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
because utilities will perform well if the Fed lowers rates.
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
Finerman points out that lots of the retail names have been hit hard and this presents an opportunity. She is also positive about Target. (
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,
Citigroup Rate Cut Trade Idea
An analyst at
came out on Monday and issued a trading idea off a possible rate cut: Buy industrial gas stocks like
. 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
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
on a pullback. (
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,
Online Traders Cooling Down
reported after the bell that profits will fall by 31% due to mortgage exposure. Finerman says the other companies like
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
and sell Ameritrade. (
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,
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
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,
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
in the oil space.
Pops & Drops
traded up 3%. Adami says Bear Stearns upgraded the stock with a $10.50 price target. He likes F for a trade. (
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,
traded up 3% after raising their 2007 outlook. Adami says the stock will still go higher even though it has a rich valuation. (
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,
Las Vegas Sands
traded up 4%. Najarian likes the stock.
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.
fell 2%. Finerman says the stock will not go up until they get rid of CEO Dick Parsons.
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
very curious. She recommends TXI on a dip.
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 Microsoft Corporation Report because it's cheap.
- Najarian recommends Rambus (RMBS) - Get Rambus Inc. Report.
- Finerman predicts the Fed will cut rates by 3/8.
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