The End Of Easy Money
Stocks ended higher on Friday, as investors took a surprise hike in the Fed's discount rate as a signal the economy is getting stronger.
However it didn’t entirely assuage fears that the eventual withdrawal of easy money will hurt Wall Street.
What must you know before you make your next trade?
Instant Insights with the Fast Money traders
It seems to me that Bernnake announced this major policy shift on an expiration Friday, which typically is a high-volume day for stocks, muses OptionMonster Jon Najarian. Was Bernanke counting on that volume to support the market in the wake of any fear? I think he was.
I’m very bullish, says Joe Terranova. The Fed move does not touch private borrowing costs, they’re staying the same. The Fed moves says to me the financial system is flush with liquidity and the capital markets are functioning. I think the trade is the reflation trade.
I doubled down in my positions in Citi and JPMorgan , reveals Brian Kelly. I think the Fed move is a signal the economy is getting better. And I think the Fed is telegraphing that they’re going to raise interest on reserves. At Citi and JPMorgan reserves are almost 12% of their assets.
The action in the market was very encouraging, says Guy Adami. However I do think it’s a signal that rates are going up. If you’re looking for trades I’d look at Jefferies and Raymond James.
TOPPING THE TAPE: OIL
Oil prices rose toward $80 a barrel on Friday, as refinery strikes in France and tensions about Iran's nuclear program outweighed the headwind of a stronger dollar.
What must you know?
I think gains in the oil market are more about geo-political tensions than anything else, explains Joe Terranova. I would not get short.
I agree that there’s something going on, adds Guy Adami. We’re seeing bad news and good price action in this space.
Oil over $80 starts to scare me, says Brian Kelly. At that level it’s a drag on the economy. It actually makes me not want to get into stocks.
I agree that the impact of higher oil on consumers will become a problem – it will probably manifest itself in the spring, adds Terranova. Oil is moving too rapidly right now.
OUTSIDE THE STOCKS: GOLD
Gold prices rose on Friday as investors bought the metal to hedge against currency volatility and debt default risks in Europe.
On the Halftime Report, Euro Capital president Peter Schiff made the case that the performance in gold is a signal that inflation is a real concern.
“Gold doesn't only look good in terms of US dollars,” he said. “Look at the chart of gold in terms of euro., yen or pound. The fact that gold is doing so well against every currency out there on the planet shows that inflation is a real concern. That’s why people are buying gold.”
And he went on to say, “I think gold is looking for an explosive move to the upside.”
Should you follow Schiff into gold?
Gold topped out around $1200, reminds Guy Adami. But it also bounced around $1065. I think we’re in no-man’s land. If I were long gold I’d take profits.
But March is historically one of the more volatile months, reminds JoeTerranova. If you’re long gold, I’d stick with it.
If you really believe that gold will become a currency at some point in time, then you should have 95% of your portfolio in gold and 5% in canned goods, chuckles Brian Kelly.
CHART CENTER...HOW FAST AND HOW FAR WILL RATES GO?
When the rules of investing are changing minute by minute - sometimes the best tool can be charts.
How fast and far will rates go?
For technical analysis we turned to Todd Gordon of Forex.com. Find out why he says inflation expecations are way overblown.
Watch the video now.
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Trader disclosure: On February 19, 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), (MSFT), (NUE), (BTU); Kelly Owns (AMZN) Calls; Kelly Owns (JPM); Kelly Owns (FXE) Puts; Kelly Owns (ELX) Call; Kelly Owns (QLGC); Jon Najarian Owns (AAPL), Is Short (AAPL) Calls; Jon Najarian Owns (AMZN), Is Short (AMZN) Calls; Jon Najarian Owns (BAC); Jon Najarian Owns (BBY), Is Short (BBY) Calls; Jon Najarian Owns (C); Jon Najarian Owns (CAT), Is Short (CAT) Calls; Jon Najarian Owns (FCX), Is Short (FCX) Calls; Jon Najarian Owns (GS), Is Short (GS) Calls; Jon Najarian Owns (HD), Is Short (HD) Calls; Jon Najarian Owns (HPQ), Is Short (HPQ) Calls; Jon Najarian Owns (MS); Jon Najarian Owns (PCLN), Is Short (PCLN) Calls; Jon Najarian Owns (RSH); Jon Najarian Owns (SBUX), Is Short (SBUX) Calls; Jon Najarian Owns (WMT), Is Short (WMT) Calls; Schiff Owns (POT); Schiff Owns Gold; Schiff Is Short U.S. Dollar; Kaminsky Owns (EPV); Terranova Owns (JPM), (RIMM), (IBM), (QCOM), (GOOG), (EMC), (AAPL), (DELL), (MSFT)’ Terranova Owns Crude Oil Futures (March 2010, April 2010, December 2011, December 2012)
For Joe Terranova
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 (XLP)
Virtus Investment Partners Owns More Than 1% Of (XLB)
Virtus Investment Partners Owns More Than 1% Of (XLI)
Virtus Investment Partners Owns More Than 1% Of (SKT)
For Brian Kelly
Kanundrum Capital Is Short Euro
Kanundrum Capital Is Short Yen
Kanundrum Capital Is Short Copper
Kanundrum Capital Owns (GDXJ)
Kanundrum Capital Owns 9MOS)
Kanundrum Capital Owns (POT)
Kanundrum Capital Owns (IPI)
Kanundrum Capital Owns (GLD)
Kanundrum Capital Owns (C)
Kanundrum Capital Is Short (FCX)
For Robert Samuels
Oppenheimer & Co. Is A Market Maker In (FINL)
Oppenheimer & Co. Expects To Receive/Seek Investment Banking Compensation Frmo (UA) In Next 3 Months
Other Relevant Disclosure
Jon Najarian Owned (GOOG) On 1/21/10
Terranova Owned March British Pound Futures On 1/29/10
Kanundrum Capital Owned (GOOG) Calls On 1/13/10
Kelly Owned (GOOG) On 1/13/10
CNBC.com with wires