Word On The Street
Dylan Ratigan hosted CNBC “Fast Money” show Wednesday night. He started the show with a discussion of the three major issues in the market right now: a lack of confidence, hedge funds and many investors remain on the sidelines and the fundamental aspects of this economy continue to deteriorate. He said when you put all three of things together you get a stock market that continues to sell off. Pete Najarian pointed out that the financials are yet to participate in this market. He says “the volatility index fell too fast and that’s part of the issue right now.” Karen Finerman told viewers she was stopped out of a long position in Google (GOOG) after the stock broke below $300 per share. She says “Google is an interesting company, but I don’t need to fight the tape.”
Intel Warning
Ratigan moved the conversation to breaking news that shares of Intel (INTC) were halted in after-hours trading. The chip company said its fourth-quarter revenue will come at $9 billion, which is below Wall Street expectations. Jeff Macke said things continue to deteriorate and the fundamentals are disastrous. He says “I can’t be confident in this market and I have never had more cash on hand.”
Bank Talk
Ratigan switched the discussion to the bank sector. He explained that Wells Fargo (WFC), JPMorgan Chase (JPM), Morgan Stanley (MS), Citigroup (C), Goldman Sachs Group (GS), Merrill Lynch (MER) and Bank of America (BAC) are all down significantly from the announcement of the TARP plan. Najarian said “hats off” to Meredith Whitney, managing director at Oppenheimer for saying that Citigroup could go into the single digits. He says “the one to keep an eye on is American Express (AXP), which is seeing an amazing amount of put options activity.”
Goldman On Intel
CNBC’s Jim Goldman joined the traders to discuss the Intel news. He explained that Intel’s revenue revision was “substantial.” He says “you wonder what other kinds of ripples this could send through the rest of the industry.” Goldman mentioned Intel will also reduce its capex spending by $100 million to $2.8 billion. Macke said Intel is behaving like a company that is afraid because nobody is buying anything.
Energy Take
Ratigan brought up the weakness in crude oil and what it might mean about the state of the economy. Finerman said the government would be better off having oil a little bit higher because it’s become a full on proxy of fear. She says “I wouldn’t take off the oil short trade yet, but the equity side hasn’t worked.” Najarian said the pull back in natural gas and oil is helping the input costs for someone like Archer Daniels Midland (ADM). Seymour pointed out that ConocoPhillips (COP) is trading like oil is at $40 per barrel.
Kass Chat
Doug Kass, founder and president of Seabreeze Partners Management joined the traders to discuss where we are in the cycle of deleveraging. Kass said the outlook for the next three to five years has been jarred and our social, economic and political future has materially changed. He says “the scope and duration of the meltdown has placed our economy passed the tipping point.” He mentioned were in a very dangerous environment for both shorts and longs now. He explained that around $600 billion of hedge fund capital is in computer generated program trading. He told viewers to air on the side of “conservatism.”
TARP Affect
CNBC’s Steve Liesman joined the “Fast Money” crew to talk about the TARP bailout plan. He explained that the Treasury plans to get involved in the asset-backed market for consumer loans. He says “the Fed will have another facility that will buy bundled credit card loans and bundled auto loans.” He mentioned the Fed will also provide private equity matching funds. Liesman told viewers that the Treasury, FDIC and the Fed issued a joint policy statement that said they expect banks to start lending and get their dividend policies right. Finerman said the banks should dilute their shareholders instead of using the TARP money to recapitalize.
Oil Depression
The crew spoke with Addison Armstrong, of Traditional Energy about the weakness in crude oil. Armstrong said it’s all gloom and doom in the oil markets right now. He says “there is nothing that is going to stop crude oil from falling, not even OPEC, as long as there is wholesale selling in every other market.” He told viewers he likes natural gas at $6. Najarian said he saw enormous amounts of activity in the November options for the Energy Select Sector SPDR (XLE). Armstrong said oil could potentially go to $45 a barrel and that would cause pain for the integrated oil names.
Trader Radar
Shares of Scotts Miracle-Gro (SMG) were among the most active names on the NYSE Wednesday.
Final Trade
Macke said he is going to sell the rest of his ProShares UltraShort S&P 500 (SDS) position. Seymour recommended the UltraShort MSCI Emerging Markets ProShares (EEV). Finerman said she is sticking with her short position in Capital One Financial (COF). Najarian picked Archer Daniels Midland (ADM). Get the scoop on tomorrow’s hottest trade ideas – TODAY! BeaconEquity.com PREMIER PICKS have an amazing track record. Join this select group and ride the profit wave!