No. 2 - Mortgage Meltdown
"Mortgage Meltdown or Media Hysteria, You Decide"
From reading the newspapers, you’d think there was a virtual mortgage crisis in America. But look again! While home loans to people with poor credit (the so called sub-prime market) has grown as a business, it’s still a relatively small part of the total mortgage pie, less than 15% by most accounts. Moreover, Wall Street has gotten better at managing risk, offering to only those who want it. In other words, what happens in subprime land could very well stay there. Is there Fast Money in the media’s so-called mortgage crisis?
Steve Liesman joined the guys for this conversation and disagreed with Dylan's premise. Liesman said just because the big investment banks aren’t saying they don’t have trouble doesn’t mean there is not trouble. There is contagion.
Tim Strazzini said the next trade is to short the American Credit Corp. , CompuCredit Corp., Capital One Financial. These stocks are tied directly to consumer credit and are the next wave to be hit.
Guy Adami said looking at trading volumes, "I would not get short these stocks. I like Goldman Sachs , they will report another record quarter."
Look across the board at Lehman and Goldman – said Jon Najarian.
Bolling said, "Take a look at Mastercard, which closed today at $100.94. The chart is breaking down and it’s going back to $85 a share."
Dylan said that the bottom line is look for other consumer names to become vulnerable to sub-prime downslide, but the risk to the brokerage stocks such as Goldman Sachs may be overblown.
On MAR 5, 2007, the following stocks and commodities mentioned or intended to be mentioned on CNBC’s Fast Money were owned by the Fast Money traders.
Strazzini: Gold,(MER), LBF
Bolling: Gold, Silver, Soybeans, Short Corn, S&P Futures, short Nasdaq futures, NMX
Najarian Owns (PALM)
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