"The markets were hammered today, not by oil but housing" said Dylan Ratigan on CNBC's "Fast Money" on Wednesday. Fannie Mae's (FNM) and Freddie Mac's (FRE) costs to borrow are just too high. Ratigan added that oil ticked higher and said that did not help.
Ratigan then asked the traders, "How do you trade in this kind of market?"
Pete Najarian said there is "no need to be a bottom-picker." Najarian then stated that he "knows everyone is ready, but it's just not time."
Jeff Macke said that in this market. the "generals are getting taken out and shot," referring to all the big names getting hit right now. "If you open your mouth, you drop," said Macke, in reference to all the bad news coming out right now. As for Fannie and Freddie, Macke said that "nobody will take anything they have to offer."
A Trader's Market
On a bright note, Guy Adami said that "the biggest bull runs are in bear markets" but that you have to be wary in this kind of market.
Najarian said that you have to get puts with anything you buy, and that "this is an options trader's dream right now."
Karen Finnerman agreed that people are "not going to be able to pick the bottom." However, she did say that she thought
looked attractive at this valuation.
However, Macke reminded the traders that "you guys are pros, and this is a brutal brutal market for everyone."
Ratigan then said that the earnings deterioration over the next 12 months is going to hit the markets hard.
Najarian advised that "if you are going to trade, this is a trading market" and that "if you get that one-day move, take it off the table, because someone else is going to." Najarian then mentioned that he made this mistake yesterday, as he got part of the run-up on Fannie, but he said he "should have taken the 10%" that he gained.
A Peek at Chesapeake
Adami then said that the trade tomorrow is in
, and that you have to move quick in this kind of market. He said that the "easy trade is to buy it on the secondary tight stop."
Macke did not agree with this and stated that the "52-week low list is not your buy; you're fighting the overall trend of the market." He then said that a handful of people will win within this market, but he said that the risk is "akin to going over Niagara Falls in a barrel, there is only a chance you'll make it."
Cisco Gets Hit
Ratigan then moved forward with technology, stating that Cisco
got murdered today, down 5.68%.
Najarian said he believes Cisco is "great on the dip" and that people should buy.
Finnerman said that the company is "in a value position, as it hasn't traded at a P/E like this in five years."
Narjarian then made a comment about
stating, "I own Apple, but who will take over for Steve Jobs?"
Finnerman said that she "doesn't know any CEO who is as intertwined with company" as Steve Jobs is with Apple.
A Wider View
Adami moved the group along and said we are not in a bear market yet; he pointed to capitulation, stating, "You should not go out and buy yet." However, referring to a possible upswing, Adami added that "you see very violent moves in these kind of markets," and he said he believes it is coming.
Ratigan then asked the group, if they wanted to benefit from this without too much risk, where would they be?
Macke said, "I would take a taste of transports" right now, but the overall risk/reward within the market right now is just not right yet, and he advised not to buy quite yet.
Adami said that he would buy
because the valuations look good, and if there is any rally in the market, Alcoa will go with it . He then added that
would also go up, so he advised picking this one too.
Najarian did not have a pick, as he believes were close to a rally but not there yet. "We need a catalyst from the
," he stated.
Ratigan then brought up
United States Steel
, as it was up 82 cents today.
Adami said this may be good news but that "their own success is their own failure -- everyone is in it." He add that "if you are going to build a position this is an interesting level"
Time to Take a Flier?
Guest Dennis Gartman, economist and editor of
The Gartman Letter
, then joined the show as Ratigan commented that there may be a violent bear market rally and asked, "Will you invest any money on speculation?"
Gartman stated that he is a hedger here and that he would buying banks but selling the broad market. He believes that the price levels of the banks are absurdly low and said that "if you are a player, we're getting to the capitulation." He said that he likes
Bank of America
but says you are "better to buy the ETFs because they're easier to play." He also added that "if banks show you profit, add to the bank side."
Macke asked, "What makes you comfortable the trend is down?"
Gartman then stuck to his opinion that he believes the bank stocks have been beaten badly and that he will "buy and short the market."
Ratigan went on to say that there are two things going on right now, banks and energy, and introduced Dick Bove of Ladenburg & Thalmann to talk about the banking side.
Bove said he believes that the banking sector is "strong and healthy," as reserves are high, deposits are growing, loans are growing and profit margins are flat. He stated that "all the fear is not relevant, given it's noncash charges to the banks, and cash is growing in the system."
Ratigan then noted that the cost of capital keeps getting more expensive and asked Bove's thoughts on the topic.
As for Fannie and Freddie, Bove says that there is plenty of money available to the companies and that they are not in massive difficulty. As for commercial lending, Bove stated, "Were not going into depression." He believes that we will see a reduction in the loan losses as the number of originated mortgages has been going down. Bove said that defaults are going to go down, and we won't see loan losses higher than we did in 1934. "Fears in this industry are not valid" Bove said, and added that he likes Bank of America, Citigroup and
Moving on to commodities, Ratigan stated that "we have seen an unprecedented move higher in this area" and brought in Mike Wilson of
to talk about the subject.
Ratigan asked if inflation will cause demand destruction, and he asked if this is possible.
Wilson said this is "not going to happen, as the shareholders like the fundamentals"
Ratigan then asked if the anxiety over oil is reason to giving his company pause.
Wilson said that the increase in oil is not really a concern and that if oil shoots up, "we may see a small correction and then they look back at the fundamentals of the company, and we shoot back up." Wilson stated that this fundamental driving the company is that supply is yet to catch up with the overwhelming demand for fertilizers.
Najarian then asked Wilson if it is correct that they have full control just to meet their demand so that they never have to store product.
Wilson said this is not true and that "inventories are low and we can't produce enough"
Macke added that with the commodities, all you have to do is "play the charts."
This article was written by a staff member of TheStreet.com.