Fall Forecast: Financials
Hurricane season is far from over but already '08 will be remembered as the year of terrible storms. Of course we're talking about the financial storms that touched down in the center of Wall Street.
Damage ranged from surprising to cataclysmic. Merrill Lynch and Citigroup have taken at least $45 billion and $40 billion in write-downs respectively. Freddie and Fannie shares are down 80% since May. And, as you well know, Bear Stearns had to be taken over by JP Morgan to avoid bankruptcy.
But, like the song says, there’s got to be a morning after. Considering the Financial SPDR has dropped 30% in 2008 some analysts think we may be near the bottom. Is there a ray of light breaking through the clouds?
"I think we’ve already seen the bottom in financials,” says Mendon Capital Advisors president and chief investment officer Anton Schutz on Fast Money. “I think it was in July when there was the fear of failure in Freddie and Fannie and IndyMac was seized. There was blood in the Street and we certainly saw plenty of panicking. I don't think we'll retest those lows."
"I expect there will still be some downside still, but there are great opportunities," he adds. Since Schutz thinks the bottom is already in it should come as no surprise that he recommends getting long. Following are his picks (some of which he provided to our producers ahead of the broadcast).
REGIONAL BANKS: TFS Financial (TFSL), American Capital Agency (AGNC) Hudson City Bancorp (HCBK), People's United Financial (PBCT)
MORTGAGE REITs: Annaly Capital Management (NLY), American Capital Agency Corp. (AGNC)
ASSET MANAGERS: Federated Investors (FII), Janus Capital Group (JNS)
MONEY CENTER BANKS: JPMorgan (JPM)
What do you think? Answer the Charles Schwab Question of the Day!
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Trader disclosure: On Aug 26, 2008, the following stocks and commodities mentioned or intended to be mentioned on CNBC’s Fast Money were owned by the Fast Money traders; Adami Owns (AGU), (BTU), (C), (GS), (INTC), (MSFT), (NUE); Tatro Owns (C), (GS); Quint Tatro Is The Principal Of Tatro Capital; Tatro Capital Owns (QQQQ), (SSO), (SPY), (FXI), (XLF), (IHI); Jon Najarian Owns (C), (EXM), (JPM), (UNG); Jon Najarian Owns (AAPL) Calls, (MRVL) Calls, (RMBS) Calls, (EWH) Calls; Jon Najarian Owns (PTEN) Call Spread; Terranova Owns (AAPL), (RIMM), (EOG), (VLO), (YHOO), (NOV), (KOL), (GS), (POT), (SA), (FCX); Terranova Owns (AIG) Puts
Terranova Is Chief Alternatives Strategist Of Phoenix Investment Partners, Ltd.; Phoenix Investment Partners Owns More Than 1% Of (ABD), (ARE), (BRE), (CNTY), (CLB), (OFC), (DLR), (ESS), (EXR), (FL), (IAT), (IGE), (LNET), (MAC), (OIIM), (PSPT), (DBC), (DBV), (SLB), (SKT), (BLV)
Terranova Is Co-Portfolio Manager Of The Phoenix Diversifier PHOLIO; Phoenix Diversifier PHOLIO Owns (IGE), (DBC), (DBV)
Schutz Invests In The Funds He Manages, Burnham Financial Services Fund And Burnham Financial Industries Fund; Schutz's Funds Own Approx. 4% Of (AGNC); Schutz's Funds Are Long (TFSL), (PBCT), (NLY), (AGNC), (FII), (JNS), (JPM), (LEH), (C)