'Fast Money' Recap: Commodities Comeback

NEW YORK ( TheStreet) -- The markets fell again Tuesday despite a comeback in commodities.

The Dow Jones Industrial Average fell 25.05, or 0.20%, to 12,356.21. The S&P 500 dropped 1.09, or 0.08%, to 13216.28. The Nasdaq slipped 12.74, or 0.46%, to 2746.16.

Brian Kelly on CNBC's "Fast Money" TV show that silver led the commodities with a strong move higher.

Guy Adami said Goldman was spot on in its bullish call on a number of commodities. Tim Seymour said there would have been a further market decline if Goldman and Morgan Stanley had not upgraded commodities and gold. Seymour said the S&P was still in "no-man's land" with 1295 serving as the test for the index.

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 on TV

Joe Terranova said Goldman's call was essentially a reversal of its call on April 12. However, he sees a slowdown in oil, noting oil could drop $3 to $5 a barrel easily. He said going with that selling pressure would be the wrong trade. Rather, he said he still believes in energy, with CVR Energy ( CVI) as a point of reference.

Zachary Karabell said the demand for copper is quite real. He said China's has been destocking copper for many months and its inventories are at a two-year low.

Melissa Lee, the moderator of the show, asked the panel for derivative trades off the commodity trade. Brian Kelly said he would look beyond the airlines to hotels and car rental companies.

Turning to the financials, Lee referred to Federal Reserve Bank of Kansas City Bank president Thomas Hoenig's comments that banks should stick to deposits and loans if the financial system is to avert its near disasterous plunge in 2008.

Terranova said financial names like Blackstone ( BX) and KKR ( KKR) should fare well under that framework. Kelly said he liked the prospects of JPMorgan ( JPM) and Morgan Stanley ( MS) if the Fed decides to help increase loan demand by increasing liquidity.

Seymour said he still liked Goldman Sachs ( GS) despite its regulatory problems. Adami said he didn't like the price action in Goldman and sees it headed down further.

Lee noted that the price of Brent oil climbed today on a Goldman Sachs call that oil will hit $130 a barrel by year's end. Daniel Dicker, a senior columnist for TheStreet, said the call, which amounted to a reversal of Goldman's position six weeks earlier, was "weird" in its logic. He said the Goldman's rationale for the call for the earlier correction in oil had little to do with what really caused oil prices to fall.

Dicker sees instead a flat market ahead for oil. While there might be some value in the market, he advised waiting until October. He said Goldman was probably right in predicting an organic rise in the oil but was a little too early in its call.

Commenting on the 55% rise in the first day of trading of Yandex ( YNDX), Seymour said the company was a world-class company whose search business is equal to, if not better than, Google ( GOOG).

He said his firm stayed away from Yandex because he thought the valuation was much too high, at 60 times earnings.

Karabell disputed the idea that recent IPOs like Yandex and LinkedIn are bubble stocks. He said investors should pick their entry points for those stocks and not wait for them to come back to market multiples.

Lee noted that Doug Kass, a RealMoney Silver contributor at RealMoney.com, had mentioned that 50,000 out-of-the money gold call options at between $1600 and $1800 an ounce were made, with expirations in August and September. She said the trade could have involved a sovereign fund or bank. Terranova said it was probably a speculative trade, while Seymour said it might be a trade on the euro. Adami didn't think the size of the deal was large.

CNBC reporter Kate Kelly broke in to say that the shares of AIG ( AIG) had been priced at $29 for its secondary offering.

Seymour said the taxpayers were fleeced on the deal. He said the stock was worth $1,200 in November, 2007. Adami said the taxpayers didn't make as nearly as much they should have from the deal. And Kelly said the offering should have been cancelled.

Terranova said the stock had little chance of stimulating investor interest. He said AIG took a huge charge in the fourth quarter, sold off its key assets and still faces a government overhand of 70% to 75%. "I can't see why you would want want to buy it."

Lee brought in Joe Sanderson, CEO of Sanderson Farms ( SAFM) which reported a second-quarter loss on lower chicken prices and soaring feed costs.

Sanderson said the company recently hedged some feed costs but acknowledged that it's been hurt by unemployment and the impact it's had on its food service business.

From this week's health care playbook, Adami touted Amarin ( AMRN), a biopharma company that he said has been doing great the past couple of weeks. He said the stock has a huge upside from a drug for cardio vascular disease that is currently in phase 3 trials. He said the stock could soar from $18 to $30.

In the final trades, Seymour said he liked Petrobras ( PBR) and Suncor ( SU). Adami said eBay ( EBAY) was worth looking at. Kelly said he was getting some Qualcomm ( QCOM) Wednesday. And Terranova said he was adding to pairs trade in which he was short Dell ( DELL) and long HP ( HPQ).

--Written by David Tong in San Francisco.

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