'Fast Money' Recap: Bank Rally Lacks Substance

NEW YORK ( TheStreet) -- The financials rallied today on reports of a a $1 trillion mortgage refi plan that the White House later denied it was behind.

Melissa Lee, the moderator of CNBC's "Fast Money" TV show, asked the trading panel and experts to sort out what happened.

Chris Whalen, senior managing director for Tangent Capital Partners, said the market reaction was the opposite of what it should have been. He said the big banks don't want to get into this because they don't want to deal with second liens.

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

Whalen said the Fed has done everything it can. He said the real culprits are Freddie Mac and Fannie Mae and the larger banks that have been sitting on their hands with regards to refinancing the bottom third of the market.

Tim Seymour said the financial space didn't need this report because the bank stocks have been pricing in better loan growth and a better reaction on the mortgage side.

Brian Kelly said today's financial rally was actually in reaction to the white paper from the Fed about getting foreclosed homes off the balance sheets of banks and turning them into rentals.

Turning to today's mixed retail sales results, Lee noted that Target ( TGT) missed analyst estimates. Terranova said Target's undoing came at the hands of Walmart ( WMT), which did a very good job of promotions over the holiday season.

Another retailer that didn't do well was Family Dollar ( FDO). Scot Ciccarelli, of RBC Capital Markets, said consumers simply went elsewhere for discretionary items. Dennis Gartman said the dollar stores will lose sales as the economy gets stronger and consumers move to higher-end stores.

Commenting today's boost in ag stocks, Gartman said companies like Monsanto ( MON) and Mosaic ( MOS) are getting a boost from dry, hot weather conditions in South America, particularly in Argentina and Brazil.

He said the situation should help the U.S. corn crop and producers of fertilizers and nitrogens. Terranova added his picks of CF Industries ( CF) and Darling International ( DAR).

Shifting to crude, Dan Dicker, a senior commentator for TheStreet, said the U.S. is pressing hard on several fronts to get Iran back to the table to negotiate a settlement on the issue of atomic weapons development.

Dicker said the decline in Tesoro's ( TSO) shares after it slashed its fourth-quarter forecast underscores the margin pressures on refiners.

However, Dicker was sanguine about the outlook for refiners because of the possibility of a supply shortage of gasoline at anytime if anything goes wrong. He said he would use the current situation to build a position in some of the refiners.

Terranova said some refiners like CVR Energy ( CVI) and Hollyfrontier ( HFC) are doing well because of the demand for oil from China.

Is Best Buy ( BBY) a possible target for private equity firms?

Dana Telsey, CEO of the Telsey Advisory Group, said there are a lot of structural issues such as downsizing the store base and increased competition that can be handled out of the public eye. She said taking the company private would require the cooperation of its chairman. She also said she thought Best Buy would still be a public company a year from now.

Turning to the volatility playbook, Najarian attributed the today's 3% drop in the VIX even in a down market to the narrowing of moves in the markets in the past 30 days.

In the wake of reports of the possibility of bankruptcy for Eastman Kodak ( EK), Lee asked the panel what other companies are vulnerable because of their obsolete products and services.

Najarian said hard disc companies like Seagate ( STX) and Western Digital ( WDC) are fighting a losing battle against flash. Kelly's choices were Barnes and Noble ( BKS), Sodastream ( SODA) and Gamestop ( GME).

Terranova offered up Wendy's ( WEN), which he said is facing major secular headwinds.

Seymour mentioned Live Nation Entertainment ( LYV); Scott Nations noted Microsoft ( MSFT) and its aging office suite of products; and Gartman noted the decline of newspapers.

Lee shifted to Terranova, author of a new book entitled, Buy High, Sell Higher. He said one tip he had for investors was to make sure their biggest position was a winning position. He said it's classic mistake to hold large, long positions that are losers.

Lee asked Kulbinder Garcha, managing director for Credit Suisse, for his upside call on Nokia ( NOK). He said Nokia should do well because the Windows platform is competitive. He also said Nokia has done a good job pricing its smartphone and enjoys a strong level of brand and distribution. He said Nokia's turnaround would extend into 2013.

In the final moves, Seymour said he would buy Mobile Telesystems ( MBT) until it reaches $17.50. Gartman was buying sterling and selling the Swiss Franc. Najarian said he would buy Mastercard ( MA) if it falls below $350. Terranova said he bought some Deckers ( DECK) with a stop close at $77.25.

-- Written by David Tong in San Francisco.

>To contact the writer of this article, click here: David Tong.

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