#1 - Lost At The Wheel
Ben Bernanke is scheduled to speak at 10am on Thursday about the “near-term outlook for the U.S. economy”. The speech follows criticism from Paul Volker who suggested the Fed is not in control. Can you trade it?
Mike Darda, Chief Economist at MKM Partners, joins the panel for this conversation. Following is a summary of his main points.
-- Bernanke's speech Thursday (to be streamed live on CNBC.com) will likely mirror his speech last week in which he suggested that the Fed has taken down expectations for growth and noted more important threats to economy. Overall Darda thinks the Fed is more likely to lower rates
--Darda predicts Bernanke will not move before the meeting. However at the meeting he anticipates aggressive further easing; possibly a 50 bps rate cut on Jan. 30 and it could be 75 bps.
-- A rate cut should be bullish for emerging markets, Darda says, as well equities in the energy, materials, industrials, technology, and financial sectors
-- Darda feels the market is close to the end of this weakness. Since the valuations on stocks relative to bonds are lower than we've seen them going back to the 1970's -- it could pay to be a bull, he concludes.
#2 - Last Stocks Standing
Agriculture stocks, the last bastions of the bull market, took heavy losses Wednesday. What does it mean when the last thing working, rolls over?
You can’t hide in these stocks, says Jeff Macke, and keep your gains. I suspect ag stocks like Monsanto (MON) are probably going to roll over in a hard way.
I agree adds Karen Finerman. We’ve only seen a tiny bit of selling in the ag names. I don’t think it’s even started yet.
I think most of the valuations are crazy in this space, Guy Adami chimes in. If you want to play ag, check out Dupont (DD).
Or check out Anderson Inc (ANDE) adds Pete Najarian. Also I think you could play Monsanto short and Mosaic (MOS) long.
#3 - Fallen Angels
Ten percent of S&P 500 stocks are off 50% or more from their 52-week highs. Are these “fallen angel” stocks due for a bounce after taking such staggering losses?
FALLEN ANGELS: OFF 50% FROM HIGH
Darden Restaurants (DRI) -55%
Red Lobster isn’t going out of business says Jeff Macke. The stock is trading at only 15 times valuations and I say build on your position.
Coach (COH) -53%
It’s a good company that’s trading at a reasonable valuation, says Jeff Macke.
Crocs (CROX) -62%
It’s also a good company that’s trading at a reasonable valuation, says Jeff Macke.
I am long Crocs and I like what I’m hearing from the company, adds Karen Finerman.
Akamai (AKAM) -57%
I don’t think rumors that they’re going to lose contracts with Apple are true, says Guy Adami. Not a bad stock.
King Pharmaceuticals (KG) -50%
30% of revenue comes from a blood pressure drug and I think the selloff is overdone, says Pete Najarian.
Source of data: Birinyi Associates
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Trader disclosure: On Jan 16, 2008, the following stocks and commodities mentioned or intended to be mentioned on CNBC’s Fast Money were owned by the Fast Money traders; Macke Owns (INTC), (YHOO); Najarian Owns (C), (CSCO), (BIIB), (FRE),(MCD), (TIBX); Najarian Owns (AAPL) Options, (YHOO) Options, (WM) Options; Finerman's Firm And Finerman Own (CROX); Finerman Owns (GS), (TSO), (VLO), (WMT), (YHOO); Finerman's Firm Owns (MS) Options; Finerman's Firm Owns (MSFT) Options; Finerman's Firm Owns (MDY) Puts And Is Short (MDY); Finerman's Firm Owns Russell 2000 Puts And Is Short (IWM); Finerman's Firm Owns S&P 500 Puts And Is Short (SPY); Finerman's Firm Is Short (IJR), (IYR); Finerman's Firm Is Short (LEH) And Owns (LEH) Puts