After a sluggish day, stocks rallied late Friday on news of a potential bailout for troubled bond insurer Ambac (ABK) . The Dow and the S&P 500 both climbed 0.8%, while the Nasdaq ticked up 0.2%.
"Fast Money" TV show, Tim Seymour said that bad inflation data and negative sentiment hurt the market this week. He called today's reversal "unprecedented," and cautioned that no one knows what form the bailout may take.
Jeff Macke asserted that today's rebound illustrated that the market can't rally without at least benign sentiment on the financials. Seymour was skeptical about the prospects of a rally in the financials.
Commotion in the Commodities
In the wake of a steep increase in commodity prices, Guy Adami advised looking at
. He prefers Baker Hughes on its big move down from November. Finerman said her fund's exposure to refiners is very small, and she's staying on the sidelines for a bit. Seymour noticed that a lot of investors were stepping out of the rising commodities trade, but he sees more supply disruptions going forward. Generally, he plans to continue to ride the rally. Macke advised being long oil on its breakout.
Regarding gold, Adami stressed that getting long the
ETF is much smarter than buying the North American miners. He pointed out struggles for
Bond Insurer Rehab
The crew welcomed
reporter Charlie Gasparino to the show to explain his report of the Ambac bailout. The traders credited Gasparino with the 11th-hour upswing at the end of the day.
Gasparino said that the involved parties have been it talks for six weeks, and his sources say that "the rubber is hitting the road" on the deal. He credited Eric Dinallo and the state of New York for bringing insurers to the table. He added that his sources have indicated they will not put money on any restructured insurers unless they can past muster with the credit ratings agencies.
Finerman said she would be bullish on U.S. stocks should the banks and bond insurers reach an agreement. Macke said he would sell into strength. Seymour warned that even if a deal is reached, the credit market still has a lot of unwinding to do.
Next Week's Housing Data
In advance of housing data and earnings from homebuilder
, the crew spoke with Ara Hovnanian, CEO of
Hovnanian said next week's numbers won't likely surprise people. He noted that the market is slowing. He reminded viewers that in past housing corrections, the market bottomed at around 1 million housing starts, and he believes the U.S. will hit that number in 2008.
Finerman expressed concern about Lowe's and
, but said she likes them for the long term.
Bernanke to Speak Next Week
Seymour said that the producer price index and the PCE deflator stand to substantially impact the market. If inflation mounts, the
won't be able to continue cutting rates. Macke agreed.
Earnings From Retailers
Macke predicted "hideous" headlines and more evidence of a recession as retail companies report earnings next week. He noted that on less-than-stellar numbers,
reacted well. He predicted more of the same, adding that
are substantially off their highs. He forecast a rebound from retailers because of heavy pressure from short-sellers.
Earlier this week, Macke told investors to stay away from
. The stock since rallied. He stood by his call, advising viewers to buy oil itself rather than the refiners.
Seymour was wrong on
. He had called the stock cheap on a valuation basis, but it fell 9% after his call. He said the tape is tough for retailers and that he'll continue to hold the stock.
Adami continually plugged
, but the stock dropped 8% on Thursday. He admitted he stayed in the stock too long but maintained it is the best in its space.
Finerman had recommended
ahead of this week's earnings. She said she got the call wrong. This is why money managers diversify, she added.
. Adami selected
. Finerman said she likes
. Seymour likes
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