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Warning Writedown Ahead

Monday, 25 Feb 2008 | 6:35 PM ET

#1 - Warning: Writedowns Ahead

Banks begin reporting earnings March 10th. Will they issue warnings of further write-downs this week ahead of earnings?

CNBC’s Charlie Gasparino joins the panel for this discussion. Following is a summary of his main points.

Citigroup

According to Goldman, Citigroup is the most vulnerable to subprime writedowns. Gasparino also thinks Citigroup remains a “huge mess” and should see other massive writedowns. Now the questions becomes - do they eliminate their dividend all together.

Goldman Sachs

Goldman dodged a bullet last quarter, but they most likely won't be so lucky this quarter, says Gasparino. They could be in the “soup” with Citigroup.

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Also, a consortium of banks has largely finalized a deal to recapitalize troubled bond insurer Ambac Financial Group and is now trying to sell the plan to the rating agencies to save Ambac's triple-A rating, CNBC has learned.

The review should be done by the end of the week, says Charlie Gasparino. But, I don’t think they’re great businesses going forward.

Tomorrow's Trades #1: GS
Goldman lowers estimates on banks and brokers today, with the Fast Money crew.

Read More:

> Ambac Still Needs Ratings Firms To Approve Rescue






#2 - Bad News Buys:

Macy's (M),Target (TGT), and RadioShack (RSH) all report earnings on Tuesday. Does Monday’s rally in Lowe’s suggest worst-case scenarios are already priced into retail?

Shares of Lowe's rallied on Monday after the home retail giant said profits fell, albeit less than expected, Dylan Ratigan explains.

What does that mean going forward?

Bad news could be in the retailers, exclaims Jeff Macke. I think it’s time to hold your nose and buy.

I agree, says Karen Finerman. But still expect the worst.

Tomorrow's Trades #2
An outlook on this week's retail earnings, with the Fast Money traders.

I like Home Depot (HD) at current valuations, adds Guy Adami.



  Price   Change %Change
HD
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M
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RSH
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TGT
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I like Home Depot (HD) at current valuations, adds Guy Adami.


#3 - Aloha, Pete

Fresh from his Hawaii vacation, Pete Najairan reveals where he’s seeing unusual options activity.

Tomorrow's Trades #3: CCOI
Seeing unusual options activity in Cogent ahead of earnings Wednesday, with Fast Money's Pete Najarian.

Watch Cogent (CCOI) ahead of earnings, explains Najarian. Options trading suggests it could go higher. I recommend buying the calls, he counsels.

  Price   Change %Change
CCOI
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Trader disclosure: On Feb.25, 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 (ATVI), (YHOO), (DIS); Najarian Owns (C), (MS), (MSFT), (XLF), (YHOO); Najarian Owns (CCOI) Calls, (AA) Calls, (NTAP) Calls; Najarian Owns (ACI) Calls; Finerman Owns (GS); Finerman's Firm And Finerman Own (HD); Finerman's Firm Owns (MSFT), (SUN), (TYC), (WMT) (YHOO), (AAPL); Finerman's Firm Is Short (IYR), (IJR), (MDY), (SPY), (IWM), (COF), (LEH); Finerman's Firm Owns Shares Of Royal Bank of Scotland Group plc; WWE Programs Air On Networks Of NBC Universal, The Parent Company Of CNBC; Vivendi Owns 20% Of NBC Universal, The Parent Company Of CNBC; GE Is The Parent Company Of CNBC

  Price   Change %Change
CCOI
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HD
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M
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GS
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C
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TGT
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TWX
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  • Chief Market Strategist for Virtus Investment Partners & CNBC Contributor

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