'Fast Money' Recap: Relief Rally

The trading panel said the financials got the lift they badly needed from the financial overhaul bill.
Publish date:



) -- The financials rallied today as congressional leaders worked out a deal on a financial overhaul bill.


Dow Jones Industrial Average

fell 8.99, or 0.09%, to 10,143.81, while the

S&P 500

added 3.07, or 0.29%, to 1,076.76. The


gained 6.06, or 0.27%, to 2,223.48.

Karen Finerman said on


's "Fast Money" TV show that today's rally in the financials was justified because the banks got some clarity from the bill. She said the bill wasn't so bad, adding one of the most of the most interesting features of the legislation was the lack of information on proprietary trading -- what it is, who can do it and how much. "The fewer the details, probably the better."

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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Mike Khouw agreed, saying the lack of clarity and the need to work some of these things out over a couple of years are a "net win" for the financials.

Tim Seymour also said the bill will allow the most profitable businesses like the derivatives business to remain on the balance sheets of banks like


(C) - Get Report


JPMorgan Chase

(JPM) - Get Report


Jin Kinahan said it was a win in the long term for the banks because it will allow them to define what trading is instead of letting the government do it.

Melissa Lee, the moderator of the show, said

Goldman Sachs

(GS) - Get Report

rallied today 3.72% despite questions about the possible divestiture of two of its biggest assets, hedge funds and private equity.

Finerman added the bill gives Goldman time, adding the government may not want to move in the direction of a fire sale on hedge funds and private equity.

Khouw said Goldman still looks like a compelling valuation because of the value of any assets that would be spun off and the multiple placed on the remaining business.

Patty Edwards said it's not so clear whether the exchanges like


(ICE) - Get Report



(CME) - Get Report

will benefit because the identity of the counter-party risk in an OTC derivatives trade will not be known.

Khouw disagreed, saying the clearing houses would be taking up the role of the counter-party risk.

Commenting on the rise in oil prices today from the threat of the first hurricane of the season in the Gulf, Seymour said the risk is back on the trade and liked the refiners and oil service companies here. Kinahan said the weak dollar also lifted oil prices.

In other commodity news, Lee said copper was up 7% for the week. Seymour said there is a general belief that copper prices are going higher and that companies like

Freeport McMoRan


are cranking up production.

BP continued to fall, but Seymour said there was "some good news" for the company if it can take out credit lines, borrow from banks and not have to have a fire sale of its assets.

Is the financial reform a win for the financials? Michael Block, chief equity strategist for Phoenix Partners Group, said it is because it helped get a big overhang out of the way for the financials.

Now, he said there are two other obstacles looming: second-quarter earnings and mid-term elections. He said the financials could do quite well in their earnings as the bar for earnings estimates and expectations is getting lower. He said the rhetoric will heat up as the mid-term elections nears as politicians go after the "fat cats" who weren't penalized in the financial overhaul bill.


(AAPL) - Get Report

stock was flat today after the launch of its new iphone. Edwards said the reaction was normal and offered an opportunity for investors to get in on a pullback.

But Khouw said Apple is in a difficult position of having to do everything right. He said the problem is "scale," adding it is very difficult for a company of that size to "knock it out of the park."

Harvey Pitt, former SEC chairman, expressed disappointment in the financial overhaul bill. He said the bill will wind up being very costly for taxpayers and impose needless layers of bureaucracy.

He said he was looking for a bill that would have provided to a steady flow of information to government to analyze and disseminate to the market with the goal of stopping trends before they become serious problems.

In the final trades, Edwards liked

Phillip Morris

(PM) - Get Report

. Seymour liked

Rio Tinto


. Kinahan liked


(CME) - Get Report

. Finerman liked



. And Khouw liked

Goldman Sachs

(GS) - Get Report


Bank of America

(BAC) - Get Report


-- Written by David Tong in San Francisco

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