Friday was a down day in the markets, ending with the major indices finishing lower. The
shed 1.14% to 11,100.54, the
dropped 1.11% to end at 1239.49, while the
lost 0.83%, finishing at 2239.08.
"Fast Money" TV show, the traders began the show with a lengthy discussion on
and the financials.
Karen Finerman said that the financials are "vague," with "a lot of swirling around." She said that she is unclear at the moment about whether we're at a similar place now with FNM and FRE.
Jeffery Macke said that you cannot buy the financials. He said that Fannie and Freddie are "simply in the house of pain," and "financials are a falling knife."
Guy Adami said that he has no idea what to do with these stocks and said that we "saw capitulation today."
Dylan Ratigan asked the traders if they believe that investors understand the macroeconomic risks surrounding the markets today, examples being housing and banking issues.
Macke said that "every crisis has a rhyme," and said this situation cannot be plugged into a spreadsheet. He said that no one is on the other side of these trades, and that this whole situation will "play itself out."
Ratigan asked if the Fannie and Freddie crisis would presume massive default on mortgages.
Finerman responded by saying "90% of these AAA mortgages will be fine."
Moving on to banks, Pete Najarian weighed in, saying that there is an opportunity with foreign banks. He said that domestic banks are trading below book value and that foreign banks "have not been beaten." Najarian gave examples:
Looking at names which were not involved, Adami said to look at what
said today. He said GE announced that infrastructure is up 20% and that "these plays are working."
Macke continued, saying that when non-related names react and are pulled down in financial crisis, we will know we're in capitulation. He said an example was
Research In Motion
Najarian agreed, saying that
"was flat while others got crushed."
Adami agreed, saying to look at
. He said that "opportunities exist if you get rid of the tunnel vision and look for them."
Speaking on the pullback in trends that have recently been observed, the traders weighed in.
Macke said that it is wise to "not ride these things down," but he "would take a risk."
Najarian agreed and said to look at the airlines because they make a good trading opportunity. He said that if you feel oil is at the upper end, then there may be an opportunity by going across the board to airlines.
Macke warned, "I do not want a portfolio betting on airlines rallying."
Next, Doug Cliggott, chief investment officer of Dover Management, discussed the current economic environment. He said that we are "about halfway" to the bottom and that "we're uncomfortably far away
from the bottom."
He concluded by saying he likes health care stocks, specifically
Johnson and Johnson
. Continuing, Cliggott said that "tech is the most overcrowded long in the market right now," and that is his short.
Following Cliggott was Jeff Harte, brokerage analyst with Sandler O'Neill. He said that it is "hard to say what exposures could be
in financials," within the market. Harte said that although investors may think stocks are cheap but he "cannot say for sure." Wrapping up, Harte concluded that the markets "need to see greed take the place of fear again," and there must be housing price stabilization or a stabilization of the housing market's deterioration.
Focusing on upcoming earnings, the traders looked to Johnson & Johnson for salvation. Najarian and Adami both like JNJ saying it is "interesting," and they like "where JNJ's been."
Digging into oil, guest Matt Simmons, chairman of Simmons & Co., detailed the current fluctuations. He said that he is "flabbergasted with the misinformation going around" and said that we are currently in a "witch hunt." Instead, Simmons noted, we should be doing our homework to get ourselves out of this mess. Simmons continued, saying that the false belief that that oil is in a bubble is "terrible" and "poppycock."
Following this up, Simmons warned investors that it is possible we will see a catastrophic collapse due to the dropping of inventories bringing about a price collapse thus creating an oil shortage. He said a "shortage will create a bank run."
Wrapping up today's "Fast Money" were the final trades.
Macke said to "sell Budweiser,"
Adami advised to take JNJ "into earnings."
This article was written by a staff member of TheStreet.com.