Strategy Session with the Fast Money Traders
The pullback makes sense to me, says Pete Najarian. We had a huge rally on Monday. And the Vix didn’t move all that much which was good.
I’m very bullish, Guy Adami concurs. And I still think the S&P goes to 900.
From a technical perspective we had a pretty good day, adds Tim Seymour. It could have been much worse.
It seems questions remain from the Geithner plan, muses Karen Finerman. For example, what’s the price being paid for the toxic assets and if it’s low, will it leave a big hole in the balance sheets of banks?
GOLDMAN TO PAYBACKK TARP?
Goldman Sachs hopes to pay back the $10 billion it took from the U.S. government's $700 billion Troubled Asset Relief Program within a month, The New York Times said on Tuesday, citing people involved in the process.
The urgency to repay the money follows last week's uproar over bonuses paid to executives at the insurer American International Group , and revelations that Goldman was the largest recipient of government money stemming from its role as an AIG counterparty, the newspaper said.
Goldman Sachs spokesman Ed Canaday declined to comment
That’s a lot of money to payback, muses Karen Finerman. Goldman has to get it from someplace. Might they be considering a secondary, she wonders.
In the financials I’m keeping an eye on Jefferies and Greenhill , says Guy Adami. And I’m also watching Lazardand Raymond James . They pulled back on Tuesday and I think it’s time to dip a toe.
OIL UP SLIGHTLY
Oil rose slightly on Tuesday amid lingering optimism that the government's plan to unburden banks of soured assets could help fuel the global economy.
However, the gains were limited, as dealers await a round of U.S. oil inventory data due out on Wednesday. Analysts expected to see an increase in crude stockpiles.
In commodities I think the play is nat gas, says Tim Seymour. Devon , Apache and EOG Resources are great names to own if you think nat gas is going higher.
Guy Adami and Karen Finerman both concur.
GOLD CRUSH CONTINUES
For the third day in a row gold closed lower; on Tuesday it slipped as the dollar strengthened.
Gold is often viewed as an alternative to holding the dollar, and often falls when the dollar rises because it makes metals priced in the U.S. currency more expensive for holders of other currencies.
However the move lower may hit resistance according to some analysts who say inflationary concerns should underpin the precious metal’s safe-haven appeal.
I think this is an opportunity to buy gold, says Pete Najarian. If you want to have gold in your portfolio this could be your opportunity to get in.
I’d wait for gold to hit $880 and see how it performs before I got long gold, counters Guy Adami.
Personally, I’d sell gold and buy platinum, adds Tim Seymour.
FED TO BUY TREASURIES TOMORROW
The U.S. Federal Reserve will start buying Treasury bonds on Wednesday, the New York Fed said on Tuesday, beginning the most decisive escalation of its efforts to help end a deepening recession.
The Fed surprised markets at its policy-setting meeting last week when it announced it would buy up to $300 billion of Treasury securities over the next six months. It will be the first time the Fed has bought longer-dated U.S. government debt since the 1960s.
I’m short Treasuries by being long the TBT , reveals Karen Finerman. I think these bonds will trade much lower.
I think the play is Home Depot because the Fed’s move will ultimately lower mortgage rates, adds Guy Adami. (Mortgage rates are loosely tied to 30-year notes.)
DISNEY LEADS CONSUMER NAMES LOWER
Disney led consumer names lower on Tuesday after Goldman Sachs downgraded the media company to neutral from buy and removed it from its Americas Buy List, saying that the stock was trading at a 25 percent premium to its peers.
In the space, I think it’s interesting to note that bookings on Carnival Cruise Lines are higher, says Pete Najarian. But that’s because the cruise line dropped its prices. It seems to me consumers will spend but they want bargains.