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Fast Money Recap: Picks Off the Fed

The crew at Fast Money trades ideas as they Fed watch.

As the Fed prepares for its highly anticipated meeting on Tuesday, the team at CNBC's "Fast Money" traded ideas and thoughts based on a potential change in the rates.

Mike Darda, chief economist and director of research for MKM Partners, joined the crew to talk about the Fed. Darda would like to see a cut in the Fed funds rate by 25 basis points and the discount rate by 50 basis points. Jeff Macke wants the Fed to cut 25 basis points and give a bullish bias toward growth. Guy Adami thinks no matter what the Fed does on Tuesday the market is going to fall, especially with the way the technicals are lining up.

So, what is a trade idea for the Fed meeting? Adami says buy

Public Service Enterprise Group

(PEG) - Get Report

because utilities will perform well if the Fed lowers rates.

CNBC

Senior Economic Reporter Steve Liesman maintains the Fed can help the consumer since many of the consumer rates are tied to LIBOR and the Fed funds. He doesn't believe the U.S. is heading into a recession, but he does see a current housing bubble.

Macke agrees that rate cuts are good for the retail sector, but he feels investors should take their time in building positions. He likes

Target

(TGT) - Get Report

and

Macy's

(M) - Get Report

Finerman points out that lots of the retail names have been hit hard and this presents an opportunity. She is also positive about Target. (

RealMoney

Take: Steven Smith said recently, "Target options have been particularly active on news that the retailer is considering selling some assets including its credit card business." To read more on what Smith said,

click here.)

Citigroup Rate Cut Trade Idea

An analyst at

Citigroup

came out on Monday and issued a trading idea off a possible rate cut: Buy industrial gas stocks like

Praxair

(PX)

,

Air Products

(APD) - Get Report

and

PPG Industries

(PPG) - Get Report

. The analyst presented data that suggests these stocks have a tendency to jump 23% in the 12 months following a rate cut. Adami agreed with the logic of the call.

Taking Brokers' Temperature

Financial stocks struggled Monday as investors prepared for huge earnings this week in the brokerage names. Jeff Macke believes that if

Lehman

(LEH)

says everything is rosy, sell; if they say they have clarity, even better. Adami expects that the Lehman quarter will be a disaster and the options are telling you the stock will trade aggressively. Pete Najarian says the financials had a monster run, so a slight pullback is a buying opportunity.

Karen Finerman continues to be suggest buying into

Goldman Sachs

(GS) - Get Report

on a pullback. (

RealMoney

Take: Jim Cramer said recently, "I did not mention Goldman as a call play because: A) the calls are too expensive, and B) Lehman's in control." To read more on what Cramer said,

click here.)

Online Traders Cooling Down

E*Trade

(ETFC) - Get Report

reported after the bell that profits will fall by 31% due to mortgage exposure. Finerman says the other companies like

Ameritrade

(AMTD) - Get Report

will have the same problems, so sell. Najarian worries about E*Trade because investors need to be informed of the exposure levels to mortgages. He says own

Schwab

(SCHW) - Get Report

and sell Ameritrade. (

RealMoney

TheStreet Recommends

Take: Jim Cramer said recently, "E*Trade had been pretty emphatic that things were not worrisome in that portfolio." To read more on what Cramer said,

click here.)

Oil is Heating Up

Oil prices hit another record on Monday. Is a 32% jump in crude this year telling us the true story on global growth and demand? Najarian declares that the global growth story is here and it's not just about oil -- look at coal stocks, he says. He likes

Peabody Coal

(BTU) - Get Report

. (

RealMoney

Take: Mark Manning said recently, "Peabody Energy also had a very good day Thursday, clearly breaking above the 50- and 200-day moving-average resistance." To read more on what Manning said,

click here.)

Adami mentioned a Barron's article that said oil could go to $45 is telling. According to him, the article could be on to something. Macke noticed that the "short the dollar" trade is crowded and if you see a reversal, look out on the oil stocks, because oil is denominated in dollars. Finerman continues to like

ConocoPhillips

(COP) - Get Report

in the oil space.

Pops & Drops

Pops-

Ford

(F) - Get Report

traded up 3%. Adami says Bear Stearns upgraded the stock with a $10.50 price target. He likes F for a trade. (

RealMoney

Take: Steven Smith said recently, "There was good call-buying in both General Motors and Ford. Most of the activity was in three- to six-month-dated calls." To read more on what Smith said,

click here.)

Monsanto

(MON)

traded up 3% after raising their 2007 outlook. Adami says the stock will still go higher even though it has a rich valuation. (

RealMoney

Take: Jim Cramer said recently, "Fortunately, the rallies are occurring in infrastructure, casino and ag -- how great is Monsanto?!? -- which can be resilient in the face of whatever the Fed does" To read more on what Cramer said,

click here.)

Las Vegas Sands

(LVS) - Get Report

traded up 4%. Najarian likes the stock.

Nokia

(NOK) - Get Report

popped 2% after a favorable Barron's article. Najarian says that NOK makes the best devices out there and sells $1 million of them a day.

Drops-

Time Warner

fell 2%. Finerman says the stock will not go up until they get rid of CEO Dick Parsons.

iRobot

(IRBT) - Get Report

plunged 23% after losing a big Pentagon contract. Macke says this stock is going lower.

Material stocks fell on Monday. Finerman finds the action in names like

Vulcan Materials

(VMC) - Get Report

,

Martin Marietta

(MLM) - Get Report

and

Texas Industries

(TXI)

very curious. She recommends TXI on a dip.

Final Trade

The crew gives a shout-out of their closing trade ideas.

  • Macke cautions to hold off from buying stocks in the morning.
  • Adami says buy Microsoft (MSFT) - Get Report because it's cheap.
  • Najarian recommends Rambus (RMBS) - Get Report.
  • Finerman predicts the Fed will cut rates by 3/8.

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