TRADER TALK VIDEO GALLERY

» More

TRADER TALK RSS FEED

» Help

Subscribe to this RSS feed
Stay up to date with the Trader Talk blog.

LATEST FROM OUR BLOGS

» More

- Portfolio Prep for Next Week: 'Don't Get Crazy'

MORE HEADLINES

» Markets | Economy | Companies

- Next Week: Cash In Now Or Wait For A Santa Rally?

CNBC ON DIGG

Trader Talk Video Gallery

NYSE Midday Update

CNBC's Bob Pisani reports on the trading day from the NYSE.

NYSE Morning Preview

CNBC's Bob Pisani reports on the trading day from the NYSE.

NYSE Morning Preview

CNBC's Bob Pisani reports on the trading day from the NYSE.

NYSE Market Wrap

Bob Pisani reports on the trading day from the NYSE.

NYSE Market Wrap

Bob Pisani reports on the trading day from the NYSE.

NYSE Morning Preview

Bob Pisani reports on the trading day from the NYSE.

NYSE Market Wrap

Bob Pisani reports on the trading day from the NYSE

NYSE Midday Report

CNBC's Bob Pisani reports on the trading day from the NYSE.

Trader Talk

Text Size

Jul.14

4:09 PM ET

Monday, 14 Jul 2008

Financial Worries Now Include Credit Cards, Auto Loans

Posted By:Bob Pisani

Topics:Earnings | Investment Strategy | Stock Market

Sectors:Oil and Gas

We will start earnings in earnest tomorrow as banks like US Bancorp [USB Loading... () ]report, along with Intel [INTC Loading... () ]and Johnson & Johnson.[JNJ Loading... () ] Banks are oversold and cheap by historical standards, and while a few that report decent numbers will definitely bounce, it is unlikely to eliminate worries over more capital raising.

There's additional worries, as now many are concerned with deterioration in other parts of the banks' portfolios, like credit cards, auto loans and commercial real estate.

The reason these banks are continuing to see selling is that the Street is now taking down estimates for the second half of the year AND 2009.

The failure of IndyMac[IMB Loading... () ], as well as the continued willingness to sell into any rally in financials, put pressure on regional banks, many of which were down double digits today.

President Bush's lifting of the Executive Order banning offshore drilling, as well as the usual trend toward staying long energy stocks, lifted E&P and oil exploration stocks today.

The stocks moving today are the ones that make sense: National Oilwell[NOV Loading... () ] (makes components for oil rigs) and U.S. drillers like Transocean[RIG Loading... () ], Diamond Offshore[DO Loading... () ], and Noble[NBL Loading... () ]. Large oil service companies like Schlumberger [SLB Loading... () ]are also strong.

Here's two problems:

1) Fadel Gheit at Oppenheimer, as well as others, have pointed out that the cycle time for any discoveries is at least 3-5 years. In other words, in the best case scenario we will not see oil for at least 3 years.

2) Most stocks already trading at high multiples; for example E&P companies like EOG [EOG Loading... () ]are trading at 12.8 times forward earnings; Chesapeake [CHK Loading... () ]at 16 times forward earnings.

A company like Exxon[XOM Loading... () ]? Only 8 times forward earnings, in fact Exxon is down 10 percent this year, while the E&P and oil service stocks are killing. Why? Because energy stock traders only go to Exxon when oil drops, as a safe investment.