STOCKS FALL ON FEAR FED OUT OF BULLETS
The Dow fell on Wednesday as investors continued to digest whether the Fed had any more ammunition left after its bold move on Tuesday to slash borrowing costs to a record low, even zero, while it pledged to use "all available tools" to jumpstart the U.S. economy.
"I think there is a worry about the huge amounts of debt and liquidity that is being placed in the system and that ultimately inflation will come up, "says Robert Francello, head of equity trading for Apex Capital hedge fund.
Meanwhile, the dollar tumbled on Wednesday, hitting its lowest in more than 13 years versus the yen and also falling against the euro.
Strategy Session with the Fast Money Traders
Ben’s gone a little nuts, exclaims Jeff Macke. He’s just going to print money and spend it.
The knee jerk reaction to the dollar has been a flight into gold , says Guy Adami. But I’m not sold that the dollar is going lower. Europe is way behind us in the financial crisis.
Europe has got to cut, echoes Karen Finerman.
I’ve got my eye on the VIX , adds Pete Najarian. It’s moving significantly lower and that signals that panic is not in the market. Say what you want about Bernanke's plan, the market is liking it.
The fundamentals aren’t going to change, bristles Macke. But the Fed is going to throw a bunch of money at them.
And post Fed the credit markets appear stronger, muses Finerman. But I still think there are a lot of bad things to come.
WHAT'S WRONG WITH OIL?
Exxon and Chevron were the top drags on the Dow, after oil prices fell briefly below $40 a barrel for the first time since July 2004. U.S. crude oil futures declined despite a decision by OPEC to make its deepest output cut ever.
Oil is in a very steep contango and it’s difficult for it to go up, explains Guy Adami.
LOSING FEELS GOOD FOR MORGAN STANLEY, GOLDMAN
Financial stocks were unable to sustain their gains despite an analyst note that said poor results from Morgan Stanley were not likely to be repeated. The call helped lift shares of the investment bank reversing an earlier decline.
Morgan's debt was trading higher and I think that’s what led the equity higher, explains Karen Finerman.
I see more upside to Morgan than Goldman , says Pete Najarian, but I wouldn’t chase either.
Meredith Whitney took down her estimates big time on Goldman and the stock still closed higher, adds Guy Adami. That could be a “tell.”
I still maintain that Morgan and Goldman collectively don’t know what’s on their balance sheets, bristles Jeff Macke.
APPLE LOSES 6% ON JOBS CANCELLATION
Apple weighed down the Nasdaq after the company said that Chief Executive Steve Jobs would not be giving the keynote address at the Macworld trade show, renewing concerns about his health. Subsequently, the stock was downgraded by Oppenheimer.
Until investors see Steve Jobs out there and healthy the stock will remain under pressure, speculates Karen Finerman. I’m surprised that Apple did something like this.
Ultimately Apple makes consumer electronic devices, reminds Jeff Macke. I’d run away from this stock.
They’ve had three analyst downgrades, adds Pete Najarian. If Mac sales are weak, that’s an issue.
AFTER HOURS ACTION: NKE
Nike said on Wednesday that quarterly net profit rose 9 percent as higher-priced products and international growth offset lower revenue in the U.S. and at the non-Nike brands group.
Shares rose nearly 3 percent in after-hours trade.
I don’t expect more big things from them, says Jeff Macke.
I find valuations interesting, counters Guy Adami. But the dip.
BATTLE THE BEAR: BIOTECH BUSTS OUT
Looking for further evidence that the Health Care sector is the best way to battle the bear? The IShares NASDAQ Biotechnology ETF has shot up 5% in the past five days, despite little change in the S&P 500.
The trade is working because there have been a lot of companies with good data, explains Karen Finerman. And I expect to see more takeovers.
Keep an eye on Teva, adds Pete Najarian. The big names are getting into generics. And watch Novartis .
My favorite stocks in the space are Celgene and Gilead , adds Guy Adami.
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Trader disclosure: On Dec. 17th, 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 (MCD), (MSFT); Adami Owns (AGU), (BTU), (C), (GS), (INTC), (MSFT), (NUE); Najarian Owns (ENER) Call Spread; Najarian Owns (UYG) And Is Short (UYG) Calls; Finerman's Firm Owns (MSFT), (IBB); Finerman's Firm Owns (OIH) Puts; Finerman's Firm Is Short (IYR), (IJR), (MDY), (SPY), (IWM), (VNO), (FCE.A), (USO)
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