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'Fast Money' Recap: Gasparino on Ambac

The crew talks with fellow <I>CNBC</I> reporter Charlie Gasparino on his market-moving Ambac story.

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%.

On

CNBC's

"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

Baker Hughes

(BHI)

and

Schlumberger

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. 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

streetTracks Gold

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ETF is much smarter than buying the North American miners. He pointed out struggles for

Newmont Gold

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and

Kinross

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as evidence.

Bond Insurer Rehab

The crew welcomed

CNBC

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

Lowe's

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, the crew spoke with Ara Hovnanian, CEO of

Hovnanian

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.

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

Home Depot

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, 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

Federal Reserve

won't be able to continue cutting rates. Macke agreed.

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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,

Wal-Mart

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and

J.C. Penney

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reacted well. He predicted more of the same, adding that

Kohl's

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and

Target

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are substantially off their highs. He forecast a rebound from retailers because of heavy pressure from short-sellers.

Fast Fire

Earlier this week, Macke told investors to stay away from

Tesoro

(TSO)

. The stock since rallied. He stood by his call, advising viewers to buy oil itself rather than the refiners.

Seymour was wrong on

Sears

(SHLD)

. 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

Apollo Group

(APOL)

, 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

Crocs

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ahead of this week's earnings. She said she got the call wrong. This is why money managers diversify, she added.

Final Trade

Macke chose

Disney

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. Adami selected

Wachovia

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. Finerman said she likes

Yahoo!

(YHOO)

. Seymour likes

Homex Development

(HXM)

.

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