STOCKS HALT 5-DAY LOSING STREAK
The Dow rallied on Wednesday, ending a five-day losing streak, on news that China will increase stimulus spending. The belief is that China will focus on infrastructure and manufacturing; and it's that belief which drove oil and metals prices higher, helping to underpin the market after it hit a 12-year low a day earlier.
"All of the economies are interlinked, so if you can get the first-biggest economy going, the U.S., and the third-biggest economy going, China, then that alone will start bank lending and an increase in the securitization," says Hugh Johnson, chief investment officer of Johnson Illington Advisors
The day's rally is a modest one, however, compared with declines of more than 21 percent since the beginning of the year for the Dow and S&P. Analysts have said that without stabilization in the financial and housing sectors -- the heart of the economic crisis -- the economy will not be able to improve.
Strategy Session with the Fast Money Traders
I’m not all that crazy about the day's market action, says Guy Adami. Technically we have to close above 741 in the S&P for me to get interested.
I think there’s more room to go in both oil and industrial metals, speculates Tim Seymour.
China hasn’t changed my basic strategy which is trade it and wear a Hazmat suit, says Jeff Macke. I don’t see a big reason to get excited.
There is a great deal of fear and misinformation in this market, says Karen Finerman. I think if you dig down you can find opportunities. But that doesn’t mean those stocks can’t go lower.
And in financials I’m long preferred shares of Bank of America and Walls Fargo and short their common stock. The relationship between the common and preferred is totally out of whack and it can’t stay this way.
If you're looking for a stock play, I’d keep an eye on ACM, adds Adami. Valuations-wise they look attractive.
GOLD’S TEXTBOOK DOUBLE TOP
Goldfell on Wednesday, flirting with three-week lows as a bounce in equities lured investors away from the safe haven and back into riskier assets.
If sentiment gets more bullish in the stock market it’s probably inherently negative for gold, muses Guy Adami. If you’re short I’d take back those shorts. Next, I think gold tests $885.
In this environment I’d probably buy the miners such as Barrick and Harmony , adds Tim Seymour.
MARK-TO-MARKET HEARING AHEAD
According to Reuters, a U.S. House Financial Services subcommittee is expected to hold a hearing on mark- to-market accounting rules as soon as March 12.
If that meeting results in the government relaxing mark-to-market, Jon Najarian thinks the move could single-handedly move markets.
I think there should be a mark-to-market hiatus, muses Karen Finerman, and then phase it back in. In the big picture mark-to-market is a good thing but we’re in extraordinary times and in the short term getting rid of it would help banks recapitalize.
Right now to get rid of mark-to-market is a concession that there is no market place for those toxic assets, bristles Jeff Macke. But to keep it means banks suffer. It's a catch-22.
GE FALLS TO 18-YEAR LOW
General Electric shares fell as much as 16 percent on Wednesday, touching its lowest point since 1991, as anxiety over a possible downgrade for GE and its finance unit was compounded by an investor lawsuit over a recent dividend cut.
I’d be careful of GE, counsels Karen Finerman. One part of their balance sheet is a gigantic question mark.
The financial crisis around the world seems to be worse than many of us think, says Guy Adami. And GE seems to have a lot of exposure all over the world.
This is the classic case of someone saying trust me, adds Jeff Macke. The more they say it – the less you do.
HOUSING PLAN LIFTS HOMEBUILDERS, RETAILERS
In a further effort to shore up the economy, the Obama administration launched a $75 billion foreclosure relief plan that enables struggling homeowners to modify loans even if they are "under water." Meanwhile, new data showed one in five homeowners with mortgages owe more than their house is worth.
I don’t think the plan will work, says Jeff Macke. The problem comes down to employment.
And we could be looking at one of the worst jobs numbers ever, adds Tim Seymour. If you don’t have a job you can’t pay your mortgage.
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Trader disclosure: On Mar. 4th, 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 (MS), (TM), (AAPL), (MOS); Macke Owns (GE) Puts; Seymour Owns (AAPL), (BX), (EEM), (FCX), (MON), (RIG), (BAC), (FXI); Adami Owns (AGU), (BTU), (C), (GS), (INTC), (MSFT), (NUE); Finerman's Firm Owns (DNA) & (DNA) Calls; Finerman's Firm Owns (AEO), (MSFT), (PBR), (RIG); Finerman's Firm Owns (BAC) Preferred, (WFC) Preferred; Finerman's Firm Is Short (BAC), (BBT), (VNO), (IYR), (IJR), (IWM), (MDY), (SPY), (USO)
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