The RealMoney contributors are in the business of trading and investing all day on the basis of ongoing news flow. Below, we offer the top five ideas that RealMoney contributors posted today and how they played those ideas.
brings you the news all day, and with
"Columnist Conversation," you can see how the pros are playing it on a real-time basis. Here are the top five ideas played today. To see all that
for a free trial.
1. Bank Lending
By William Furber
3:59 p.m. EST
I continue to hear commercial lending is starting to happen again, to the point where there might even be a little competition for good deals. It is early, but it may begin to show up in asset growth over the next couple of quarters.
Vince Lombardi once started a practice after a particularly disappointing game by holding up an elliptical brown leather object and saying, "OK, fellas, THIS is a FOOTBALL." In that vein, I will point out that, the spread between deposit rates and securities -- such as treasuries, agencies, mortgage-backed paper, and so on -- is lower than the one between deposit rates and real live loans to customers, and that this will boost bank profits. (For the cynical, who say, "Not when bank loan officers do the credit work," I would argue that conservatism is probably in good supply at most banks these days, and fresh-loan losses won't show up for a year or so anyway, though that last is no excuse.)
With all the noise, it's sometimes hard to remember how this all works: The Fed lowers short rates, the yield curve steepens, banks make easy money, and while they use it to pay for their past mistakes, they see the end of the tunnel, and start getting back to business.
Making loans to customers is the one activity the current government wants the banks to perform. (You could argue the timing of their other salvos doesn't help much right now.) It's just possible that banks might start making some money the old-fashioned way.
Position: Long BAC, C
2. Anyone for Disaster Insurance?
By Robert Moreno
1:34 p.m. EST
ProShares UltraShort FTSE/Xinhua China 25
has dropped off in the past several months but is still somewhat high considering the decrease in value. This ETF is a "disaster hedge." The whole China dynamic and all its corollary plays (natural resources, emerging markets, dry-bulk shipping, fertilizer producers) are being questioned, and the FXP is a way to protect against a meltdown. The candle chart shows the beginnings of a rounded bottoming process. The 21-week and the 43-week/200-day moving averages have turned up, the MacD indicator moved over the zero centerline and the RSI is solidly above the 50 level. These are all favorable trend and momentum indications.
The Force Index reflects considerable buying since the beginning of the year. In the box directly below price, FXP is plotted against
iShares FTSE/Xinhua China 25 Index
; the separate chart is a histogram (red) of that relationship. It shows a very subtle narrowing of the difference between the two prices.
The stock market is responding well to news today and the FXP is pulling back, but a rounded bottom facilitates starting small and building positions -- if you want "disaster" insurance.
3. Agrium Results, Fertilizer Update
By Sham Gad
1:20 p.m. EST
Canadian fertilizer giant
announced earnings today. A very weak 2009 compared to 2008. No surprises there. Also had a favorable outlook in 2010. Again no surprises. The company is still very interested in acquring
. Time will tell. Anyhow, what is of interest to those interested in fertilizer....
Potash prices seem to be firming.
is raising prices by $25 a ton, which would represent the first full increase in price in over a year. Also, the winter freeze in Germany and Russia has hampered potash shipments, which could also create a short-term market shortage. The long-term outlook is even more favorable. Still, the planting reports due out later this month should lift a lot of uncertainty in the marketplace.
Position: Long POT, MOS
4. Directional trading
By Timothy Collins
1:03 p.m. EST
Right now, it seems pretty insane to make a directional trade. Had you gotten long domestically at the open, you were probably stopped out. If you had gotten short something like Europe on the drop, then a disciplined trader would have been stopped out on the pop.
Right here, the positions I am looking at will be paired or hedged. If I wanted to get short Europe, due to all this craziness surrounding the PIIGS, then I may use something like
UltraShort MSCI Europe ProShares
, although the average daily volume is atrocious and spreads can run as high as 30 bps during the trading day.
Direxion Daily Dev Mkts Bear 3X Shrs
, which is a very highly correlated 3 times version of the 2 times EPV, operates with a tighter spread and allows option pairing (covered calls or protective puts), as well as the ability to pair it with puts on the
Direxion Daily Dev Mkts Bull 3X Shrs
. Whether a single day or a short-term trend seeking multi-day trade, the DPK seems to have the advantage here if you are looking to get short. I, for one, am not at the moment.
5. Retail and Snow
By Tim Melvin
12:26 p.m. EST
Right now, I really wish I owned a grocery store. I had a houseful of twentysomethings over the snowy weekend and they depleted my supply of everything. I had to go to all three stores on the island just to restock the basics. The impending second storm has sent shoppers into a buying frenzy.
The experience has me wondering how much the double whammy in the Mid-Atlantic and Northeast is going to affect retail results for the month. Although grocery and hardware stores are going to be strong, my mall spies tell me that the malls are losing business at a rapid clip. Stores are closing early due to weather conditions and shoppers can't get there anyway in many sections of the country.
I also wish
had stores in this region to participate in the bonanza.
Position: Long WINN
This article was written by a staff member of RealMoney.com.