'Fast Money' Recap: Flailing Financials
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 American International Group, Inc. 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
TheStreet Recommends
(GS) - Get Goldman Sachs Group, Inc. Report
because it is best in breed.
Najarian said to take a look into
Fannie Mae
(FNE)
and
Freddie Mac
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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 VanEck Oil Services ETF 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 Home Depot, Inc. Report
and
Target
(TGT) - Get Target Corporation Report
, Macke said that HD was "a little grim."
Macke, an enthusiastic buyer of
Wal-Mart
(WMT) - Get Walmart Inc. Report
and
Costco
(COST) - Get Costco Wholesale Corporation 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 Medtronic Plc 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 Toll Brothers, Inc. 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.
