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Financials Shake Off Volcker Testimony

The Bank ETF closed higher on Tuesday, shrugging off the Volcker plan presented to lawmakers.

Under the proposals, banks would not be permitted to engage in certain high-risk investment activities – such as speculating on the price of oil.

Senator Christopher Dodd, the Democratic chairman of the committee, said he strongly supports the proposals.

However, Senator Richard Shelby, the panel's top Republican, tells CNBC “after today’s hearing I’m not sure we need the Volcker rule.”

Considering the developments, what’s the bank trade?

Financials seemed to be excessively pounded on the news and I think we see bank stocks climb on the back of Shelby’s comments, speculates Karen Finerman.

I agree that financials do better on the Shelby comments, echoes Gary Kaminsky. If bank regulation is dead I’d expect to see upside in Goldman and Morgan Stanley. But I’d probably play those names with a pairs trade. If I were to go long Goldman I’d be short something else.

I’d wait on Goldman, counsels Pete Najarian. I want to see Goldman above $160. I’d keep an eye on names you like, but I wouldn’t rush in.

I’m concerned about the volume of puts trading in the XLF , says Guy Adami. I think on options expirations we see the next leg lower.

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DOW UP 230 IN 2 DAYS…COMEBACK OR HEADFAKE

February continued to be a pretty good month for the bulls as upbeat earnings and housing data lifted the S&P 500 and Dow with industrials and materials leading the way.

Tailwinds were wide ranging; DR Horton reported its first profitable quarter since March of 2007 while Whirlpool said 2010 would be a year of full recovery for the company. And the CEO of UPS said the economy looks to be “gradually firming.”

What’s the trade?

I’m keeping an eye on GE , IBM and Cisco for their exposure to smart grid growth, says Pete Najarian.

I’d look at Exxon, says Guy Adami. I think it could go to $71. The risk reward makes sense to me for a trade.

If you want to play in the energy space I’d look at Suncor, counsels Gary Kaminsky.

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GLOBAL GROWTH NAMES BULLDOZE AHEAD

As we mentioned above, global growth names led the way higher on Tuesday partly due to strong earnings from Dow Chemical, which said results were driven by strong demand in China and India.

What’s the trade?

In the space, I’m watching Freeport , says Pete Najarian. But don’t rush in. If it can get above $75 then I’m bullish. If you rush into this trade now, I think you may be licking your wounds.

I’m concerned about the space overall, adds Gary Kaminsky because of the lack of M&A activity. When you see M&A the implied message is we feel good about our business and the economy. But M&A has been dismal and that bodes poorly for global growth. Take a look:

U.S. M&A Activity (Announced)

total Deals
Jan. '09 125.7B 747
Jan. '10 36.0B 724
Source: Dealogic
(and Jan '09 was a bad month)

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AFTER HOURS C.H. ROBINSON

In the after hours shares of transportation firm C.H. Robinson plunged 9% after the company posted lower-than-expected profits, weighed down by a weak freight market.

What’s the trade?

I think this is a signal the global economy is slowing and I’d short China, counsels Brian Kelly of Kanundrum.

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THE OBAMA TRADE: TOP EARNERS TO SEE TAXES RISE BY $1T OVER NEXT 10 YRS

Investors are chattering about the new budget proposed by President Obama which is said to increase taxes on top earners by nearly $1 trillion over the next decade.

Will taxing the wealthy lead to wide spread prosperity? Find out with CNBC’s Rick Santelli has to say. Watch the video now!

* You can find out conversation with Santelli at the end of the Word on the Street video.



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Trader disclosure: On February 2nd, 2010, 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), (BTU), (MSFT), (NUE); Najarian Owns (AAPL) Call Spread; Najarian Owns (AA) Calls; Najarian Owns (AKAM) Call Spread; Najarian Owns (CEPH) Call Spread; Najarian Owns (INTC) Calls; Najarian Owns (MET) Call Spread; Najarian Owns (MS), Is Short (MS) Calls; Najarian Owns (PFE); Najarian Owns (SPF) Calls; Najarian Owns (XLF) Calls; Finerman's Firm Is Short (IJR), (MDY), (SPY), (IWM), (UNG), (USO), (BKS); Finerman's Firm Is Short SPX Puts; Finerman Owns (AAPL); Finerman's Firm Owns (BAC) Preferred, (BAC) Leaps; Finerman Owns (BAC) Preferred, (BAC); Finerman's Firm And Finerman Own (CVS), (FLS), (GOOG); Finerman's Firm Owns (KFT)

For Brian Kelly
Kanundrum Capital Is Long U.S. Dollars vs. Short Swiss Franc
Kanundrum Capital Is Short (EWY)

GE Is The Parent Company Of CNBC

Other Relevant Disclosures:
Najarian Owned (CEPH) Call Spread Today


CNBC.com with wires

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