'Fast Money' Recap: Flailing Financials - TheStreet

On

CNBC's

"Fast Money" TV show, the traders opened the show by speaking on today's market activity, specifically the financials.

Looking into

American International Group

(AIG) - Get Report

, the traders noted that it was down about 5.7% for the day. Goldman Sachs released "a scathing report" this morning, according to Dylan Ratigan.

Joe Terranova spoke on some AIG puts he traded, likening the situation to the 1970s gasoline crisis. He said that oil and financials go back and forth every other day, generally controlling the market activity.

Jeff Macke said that "there is no reason to be long financials right now," because this downfall "will continue to build on itself."

Zach Karabell agreed, saying that for AIG "it has been a slow bleed," and that investors cannot get in the way of this trade.

Peter Najarian weighed in on the financials, saying that

Lehman Brothers

(LEH)

is up there in the headlines today. He said that everyone thought the "kitchen sink had been chucked in" already and that it is pushing low $13s from the $17s. Najarian summized with "I am not comfortable in this point in time."

Terranova said that he likes being long

Goldman Sachs

(GS) - Get Report

because it is best in breed.

Najarian said to take a look into

Fannie Mae

(FNE)

and

Freddie Mac

(FRE)

because it is a "high-risk trade right now" and "the yields are telling you something."

Macke said that the yields are telling you they are "going out of business." He said that Lehman will have to raise money.

Terranova advised investors to stay in best-in-breed stocks, saying that is where investors want to be.

About the Oil Spike

Switching over to oil spiking within the last hour, Terranova spoke on the Venezuelans and Middle-East not being happy with oil prices. He said that a production cut could be possible and said to keep an eye out for the weekly inventory reports coming out tomorrow. Terranova wrapped up by saying that today's activity is probably short-covering in the marketplace.

Najarian said to take a look into

Oil Services HOLDRs

(OIH) - Get Report

. He said that this stock is having a "great bounce today," and "this is starting to get to be an interesting trade."

Miles of Aisles

Moving on to retailers

Home Depot

(HD) - Get Report

and

Target

(TGT) - Get Report

, Macke said that HD was "a little grim."

Macke, an enthusiastic buyer of

Wal-Mart

(WMT) - Get Report

and

Costco

(COST) - Get Report

recently, said that he sold his COST position today because it is in a "tough industry," and he "took the opportunity," to sell his shares.

Terranova suggested that investors who are being cautious should get out if HD breaks below its 200-day moving average.

Other Markets

Switching gears, Najarian mentioned

Ryland Group

(RYL)

showing heavy activity in put-buying, saying this is unusual options activity. He said to "have it on your radar."

Continuing on buys, Najarian said to look at

Medtronic

(MDT) - Get Report

, because it is "trading very strong right now." He said that investors "got to like the action right now," and said the stock is outperforming the

S&P 500

and

Dow Industrials

.

Trader Karen Finerman called in to offer advice on today's market activity. Finerman said that she is "focusing on the financials." She said that we have not seen the further shoes to drop, specifically in auto loans and commercial mortgage backs. Finerman mentioned FRE "raising paper today," which is very expensive and carrying a higher risk premium. She said that if the

Federal Reserve

raises rates, it will be bad for banks.

The Builder's View

Next, guest Bob Toll, the chief executive officer of

Toll Brothers

(TOL) - Get Report

spoke on his firm's health. He said that his firm has been trying to stay alive by accumulating cash by selling homes without giving them away. Toll said that the company "sacrificed volume" rather than sacrifice in costs.

Speaking on the inventory levels, he said that new-home "inventory should be pretty low at this point," but it is the used-home inventory which is providing a bigger problem. Toll said that the housing cycle bottom is hard to predict, because it depends on how many foreclosures happen. He wrapped up saying that the "more inventory that goes away, the better the market is."

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At the time of publication, Posluszny had no positions in the stocks mentioned.

Richard Posluszny is a finance major at Seton Hall. He provides invaluable research support as an intern at TheStreet.com.