DOW DROP PUSHES WEEKLY LOSS TO 5%
Another harrowing week on Wall Street has drawn to a close as world leaders head to Washington to address the worst financial crisis in 80 years.
The Dow ended in negative territory on Friday after an attempt at a rally in the last hour of trading fell apart, leaving the market unable to build on Thursday's dramatic rebound.
A record drop in retail sales last month heightened fears that a reluctance to spend will push the economy into an even deeper downturn than currently expected.
This could have been a key day in the S&P, says Tim Seymour but the triple bottom didn’t hold. Technically it looks to me like the market wants to go higher. Also I think hedge fund redemeptions are over.
We will take out the bottom in the S&P, counters Jeff Macke.
WHALE WATCHING: WARREN BUFFETT
Warren Buffett's Berkshire Hathaway sharply increased its stake in ConocoPhillips this spring and summer, accumulating a total of 84 million shares as of the end of the third quarter on September 30, according to Berkshire's just-released quarterly portfolio filing with the SEC.
That’s a fairly dramatic increase says Karen Finerman. I also think this stock is attractive.
I love this stock, adds Tim Seymour. I too have a lot of interest in it.
It's Buffet’s new position in Eaton that looks interesting to me, adds Guy Adami. But I wouldn’t trade alongside at current valuations.
WHALE WATCHING: GEORGE SOROS
Soros Fund Management upped its stake in Wal-Mart to 3.8 million from 612,900 shares.
It seems like an insightful move to me but then I own Wal-Mart too, says Jeff Macke.
AMERICANS SAY NO TO SHOPPING
Retail sales dropped 2.8 percent in October as consumers cut back amid recession fears, a government report showed. Consumer spending is a key driver for U.S. economic growth and corporate profits.
Adding to the grim mood, J.C. Penney and Abercrombie & Fitch gave disappointing outlooks and said shoppers look like they will be reining in spending this holiday season.
Abercrombie is getting squished, says Karen Finerman. Their clothing is fairly expensive and people just don’t have the money. If you’re looking for a trade you might want to get long rival American Eagle and short Abercrombie.
And I’m short Family Dollar , she adds. Why this company trades at a premium to Wal-Mart is a mystery.
People have been shorting Abercrombie the whole way up and it’s paid off, exclaims Jeff Macke. One day the retailers will rally hard, but it’s not now. And if you want a short trade I’d short Sears, he adds.
If you want to play retail I’d keep an eye on Dick’s , says Guy Adami. I like it ahead of earnings.
I’m short the RTH against some other exposure I have to companies that are big exporters to the US, says Tim Seymour. Or you can look at the cell phone players such as Vimpel-Comm as consumer plays in emerging markets.
HARTFORD BUCKS HORRIBLE FINANCIAL TAPE
Hartford Financial Services said Friday it applied to switch its business structure to a savings and loan holding company, which would make the firm eligible for funding under the government's $700 billion bank rescue package.
Hartford also said it agreed to buy Federal Trust Bank for about $10 million and to recapitalize the bank with an undisclosed sum.
It’s hard to get excited about the insurance industry right now, says Tim Seymour.
Also making headlines in the financial sector... according to Bloomberg ”regulators said at least one clearinghouse for the $33 trillion credit-default swap market will be running by year-end after they agreed on a plan to regulate the entities. “
“CME Group, Intercontinental Exchange Inc. , and NYSE Euronext have each submitted proposals to run a clearinghouse, a central body that would back trades in the unregulated market.”
On a related note the traders look atGoldman Sachs and consider why shares are dropping so badly.
I’m bullish Goldman long term, says Guy Adami. They’re a firm of smart guys, And I wouldn’t be surprised if they try to take the firm private.
No way, counters Karen Finerman. There’s no way they could pull that off. I wouldn’t buy the name in the hopes they go private.
INVSETING IN THIS WACKY WORLD
If it feels like the bailout isn’t working you might be right. For insights we turn to celebrated strategist Ed Yardeni.
Yardeni is quite skeptical on the TARP / bailout which he says, “has no credibility whatsoever.”
”I hope Congress does not give the administration another $350 billion. They wasted the first traunch. They gave it to a bunch of banks that didn’t really need it. That’s not the solution," he says.
Then what is?
According to Yardeni, the government should focus on bringing mortgage rates down. “Paulson and Bernanke always say the problem is housing but no one is doing anything other than helping people on the brink of foreclosure.”
Yardeni thinks the solution is pretty simple. "All they have to do is lower the mortgage rate to 4%." He believes just one dramatic move in mortage rates will stimulate the housing market and reverse this entire mess.
Intriged? You can find our entire conversation with Ed Yardeni at the end of the Word on the Street video.
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Trader disclosure: On Nov. 14, 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); Macke Is Short (TM); Macke Owns (MSFT), (UUP), (MGM), (WMT), (MCD); Finerman's Firm Owns (MSFT); Finerman's Firm Is Short (IYR), (IJR), (MDY), (SPY), (USO), (BBT), (GNK), (COF); Seymour Owns (AAPL), (BAC), (EEM), (F), (FXI)
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