% ahead of Wednesday's Federal Reserve meeting.
Dan Nathan, co-founder and editor of riskreversal.com, said investors are complacent. With the CBOE Volatility Index (VIX.X) near the lower end of its range, one perceived hawkish comment from the Fed could send markets lower.
Steve Grasso, director of institutional sales at Stuart Frankel, said the run-up in share prices for companies that become more profitable with higher interest rates -- such as E-Trade Financial (ETFC) and Charles Schwab (SCHW) -- is likely to be short-lived. He added the Fed is unlikely to raise interest rates anytime soon, and he is also a buyer of utility stocks.
Brian Kelly, founder of Brian Kelly Capital, pointed out the three biggest holders of U.S. Treasuries are slowing or selling their purchases: The U.S. Federal Reserve is tapering, China's purchases are at 14-month lows and Russia has started selling its holdings. Hawkish comments could also cause a selloff in the bond market. He sold short the iShares iBoxx High Yield Corporate Bond ETF (HYG).Guy Adami, managing director of stockmonster.com, said the 10-year Treasury yield still seems likely to decline. He reasoned that inflation is increasing in "the wrong places" and rising rates won't necessarily mean the economy is improving. Even though many investors seem stuck on the S&P 500's run toward 2,000, Nathan argued the index has yet to have a pullback of 10% in roughly two years. He suggested investors take some profits and wait for better buying opportunities. Andrea James, vice president of Dougherty & Company, said Tesla Motors (TSLA) is building its Gigafactory in order to produce the battery supply that it will need going forward. While this buildout is not easy, she said building the Model S production facility was a harder task, and one the company successfully completed. Adami said investors can buy Tesla now that it has broken out over $225 but he cautioned them to be "really careful." Kelly said to "buy with both hands" if shares of Tesla pullback to $215. Pavel Molchanov, senior vice president at Raymond James, has a buy rating on shares of SolarCity (SCTY) with a $75 price target. Shares shot higher by 18% after the company announced its purchase of Silevo, a Chinese solar panel manufacturer, for $350 million. Elon Musk, who is the company's chairman, says there could be a solar panel shortage as early as three years from now.
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