Despite some hopeful signs, the markets fell again Monday as credit conditions worsened.
The Dow Jones Industrial Average fell 79.89, or 1.21%, to 6,547.05, while the S&P 500 lost 6.85, or 1%, to 676.53. The Nasdaq fell 25.41, or 1.91, to 1,268.64. Dylan Ratigan, the moderator of CNBC's "Fast Money" TV show, said there were some promising elements in today's market activity as seen in the ability of some banks like Bank of America ( BAC) to raise some money and some active deal making highlighted by the announcement of a $41 billion deal by Merck ( MRK) to buy Schering-Plough ( SGP). Pete Najarian said the most impressive thing about today's market was that the banks didn't get clobbered as they have been. Karen Finerman said the culprit that killed any chance of a rally was the sharp falloff in the credit markets from an increase in redemptions and selling. Tim Seymour agreed, saying the problem is some $540 billion in debt that needs to be refinanced in the next few months. Zachary Karabell said the active deal making and signs of life in the IPO market were positive signs. He said that deals are finally being put together with cash and equities instead of "crazy financing." Finerman said there may be a rotation going on as investors start to move money into energy names such as ConcoPhillips ( COP) and Oil Services HOLDRs ( OIH). Najarian noted some of the assets in the energy sector are cheap as he alluded to a $760 million deal by Arch Coal ( ACI) to buy a mine in Wyoming from Companhia Vale ( RIO).
Frank Aquila, a mergers and acquisition lawyer for Sullivan & Cromwell, said he expects more strategic deals as soon as the market stabilizes. He said a lot of pharma and health-care deals are in the works. He also sees consolidation among financial firms and a lot of distressed acquisitions particularly in the real estate and retail sectors. Doug Kass, a columnist for TheStreet.com and founder and president of Seabreeze Partners Management, told Ratigan that he's starting feel bullish about the market. "Half the issues on in my watch list have started to turn positive," he said. Moreover, he said commodity prices are firming, disappointing earnings are getting favorable reactions and emerging markets are starting to improve. Ratigan brought in Rich Greenfield, of Pali Research Media, to talk about his firm's decision today to issue a sell on Walt Disney ( DIS). Greenfield said Disney, which is off 31% this year, won't bottom until 2010. He said the consumer "has fallen off a cliff" and foreign travel is weakening. Greenfield said that Disney has done a good job up to now of masking its problems by taking away market share from its peers but that it will difficult from here on out to avoid declining earnings and attendance at its theme parks. He noted three media companies that look like worthwhile investments: Viacom ( VIA), Time Warner ( TWX) and Discovery Communications ( DISCA). Ratigan asked Najarian to comment on the deal making activity among the fertilizer companies. He said the three-way takeover battle involving CF Industries ( CF), Terra Industries ( TRF) and Agrium ( AGU) underscores the level of consolidation activity in the fertilizer group and the willingness of companies to spend to purchase undervalued assets.
In the "Rising Star" segment, Karabell highlighted Thomson Creek Metals ( TC), which makes molybdenum, which is used to make high-end steel for airplanes and buildings. He said the stock is now trading at $2.83 after being as high as $27. Although the price of molybdenum has fallen, he figures there will still be a future for it because it's an "irreplacement input" for high-end steel. "Check out "'Fast Money' Portfolios of the Week" on Stockpickr every Thursday.