Fast Money Behind the Money

  Tuesday, 3 Feb 2009 | 11:46 AM ET

BEHIND THE MONEY: At Least We Have Our Health

Posted ByJohn Melloy
The health care sector today just went positive for 2009, making it the only major industry group to currently be in the green for this young year. »Read more
  Tuesday, 27 Jan 2009 | 12:27 PM ET

BEHIND THE MONEY: Stocks Won't Get Any Love Until After Valentine's Day

Posted ByJohn Melloy

BEHIND THE MONEY: Stocks Won't Get Any Love Until After Valentine's Day

The stock market will continue to churn sideways to lower as brutal earnings reports (and subsequent poor outlooks) keep rolling out and Washington haggles over President Obama's stimulus, according to Goldman Sachs strategists and other market observers.

The President has set a deadline for passing his stimulus of Monday Feb. 16, the very same week that the last few Dow members (Wal-Mart, Hewlett-Packard) are set to report. That makes Valentine's Day (Feb. 14, but many of you should already have that on the calendar) a good marker as to when sentiment may change in the marketplace.

In the meantime, "we expect poor 4Q earnings, lowered and withdrawn 2009 guidance, and decreased forecasting visibly to spur another wave of negative revisions this season," writes Goldman Options Strategist Krag Gregory, in a note to clients this morning. "Until the (stimulus) bill is signed, there will likely be volatility around changing expectations and eventual results will take time to play out."

Goldman recommends buying S&P 500 Feb-09 puts with an $830 strike price, as well as buying a Feb. VIX future vs. selling a June contract. The VIX future rises when volatility increases, as measured by the CBOE Volatility Index.

The always smart and always entertaining Jon Najarian, of OptionMonster.com fame, recommended last night on that show that you ride out this coming tumultuous period by going longgold. He's buying calls on Freeport McMoran to do just that.

So forget that last minute Pajamagram or Vermont Teddy Bear. Think ahead and buy your sweetheart a VIX future or Freeport call.


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Got something to say? Send us an e-mail at fastmoney-web@cnbc.com and your comment might be posted on the Rapid Recap! If you'd prefer to make a comment but not have it published on our website send your message to fastmoney@cnbc.com .

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  Monday, 26 Jan 2009 | 3:06 PM ET

BEHIND THE MONEY: Financials Still Dictating Where Whole Market Will Trade

Posted ByJohn Melloy

BEHIND THE MONEY: Financials Still Dictating Where Whole Market Will Trade

Many of us were wondering this morning how the market could possibly be trading higher in the face of an incredibly dire warning from Caterpillar, another round of monster job cuts and a 5 percent-plus drop in Pfizer on a perceived ill-fated merger.

The answer...the Financials. After Barclay's (keeper of Lehman) said in London that it didn't need anymore capital, the banks stocks, including Bank of America, caught a bid.

But lo and behold after the financials, as measured by the Select Financials SPDR ETF , fell into the red at 1:37 pm, the whole market promptly followed, with the S&P 500 going red around 2 pm.

We pointed out last week that the financials at their height, made up more than a fifth of the total value of the S&P 500. Today, the sector's market value is just 12% of the benchmark index. But what they've lost in mathematical weight, the stocks have gained in emotional weight. Recent behavior suggests that without a sustainable bottom in the financials, the market will have trouble making any headway.

SIDE NOTE: We'll take a moment in tonight's show to talk about a different kind of finance...Microfinance. The father of this movement and Nobel Prize Winner, Dr. Muhammad Yunus, will explain his vision to the Fast Money guys: bringing a business approach to alleviating poverty by treating credit as a fundamental human right. After seeing capitalism do so many destructive things in the last year, it will be nice to see how it can still do some good.

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Got something to say? Send us an e-mail at fastmoney-web@cnbc.com and your comment might be posted on the Rapid Recap! If you'd prefer to make a comment but not have it published on our website send your message to fastmoney@cnbc.com .

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  Thursday, 22 Jan 2009 | 11:12 AM ET

BEHIND THE MONEY: As '09 Markets Slide, Traders Go Cuckoo For Cocoa Bucks

Posted ByJohn Melloy

In the middle of yet another year, week, day when it seems as if nothing is working, the chocolate trade is rewarding investors in a desperate search for some edible alpha.

The always astute Karen Finerman, President of Metropolitan Capital Advisors, pointed out to me on our morning conference call that cocoa futures have surged to a 23-year high on dwindling supply concerns.

On top of that, on a day when every stock in the Dow Average is down, shares
of Hershey are up a tasty 2% and are now nearly in the black for the year. Hershey is moving higher after a Citigroup analyst upgraded the shares to "buy" from "hold."

"Our analysis of recent takeaway trends at retail suggest significant improvement happening at Hershey's driven by significant increases in advertising spending and consumer trade-down to less expensive chocolate," wrote analyst David Driscoll, in a note to clients this morning.

But before you go dipping into all things choclate like an endowment manager on a sugar high, note that it would seem to me that one of these trends needs to end. Either cocoa needs to top out or higher costs will start to hurt Hershey's bottom line. We'll be following it closely on Fast.

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Got something to say? Send us an e-mail at fastmoney-web@cnbc.com and your comment might be posted on the Rapid Recap! If you'd prefer to make a comment but not have it published on our website send your message to fastmoney@cnbc.com .

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  Wednesday, 21 Jan 2009 | 11:29 AM ET

BEHIND THE MONEY: TurboTax-Maker Intuit Takes Hit on Geithner Admission

Posted ByJohn Melloy

Shares of Inuit fell to their low on the day on strong volume after Treasury Secretary nominee Timothy Geithner reluctantly admitted during testimony before the Senate Finance Committee that he used the company's TurboTax software to prepare his returns.

Here was the interaction between Geithner and Sen. Chuck Grassley:

Sen. Grassley: Did you use software to prepare your 2001 and 2002 tax returns?

Geithner: I did

Sen. Grassley: You Didn't?

Geithner: No, I did

Sen.Grassley: Which brand did you use?

Geithner: I'll answer that question, but I will say these are my responsibilities, not the tax software's responsibilities, but I used TurboTax to prepare my returns.

The chamber crowd laughed out loud to Geithner's response, but it was no laughing matter for Intuit. The Treasury nominee admitted to making "careless mistakes" when preparing his tax return, apparently using the software. Geithner failed to pay $34,000 in Social Security and Medicare taxes earlier in 2001 and 2002.

Intuit shares have since rebounded off their lows, proving that any press may indeed be good press for the company.

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Got something to say? Send us an e-mail at fastmoney-web@cnbc.com and your comment might be posted on the Rapid Recap! If you'd prefer to make a comment but not have it published on our website send your message to fastmoney@cnbc.com .

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  Tuesday, 20 Jan 2009 | 10:47 AM ET

Fast Money First Look: New Low For Financials Today Forebode New Market Low?

Posted ByJohn Melloy

While Obama takes the oath, all eyes in the markets will be on the financial sector following RBS's monster loss announcement in the UK and reports of a new phase of the bailout ahead this week in the U.S.

That new phase can't come soon enough as the Financial Select Sector SPDR is just 30 cents away from closing below its Nov. 20th low point of $9.39. This breakdown may be a psychological blow the market finds tough to handle today and this week.

Citing sentiment that embodies the feeling about most of the sector, Stifel Nicolaus analyst Chris Mutascio downgraded shares of Bank of America to "Hold" from "Buy" this morning. His call may push the sector to that new closing low today.

"Downgrading the shares at an 18-year low and at approximately 70%-75% of pro forma tangible book value per share may look foolish to some," writes Mutascio. "In the end, we had to answer one simple question in order to maintain our Buy rating on the shares: If we had a clean slate, would we buy the shares today?"

Mutascio said the answer was "No", citing even further deterioration in bad loans for commercial real estate, along with the substantial preferred dividends Bank of America will need to pay to Uncle Sam. That's the concern about the troubled banks in this sector. Another phase of the bailout could wipe out even more equity for common shareholders.

Our debate on the show tonight will be whether or not the rest of the market can recover while financials go nowhere or lower. Tune in to see what the traders think.

ONE MORE NOTE: Also debuting tonight, a weeklong series on "Finding Yield". This was an idea from host Dylan Ratigan and comes about after observing investors and traders' thirst for anything that throws off some yield, whether it be a corporate bond ETF or so-called safe dividend-paying stock. With the markets set to churn for most of the year, any instrument that provides a higher payout than record low yields for Treasuries will be in high demand for investors wanting to rest a little easier. The gang will try to identify a few of those for you all week. Barron's highlighted one such instrument over the weekend that seemed to break out last week: the Vanguard Long-Term Bond ETF .

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Got something to say? Send us an e-mail at fastmoney-web@cnbc.com and your comment might be posted on the Rapid Recap! If you'd prefer to make a comment but not have it published on our website send your message to fastmoney@cnbc.com .

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  Monday, 5 Jan 2009 | 1:59 PM ET

BEHIND THE MONEY: Is Biotech The Sector Of The Year?

Posted ByJohn Melloy

BEHIND THE MONEY: Is Biotech The Sector Of The Year?

Biotechnology stocks are getting a lot of chatter already in this very young year.

A Wall Street Journal 'Heard on the Street' column over the weekend noted that cash-rich big pharma may go shopping for biotechs that have late-stage drugs, in order to cover for their blockbusters coming off patent, such as Pfizer's Lipitor. Amylin is a possible target mentioned by the paper.

Meanwhile, the Financial Times notes that Pfizer is open to a deal with a biotech rival. Although,Mike Huckman, CNBC's Pharmaceuticals reporter, maintains that this is nothing new and that Pfizer CEO Kindler has hinted at this before . Still, the buzz is picking up for the sector, which outperformed the market dramatically last year.

But what's probably the most bullish piece of news on Biotechs (see gain in iShares Nasdaq Biotechnology ETF today) is the outlook piece by JPMorgan's Geoffrey Meacham, the No. 2 analyst in the space, according to Institutional Investor magazine.

"We are positively inclined on the sector and like 2008," writes Meacham, citing "strong fundamentals for the large cap group, a favorable M&A environment and limited economic sensitivity."

CNBC's Huckman will be on the show tonight to discuss with the traders if and how you should play this group. In the past, Guy Adami has recommended Gilead Sciences , which gave investors a positive return last year and is currently the top 2009 pick of JPMorgan's Meacham. Karen Finerman has recommended the Nasdaq Biotech ETF in the past. Tune in tonight for updated trades.

OTHER NOTE: Piper Jaffray's Gene Munster, the most-followed Apple analyst on The Street, will be on the show tonight to discuss Steve Jobs' latest health revelation (He's apparently OK), which has been an obsession of the show and this column . Kudos to CNBC's Silicon Valley Bureau Chief Jim Goldman for sticking to his guns (and his reporting) and not succumbing to the rumors floated constantly by the blogosphere. Goldman maintained through all of this that Jobs was not on his deathbed. Fast Money viewers who listened to Goldman are now better off, as the stock is poised to break above the point when those rumors sparked the aggressive selling in Apple shares.

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Got something to say? Send us an e-mail at fastmoney-web@cnbc.com and your comment might be posted on the Rapid Recap! If you'd prefer to make a comment but not have it published on our website send your message to fastmoney@cnbc.com .

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  Friday, 19 Dec 2008 | 11:43 AM ET

BEHIND THE MONEY: 2009 - The Year Of The Trader

Posted ByJohn Melloy

BEHIND THE MONEY: 2009 - The Year Of The Trader

The profit and economic outlook is the cloudiest traders can ever remember and it may remain unclear well until 2009. Many believe we’re setting up for 12 months of volatile, trendless markets as the powers that be search to find the resolution that will make this bubble pop the least painful.

After the stock market’s crash in 1987 and the collapse in Japan in 1990, markets exhibited a kind-of "crash-and-churn" pattern: a monster sell-off followed by a decade of purgatory as the great forces at work during the prior bubble period are unwound.

Staring these kinds of scenarios in the face has many investors changing their gameplan, with even long-term believers suddenly finding themselves more in the day trading camp. 2009 is setting up to be "The Year of the Trader"

I'm going to "shorten my profit horizons, keep positions light and flexible and use options more as insurance," said Joe Terranova, chief alternatives strategist for Virtus Investment Partners in New York. "At the end of 2009, I will know if my year was successful if I hit a lot of singles and doubles, drew walks and kept my strikeouts low."

Find out on the show tonight just how Terranova, a FM regular, plans to play small ball next year.

TO BE SURE: Another scenario could take place. Barclays portfolio strategist Barry Knapp sees a second half recovery. By his estimation, profits will bottom in the third quarter, with the stock market anticipating that turn about seven months beforehand, as it typically has throughout history.

"If we are right that earnings trough in (the third quarter) and we are not dealing with a repeat of 2002, we believe the market could turn some time in" in the first quarter, wrote Knapp in Barclays 2009 outlook piece released yesterday.

In either case, it sounds like you’ll need to begin 2009 on your toes and not just buy stocks in January and store them away until December.

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Got something to say? Send us an e-mail at fastmoney-web@cnbc.com and your comment might be posted on the Rapid Recap! If you'd prefer to make a comment but not have it published on our website send your message to fastmoney@cnbc.com .

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  Wednesday, 17 Dec 2008 | 12:41 PM ET

BEHIND THE MONEY: 2008 is Effectively Over; Apple's 'One Scare Too Many'

Posted ByJohn Melloy

With the Fed's historic policy announcement yesterday and Morgan Stanley earnings today, the impact moments for the stock market in 2008 are over. The economic and earnings calendar between now and the end of the year is quite bare.

Now the question is, are the technical forces powerful enough to keep the S&P 500 on its current uptrend toward 1,000 or is a market with no earnings and government actions destined to drift sideways or lower. Today's action points to the latter.

To be sure, the weekly jobless claims report Thursday could move the market if it is particularly bad and we still need a resolution on the GM loan. Also, we could get a major company to release an early outlook for 2009, but many of them have already done so.

We discussed this dilemma on the morning conference call in preparation for tonight's Fast Money. Pete Najarian , Optionmonster.com co-founder and FM trader, is now turning his sights toward the Jan. 20 inauguration of Barack Obama and figuring out how to position himself for the stimulus likely to come about from the new president. More on that on tonight's show.

SIDE NOTE:Apple down 7 percent and counting today related to the company announcement that CEO Steve Jobs will not make the keynote address during the annual Macworld Expo (not affiliated officially with Apple). We highlighted this announcement last night on the show and CNBC’s Silicon Valley Bureau Chief Jim Goldman called in on the Fast Line to tell us that his sources suggest this is not related to Jobs’ health. The stock recovered in the after market, but this morning it has resumed a steady decline. It seems investors just want some straight talk from Apple about succession.

"We don't know why Steve Jobs has pulled out of his annual address at Macworld," writes Oppenheimer analyst Yair Reiner, in a report titled ‘One Scare Too Many’. "Maybe he's not feeling well, or maybe he just has nothing new to say," writes Reiner, who downgraded the stock. "Whatever the reason, the unexpected announcement has underscored the greatest risk to Apple's long-term success - its dependence on Jobs' health and its apparent lack of a succession plan."

What's more, maybe investors fear that the cancellation by Jobs means that no new, spectacular Apple products are on the horizon for him to discuss.

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Got something to say? Send us an e-mail at fastmoney-web@cnbc.com and your comment might be posted on the Rapid Recap! If you'd prefer to make a comment but not have it published on our website send your message to fastmoney@cnbc.com .

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  Monday, 15 Dec 2008 | 12:40 PM ET

BEHIND THE MONEY: As Goldman Goes, So Goes 2008's Last Gasp

Posted ByJohn Melloy

BEHIND THE MONEY: As Goldman Goes, So Goes 2008's Last Gasp

As we head into the last full week of the trading year, the S&P 500 is up 17 percent from the benchmark's 11-year low hit on Nov. 20. The financial part of the index has had a large role in that comeback, posting a gain of about 24 percent.

This last gasp by the market is now in the hands of Goldman Sachs , according to traders. The recently-converted commercial bank posts fiscal 4th quarter results Tuesday morning.

And boy, has the bar been set low. At the end of November, analysts started slashing estimates left and right on Goldman and now expect the company to lose a whopping $3.50 a share, according to Bespoke Investment Group.

Expectations for a surprise beat may be wishful thinking tainted by the automatic surprise dolled out every quarter by Goldman during the go-go bull market days, at least according to recent commentary by our guest tonight, Jeffery Harte of Sandler O'Neil.

In a note on Dec. 4, Harte slashed his 4th qtr. estimate on Goldman to a worse-than-consensus $3.78 a share loss. The widely-followed analyst cites greater-then-expected asset writedowns and flat-line investment banking activity levels, not to mention the collapse in global equities.

If Goldman does manage to disappoint, Morgan Stanley may give the market a second chance if it can say business is not as bad when it reports Wednesday morning.

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Got something to say? Send us an e-mail at fastmoney-web@cnbc.com and your comment might be posted on the Rapid Recap! If you'd prefer to make a comment but not have it published on our website send your message to fastmoney@cnbc.com .

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