Halftime Report: Bank Trade Called Into Question?
Traders are taking a long hard look at the financials after President Obama made rather stern comments following a meeting with bank executives intended to bolster lending, especially to small businesses.
Obama told reporters the meeting had been candid and said "we expect some results" from the banks. He also pressed the firms to get behind legislation to overhaul financial regulation.
US Bancorp CEO Richard Davis, who attended the summit, told CNBC the conversation involved a few key themes including 1) credit availability 2) housing loan modifications, 3) executive compensation.
Meanwhile, earlier in the day Citigroup found itself in the spotlight as it laid out a plan to repay the money it owes the U.S. government, including issuing $17 billion of stock immediately, as the bank looks to end the restrictions that came with the TARP money.
What’s the bank trade now?
The banking index is underperforming the S&P, explains Todd Gordon of Forex.com. The S&P has made 3 separate pushes off the March lows. And they're all approximately equal, about 292 points. The banks have only done about 2/3 of that push off the March lows.
I’m afraid that the government is asking them to take too much risk to shore up their balance sheets. Gordon adds. I’m worried about the banks.
Banks are now looking at a liquidity trap, muses Joe Terranova. The Federal Reserve has created massive amounts of liquidity and its on the banks balance sheets. Now the question is to motivate the banks not so much to focus on their own balance sheets but to get the money out and to lend.
USB CEO Richard Davis told us the White House is talking about the need for lending, but it needs to be responsible lending, adds Mike Khouw of Cantor Fitzgerald. We can’t roll back to where we were right before the crisis. There has to be a tighter set of standards.
It seems to me the meeting was all about photo ops, bristles Jon Najarian. I didn’t hear anything new.
M&A MONDAY: EXXON BUYS XTO ENERGY FOR $41B
On Monday, Exxon Mobil announced plans to buy XTO Energy in an all-stock deal valued at about $30 billion, in a move that thrusts the U.S. energy giant to the forefront of North America's fast-growing natural gas industry.
With the buy, Exxon, the largest publicly traded energy company, gains a major foothold in the newest energy discoveries as it bets on natural gas expanding its share of the world's largest energy market.
"This deal provides Exxon with some domestic momentum it didn't have," John Olson, a fund manager at Houston Energy Partners, said. "They are getting a huge acreage spread, with lots of shale gas plays."
The bid, announced on Monday, spurred expectation of a wave of consolidation in the energy sector as cash-rich companies such as Exxon move to snap up smaller players with attractive assets.
What’s the trade?
I’m a buyer of energy stocks, says Joe Terranova. I think this deal sets the tone for M&A into 2010.
I’d fade Devon and Chesapeake , counters Jon Najarian. But I do like long PXP.
CALL THE CLOSE
Joe Terranova: Never sell a quite market.
Mike Khouw: I’d stay long.
Jon Najarian: I’m staying long.
Todd Gordon: The path of least resistance is higher.
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Trader disclosure: On December 14th, 2009, the following stocks and commodities mentioned or intended to be mentioned on CNBC’s Fast Money were owned by the Fast Money traders; Pete Najarian Owns (AAPL) Calls; Pete Najarian Owns (DELL) Calls; Pete Najarian Owns (RIMM) Call Time Spread; Pete Najarian Owns (UUP) Call Spread; Pete Najarian Owns (CLF), Is Short (CLF) Calls
Terranova Works For (VRTS)
Terranova Is Chief Market Strategist Of Virtus Investment Partners, Ltd.
Virtus Investment Partners Owns More Than 1% Of (CLB)
Virtus Investment Partners Owns More Than 1% Of (DLR)
Virtus Investment Partners Owns More Than 1% Of (EXR)
Virtus Investment Partners Owns More Than 1% Of (IGE)
Virtus Investment Partners Owns More Than 1% Of (XLY)
Virtus Investment Partners Owns More Than 1% Of (DBV)
Virtus Investment Partners Owns More Than 1% Of (UA)
For Jon Najarian
Jon Najarian Owns (PXP)
Jon Najarian Is Short (CHK) Calls
Jon Najarian Is Short (DVN) Calls
For Pip Coburn
Coburn Manages And Invests In Coburn Ventures Buckeye Delta Fund
Coburn Ventures Buckeye Delta Fund Owns (GOOG)
Coburn Ventures Buckeye Delta Fund Owns (AAPL)
Coburn Ventures Buckeye Delta Fund Owns (RIMM)
Coburn Ventures Buckeye Delta Fund Is Short (NOK)
Coburn Ventures Buckeye Delta Fund Is Short (PALM)
Coburn Ventures Buckeye Delta Fund Is Short (LEAP)
Coburn Ventures Buckeye Delta Fund Is Short (GRMN)
Coburn Ventures Buckeye Delta Fund Is Short (SNE)
Coburn Ventures Buckeye Delta Fund Is Short (CTCT)
Coburn Ventures Buckeye Delta Fund Owns (SY)
Coburn Ventures Buckeye Delta Fund Owns (STRA)
Coburn Ventures Buckeye Delta Fund Owns (CRM)
Coburn Ventures Buckeye Delta Fund Is Short (IPG)
Coburn Ventures Buckeye Delta Fund Is Short (NYT)
Coburn Ventures Buckeye Delta Fund Owns Accenture
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