STOCKS FALL AFTER MONSTER GAIN
The Dow slid lower on Tuesday as investors paused to reassess the likely success of the government's latest plans to clean up bank balance sheets and revive the financial system, a day after initial euphoria over the plan drove huge gains.
Bank stocks , which posted their best day in at least 16 years on Monday, dragged Wall Street lower as investors booked profits amid questions whether the U.S. government's plan to spend up to $1 trillion to buy up toxic bank assets would work.
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.
OBAMA'S BALANCING ACT
President Barack Obama will hold a prime-time news conference on Tuesday to explain his economic strategy to a recession-weary public angry over executive bonuses and concerned about the government's direction.
Here are a few issues he will likely address:
TOXIC DEBT PLAN
The Obama administration hopes to persuade private investors to buy up to $1 trillion in soured bank assets that are blocking lending and exacerbating the recession, but questions remain about how the assets should be priced.
FINANCIAL REGULATORY REFORM
Obama aims to overhaul financial regulations to improve monitoring and managing financial risk and establish a clear process for unwinding troubled non-bank financial firms. Treasury Secretary Timothy Geithner is expected to announce details on Thursday.
Congress is moving to apply punitive taxes to employees of troubled insurer AIG who received $165 million in bonus pay after the company received billions in government bailout money. Obama has said he is angered by the bonuses, but questions remain about why his administration did not do more to prevent them from being paid out in the first place.
AUTO INDUSTRY RESCUE
A White House task force is trying to overhaul the troubled auto industry, but General Motors bondholders have resisted efforts to reduce the company's debt before a deadline at the end of the month.
Opinion polls show Obama's approval rating dropping as public anger mounts over the bank bailout. How concerned is he about his declining support?
Geithner is under fire for his handling of the economic crisis and the AIG bonuses. Obama has said several times that he has complete confidence in Geithner, who is still working with a skeleton staff.
SELLING THE BUDGET
Obama is facing resistance in Congress to his massive $3.55 trillion budget plan from Republicans and some Democrats who say it is too costly. Last weekend, he enlisted his network of grass-roots volunteers to build public support and pressure wavering lawmakers.
At an April 2 meeting in London, Obama and other leaders of the world's 20 largest economies will discuss how to coordinate their fiscal and monetary firepower to combat the worst global recession since the 1930s, as well as ways to regulate the financial industry.
Daniel Clifton, head of policy research at Strategas Research has a lot of interesting things to say on what lies ahead from the Obama administration, especially about Obama’s budget.
Check out his Fast Money interview at the end of the Word on the Street video.
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Trader disclosure: On Mar. 24th, 2009, 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), (C), (GS), (INTC), (MSFT), (NUE), (BTU); Seymour Owns (MT), (BAC), (EEM), (FXI), (TTM), (BX); Finerman's Firm Owns (MSFT), (PBR), (RIG); Finerman's Firm Is Short (BBT), (WFC); Finerman's Firm Owns (DNA) Call Spread; Finerman's Firm Owns (WFC) Preferred; Najarian Owns (C) Call Spread; Najarian Owns (AGN) Call Spread; Najarian Owns (AAPL) Call Spread; Najarian Owns (BX) Call Spread; Najarian Owns (GS) Call Spread; Najarian Owns (GD) Call Spread; Najarian Owns (MS) Call Spread; Najarian Owns (POT) Call Spread; Najarian Owns (PALM) Stock & (PALM) Calls; Najarian Owns (TGT) Call Spread; Najarian Owns (XHB) Call Spread; Najarian Owns (SWY) Calls; Najarian Owns (MSFT) ; Najarian Owns (FIG)mentioned or intended to be mentioned on CNBC’s Fast Money were owned by the Fast Money traders; Adami Owns (AGU), (C), (GS), (INTC), (MSFT), (NUE), (BTU); Seymour Owns (MT), (BAC), (EEM), (FXI), (TTM), (BX); Finerman's Firm Owns (MSFT), (PBR), (RIG); Finerman's Firm Is Short (BBT), (WFC); Finerman's Firm Owns (DNA) Call Spread; Finerman's Firm Owns (WFC) Preferred; Najarian Owns (C) Call Spread; Najarian Owns (AGN) Call Spread; Najarian Owns (AAPL) Call Spread; Najarian Owns (BX) Call Spread; Najarian Owns (GS) Call Spread; Najarian Owns (GD) Call Spread; Najarian Owns (MS) Call Spread; Najarian Owns (POT) Call Spread; Najarian Owns (PALM) Stock & (PALM) Calls; Najarian Owns (TGT) Call Spread; Najarian Owns (XHB) Call Spread; Najarian Owns (SWY) Calls; Najarian Owns (MSFT) ; Najarian Owns (FIG)
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