'Fast Money' Recap: Trading BP - TheStreet

'Fast Money' Recap: Trading BP

The trading panel said the pressure on BP hasn't let up despite its decision to set up a claims fund and suspend its dividend.
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NEW YORK (

TheStreet

) -- The markets ended flat Wednesday as

BP

(BP) - Get Report

bowed to White House demands to set up a fund to deal with claims arising from the Gulf oil spill.

The

Dow Jones Industrial Average

added 4.69, or 0.05%, to 10,409.46, while the

S&P 500

fell 0.62, or 0.06%, to 1,114.61. The

Nasdaq

edged down 0.05, 0.00%, to 2,305.93.

Pete Najarian said on

CNBC

's "Fast Money" TV show that the news from BP on the fund and the suspension of the dividend do not make the stock any less volatile and gave it a nice boost.

He said there is still bearish sentiment on the stock as evidenced in January put activity that sees the stock plunging to $7.50.

Joe Terranova said BP's biggest problem remains the spill, which is now is estimated at 60,000 barrels a day.

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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Tim Seymour said there's some chatter that BP may have to sell some of its assets, adding that would be a "terrible move." He said deepwater drilling will be under pressure in spots around the globe, including Brazil, and warned of higher oil and LNG prices as a result of the six-moratorium on deepwater drilling.

Gary Kaminsky said the good news is that the $20 billion does not have to be funded immediately. He said BP will be tested when it dips into the debt markets to raise money. He said there are several options in the energy space that aren't burdened with the downside risk from BP. One such name he noted was

Suncor

(SU) - Get Report

.

Terranova said he believes BP won't consider asset sales until the leak has stopped and the extent of liability is determined.

Phil Weiss, an analyst with Argus Research, said the suspension of the dividend offered a bit of relief for BP and eased the political strains between it and the White House. He said BP's problems won't ease until August when it puts in the relief wells.

Lee brought in Francesco Guerrera, U.S. business editor for the

Financial Times

, on a breaking story that U.S. banks will be facing $2 billion in bonus taxes from the U.K. He said that the tax will reduce the earnings per share of financial institutions such as

Goldman Sachs

(GS) - Get Report

,

JPMorgan Chase

(JPM) - Get Report

,

Citigroup

(C) - Get Report

and

Bank of America

(BAC) - Get Report

by 10%.

Brad Hintz, a senior analyst with Sanford Bernstein, said his earnings estimates for the banks will come down as a result of the report. However, he did not think the one-time tax will affect the banks' long-term growth rates.

He acknowledged the bonus tax could lead a departure of talent and said that

Greenhill

(GHL) - Get Report

was in a good position to benefit.

Lee brought in

CNBC

reporter Steve Liesman, who said that a number of troubled countries will soon be releasing European Central Bank-administered bank stress tests, starting with Spain. He said the countries will be releasing the results bank by bank.

At that point, Lorenzo Bini Smaghi, a member of the executive board of the ECB, BP will either seek public capital or go to the private markets.

Hintz said the release of the tests will be "torture" and lead to a lot of speculation. He said his top pick in the financial sector remains Goldman Sachs.

Patty Edwards said all the news from Europe is not good for S&P earnings. She said she would be careful about buying stocks, with the overhang from Europe as well as the problems dogging the energy and health care sectors in the U.S.

In the hedge fund trade of the week, Anthony Scaramucci recommended

Reynolds American

(RAI)

as a stock that will do well in the current market.

He said the company has 30% share of the U.S. tobacco market, enjoys a low PE and a 6.9% dividend yield and trades at 9 times earnings. He said the stock outperformed the S&P the past two years by 20%.

Is another housing dip in the cards after today's disappointing housing starts report? Nishu Sood, an analyst with Deutsche Bank, said the housing industry is heading down another leg. He said he expects consumer to hunker down and home prices to decline.

Sood said the federal government has "shot all of its bullets" to revive the industry and doesn't have the political will to extend its federal tax credit program.

He said his top pick was

MDC Holdings

(MDC) - Get Report

, a land fund.

Lee returned to Liesman to get a briefing of a speech by Fed Chairman Ben Bernanke. According to Liesman, Bernanke expects the financial regulations bill to pass in a few weeks and broadly supports the Senate and House versions of the bill.

He said Bernanke talk in his speech about the need for strict regulatory standards so that banks don't get too big to fail and the need for one regulator to oversee big financial firms.

Despite a down day for

FedEx

(FDX) - Get Report

, Seymour was optimistic about what he heard from the company in the way of increased shipments in India and China.

In the final trades, Edwards liked

Corning

(GLW) - Get Report

. Seymour liked

Fedex

(FDX) - Get Report

. Adami liked

Schlumberger

(SLB) - Get Report

and Terranova liked

Coca-Cola

(KO) - Get Report

. Najarian liked

Xilinx

(XLNX) - Get Report

.

-- Written by David Tong in San Francisco

To watch replays of Cramer's video segments, visit the Mad Money page onCNBC

.

"Check out

"'Fast Money'Portfolios of the Week" on Stockpickr every Thursday.

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