'Fast Money' Recap: Banks Safe?

The trading panel and guests discuss whether now is the time to buy financial stocks.
Publish date:



) -- Stocks finished another choppy session on the downside Wednesday in response to

Germany banning some naked short-selling and remained little changed after the

Federal Reserve



from its last policy-making meeting.


Dow Jones Industrial Average

lost 67 points, or 0.6%, to close at 10,444, though it still finished off its worst levels of the day after the euro rebounded during the day. The blue-chip index at one point was down 180 points. The

S&P 500

finished lower by 6 points, or 0.5%, to 1115, and the


shed 19 points, or 0.9%, at 2298.


Fast Money

, Melissa Lee asked how financial stocks like


(C) - Get Report


Goldman Sachs

(GS) - Get Report

should be viewed as lawmakers discuss financial regulatory reform.

For a breakout of some stocks from a recent "Fast Money" TV show,check out Dan Fitzpatrick's "3 Stocks I Saw on TV."

3 Stocks I Saw onTV

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Melissa Lee asked how financial stocks like


(C) - Get Report


Goldman Sachs

(GS) - Get Report

should be viewed as lawmakers discuss financial regulatory reform.

Guest Jeff Harte analyst of Sandler O'Neill & Partners says in general he'd be a bit more bearish about them. However, he thinks that we should go out and buy a Citi or a

Morgan Stanley

(MS) - Get Report

; even a Goldman Sachs. He thinks they are having pretty good quarters so far, and may not turn out as badly as some people expect.


Contributing Editor Gary Kaminsky begs to differ about Morgan Stanley and Goldman Sachs having a good quarter so far. He thinks its quarter may end stronger; but according to him, the fact is, the corporate credit markets are shutting out and there's been very little IPO activity.

Ultimately he believes that we're going to get a more friendly financial regulation bill than expected.


reporter John Carney said he hears that hedge funds are saying that they hate Goldman Sachs. They are really upset with what they perceive Goldman to be doing in the markets. Apparently, these hedgies are Goldman clients; some of them are Goldman alums.

Though they still see Goldman as the gold standard in the business, they feel that there's been a real change in business at the institution, according to Carney, speaking from the Skybridge Conference in Vegas.

Lee pointed out that people can be angry with Goldman, but where are they going to walk to? Najarian jumped in and said to use the options if you want to dip into Goldman stock.

Next Lee asks whether oil is the new reserve currency.

Dennis Gartman of The Gartman Letter said he doesn't think that it's the new reserve currency; though crude oil, relative to other commodities, has been prohibitively expensive.

Meanwhile, Guest Michael Khouw, a senior equity derivatives trader at Cantor Fitzgerald, said he's not crazy about gold as a reserve currency.

Lee mentioned that gold saw one of its biggest declines since April 16, and Gartman said the fall was even more dramatic, if we looked at the price of gold from the euro standpoint. He says it fell almost 60 euros in the last 36 hours.

Market Action

Later Guy Adami said that today's market close was rather impressive. "We should bounce now," he said. While he understands that the market may have longer-term fundamental problems, he doesn't think it'll be heading lower tomorrow. "It's headed for a bounce," though not necessarily a "rip." For a trader, today's action was a pretty impressive move, according to Adami.

Kaminsky, on the other hand, thought that today's market action was "terrible ... we are melting down." He actually thinks that people are coming to the realization that the credit crisis is repeating itself again, with all the same issues; and that there is a belief that this is not the end of the crisis in Europe; it's just the beginning.

According to Kaminsky, every institution says they are reducing risk: "The message is clear: risk is coming off," he said, and this is not a one-or two-day event. Risk will continue to come out of portfolios throughout the summer.

Pete Najarian said there's been a lot of risk premium being built into the marketplace.

Karen Finerman

said she thinks that we're more likely going to rebound off of a down day.

Guest Brian Kelly of Conundrum Capital says that the currency markets were bereft with rumors today, especially regarding the euro, of course. But he cautions that the problems in Europe won't be going away; regardless of what happens to the euro -- whether it goes higher or lower. He says that Europe is experiencing practically no growth right now.

Lee asked whether the "flash crash" two weeks ago was legit -- or whether it was actually the sign of a coming deterioration?

Guest John Tabacco of LocateStock.com said the fact is, the government and


have done a ton of research about the "flash crash" and haven't found much; and he thinks we're actually due for a lot more downside. "We must retest those lows." He pointed to the Europe credit crunch and went on to say that 2010 could be a replay of 2009 even for U.S. banks.

The mid to high "nines" should be a good number for the S&P to gain a little strength, and short sells are still showing a ton of overvalued situations, he said.

Regarding solar names; he says that the fundamentals and technicals are "working against you" and right now, they are moving in correlation with oil. And as far as casino stocks are concerned; he's seeing renewed energy. "But those credit fears are still out there." He, for one, wouldn't go to Vegas and start gambling money if he doesn't have it.

Before he left the show, Tabacco said a trade not crowded from the short side is


(VALE) - Get Report

. The stock closed way below a key technical level. He said we should be in a value situation shorting Vale. The company is very dependent on the China housing market.

Investor Sentiment

Speaking from Skybridge Conference in Las Vegas, Anthony Scaramucci of SkyBridge and a co-founder of Oscar Capital Management told viewers that the investment managers he's been speaking with have been for the first time in their careers very worried about all the macro economic interventions they've been seeing of late -- given that they've been affecting the investment expert's analysis of the various investment vehicles.

What he also gathered at the conference was that people are focused on low multiple names these days, like an


(INTC) - Get Report



(BUD) - Get Report

, or


(WMT) - Get Report


"I've been on the short side," he said. Now, like Finerman, people are migrating to the long side, according to Scaramucci.

Scaramucci went on to say that


is now going for more liquid side investing.

"They think bigger is better. The four hedge fund hall of famers said they've got the resources" to grow their portfolios and achieve alpha-achieving performance.

A Complex Issue

MGM Mirage

(MGM) - Get Report

Chairman and Chief Executive Jim Murren came on the show and gave viewers a progress report on the CityCenter complex.

Lee inquired about talk on condo prices being cut and the CityCenter not going well. She also wanted to hear more details about how MGM was being affected by the liens and lawsuit that Perini Building filed against the casino company, saying it owes Perini and subcontractors more than $490 million.

Murren said that the dispute's had no bearing on MGM's credit facility, debt covenants or closing of condos at CityCenter. He describes the dispute as two companies that disagree on a very important point, which will get through the court systems very quickly.

Regarding its condos, Murren said that occupancy rates are improving; trends are showing that the operating environment in Vegas is starting to improve. Murren said room rates fell more than 30% in 2009 and were down in the first quarter, but in the second quarter, rates are moving up.

In April and May, the company is raising rates more often than lowering them, and summer looks like it's going to be pretty strong relative to last year, according to Murren. He's seeing recovery, albeit not rapid recovery.

-- Written by Andrea Tse in New York

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