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Halftime: Forget Gold, Another Commodity Is Better Safe Haven

Traders are reeling from another wild ride in the markets with many investors seeking shelter from the financial storm brewing in Europe.

How should you be positioned now?

In a rare TV appearance Mark Fisher, the founder and CEO of MBF Clearing joined the desk to help make sense out of the confusion.

Instant Insights with Mark Fisher and the Fast Money traders

I think investors have it backwards, says Fisher. They’re running into gold when the ultimate currency long term should be energy and oil . In the end I expect investors will realize what China wants is what they should want. And as long as China keeps buying energy assets so should investors.

In other words, investors are going into gold as a safe haven trade, and it’s not, adds veteran trader Gary Kaminksy. Gold is now a speculative trade. Looking at the market broadly, I believe fear will increase sending the Vix higher. If you’re long equities I’d also be long the Vix .

To Mark’s Fisher's point, gold is a valuable commodity but it’s not the only valuable commodity, says Anthony Scaramucci of Skybridge. Although gold has a 5,000 year history of being a reserve currency, oil is more useful to society.

But gold remains a valuable diversification tool, counters Fast Money trader Joe Terranova. It doesn’t surprise me to see a pullback right now but I would not get short.

As for energy, I agree that it’s a good idea to have exposure to energy in the portfolio long term, he adds. I’d consider long positions in ExxonMobil, Suncor or Occidental. But this is a longer term trade. In the short turn oil appears to be challenged.

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STOCKS AND BONDS

Mark Fisher is closely watching the correlation between the S&P 500 and move in 10-year bonds.

The stock market and bond market tend to be inversely correlated. In other words, as equities decline bonds are typically go up, he explains.

But when investors see bond prices and stocks move together (equities go down and bond prices go down - or yields increase) take it as a warning sign, says Fisher.

If that happens I’d take it as a signal that people will get out of both equities and bonds and perhaps get into oil

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CIRCUIT BREAKER RULES AND ITS EFFECTS

On Monday the SEC released new details concerning single stock circuit breakers.

As expected, any stock currently in the S&P 500 that either falls or rises 10 percent or more in a 5 minute period would be halted for five minutes.

Will this solve the problems facing the market?

I think we need to try it and see how the market responds, says Mark Fisher. And if we need stronger medicine then consider something stronger.

Perhaps, if a major market index is down 3%-4% it should it should be shut down for an hour and if it’s down 7-8% shut it down for the day and let people catch their breath, Fisher adds.

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FINANCIAL REGULATION TO KILL BANK SECTOR?

The financials appeared to be fighting back on Wednesday with shares of Citigroup trading higher into the afternoon.

However, the Fast Money traders are closely watching developments in Washington with reports suggesting the Senate is entering the home stretch in its efforts to pass a massive financial regulation bill.

What’s the trade?

I’d take a wait and see approach in this space, says Gary Kaminksy, especially since problems in Europe won’t go away in the next week or the next month.

I’m a buyer of Morgan Stanley and Goldman Sachs after financial regulation is passed, adds Joe Terranova.

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CALL THE CLOSE:

Gary Kaminsky: I’d stay small.
Anthony Scaramucci: I expect the market to bounce after regulatory reform is resolved.
Mark Fisher: I’d get long a boat load of energy.
Joe Terranova: I think the market continues to take-off risk.


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Trader disclosure: On May 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; dami Owns (AGU), (C), (GS), (ITNC), (MSFT), (NUE), (BTU); lly Owns (WYNN) Puts; Kelly Owns (EXPE) Puts; Kelly Owns (EMN) Puts; Kelly Owns (CAT) Puts; nerman's Firm Is Short (IJR), (MDY), (SPY), (IWM); Finerman's Firm Is Long S&P Puts; Finerman Owns (AAPL); Finerman's Firm Owns (BAC), (BAC) Calls’ Finerman Owns (BAC), (BAC) Preferred; Finerman Owns (GS) Calls; Finerman's Firm And Finerman Own (HPQ)’ Finerman's Firm Owns (JPM), (JPM) Calls; Finerman Owns (JPM); Finerman's Firm Owns (PTV); Finerman's Firm Owns (PM); jarian Owns (AMD) Calls; Najarian Owns (ADSK) June Calls, Is Short (ADSK) May Calls; Najarian Owns (C) Calls; Najarian Owns (HPQ), Is Short (HPQ) Calls; Najarian Owns (JPM) Put Spread; Najarian Owns (MRVL), Is Short (MRVL) Calls; Najarian Owns (MS), Is Short (MS) Calls; Najarian Owns (V) Call Spread; Najarian Owns (VRSN) Call SpreadTerranova owns (PFE), (GLD)

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 (AMKR)
Virtus Investment Partners Owns More Than 1% Of (IGE)
Virtus Investment Partners Owns More Than 1% Of (DBV)
Virtus Investment Partners Owns More Than 1% Of (XLB)
Virtus Investment Partners Owns More Than 1% Of (XLV)
Virtus Investment Partners Owns More Than 1% Of (XLP)
Virtus Investment Partners Owns More Than 1% Of (XLY)
Virtus Investment Partners Owns More Than 1% Of (XLI)
Virtus Investment Partners Owns More Than 1% Of (XLU)
Virtus Investment Partners Owns More Than 1% Of (DRYS)

For Mike Khouw
Cantor Fitzgerald is a Market Maker in (ADSK)
Cantor Fitzgerald is a Market Maker in (AIG)
Cantor Fitzgerald is a Market Maker in (AMAT)
Cantor Fitzgerald is a Market Maker in (BAC)
Cantor Fitzgerald is a Market Maker in (C)
Cantor Fitzgerald is a Market Maker in (CSIQ)
Cantor Fitzgerald is a Market Maker in (FSLR)
Cantor Fitzgerald is a Market Maker in (GS)
Cantor Fitzgerald is a Market Maker in (JPM)
Cantor Fitzgerald is a Market Maker in (LVS)
Cantor Fitzgerald is a Market Maker in (MGM)
Cantor Fitzgerald is a Market Maker in (MRVL)
Cantor Fitzgerald is a Market Maker in (MS)
Cantor Fitzgerald is a Market Maker in (SPWRA)
Cantor Fitzgerald is a Market Maker in (V)
Cantor Fitzgerald is a Market Maker in (VALE)
Cantor Fitzgerald is a Market Maker in (WYNN)
Cantor Fitzgerald is a Market Maker in (QQQQ)
Cantor Fitzgerald is a Market Maker in (SPY)

For Brian Kelly
Kanundrum Capital Is Long U.S. Dollar
Kanundrum Capital Owns (GLD)
Kanundrum Capital Owns (TLT)
Kanundrum Capital Owns (GFI)
Kanundrum Capital Owns (AUY)
Kanundrum Capital Is Short (XLK)
Kanundrum Capital Is Short (XLI)
Kanundrum Capital Is Short (XLF)
Kanundrum Capital Is Short (WYNN)
Kanundrum Capital Is Short (AA)
Kanundrum Capital Is Short (CAT)
Kanundrum Capital Is Short (EMN)
Kanundrum Capital Is Short (EXPE)
Kanundrum Capital Is Short (CME)
Kanundrum Capital Is Short (STT)
Kanundrum Capital Is Short (XLE)
Kanundrum Capital Is Short (SU)
Kanundrum Capital Is Short (IOC)
Kanundrum Capital Is Short (USO)
Kanundrum Capital Is Short Euro

For Anthony Scaramucci
Scaramucci Owns (BAC), Skybridge Owns (BAC)
Scaramucci Owns (C), Skybridge Owns (C)
Scaramucci Owns (GS), Skybridge Owns (GS)
Scaramucci Owns (HPQ), Skybridge Owns (HPQ)
Scaramucci Owns (JPM), Skybridge Owns (JPM)
Scaramucci Owns (WMT), Skybridge Owns (WMT)
Scaramucci Owns (BUD), Skybridge Owns (BUD)
Scaramucci Owns (INTC), Skybridge Owns (INTC)

For Dennis Gartman
Funds Managed By Dennis Gartman Are Short (GS)
Funds Managed By Dennis Gartman Own (MMM)
Funds Managed By Dennis Gartman Own Gold
Funds Managed By Dennis Gartman Are Short British Pound Sterling
Funds Managed By Dennis Gartman Are Short Euros
Funds Managed By Dennis Gartman Are Long Australian Dollars
Funds Managed By Dennis Gartman Are Long Canadian Dollars

For Jeff Harte
Sandler O'Neill Served As Financial Advisor To Investor Group That Agreed To Buy First Republic Bank From (BAC)
Sandler O'Neill Recvd. Inv. Bank. Comp. From (C), (JPM), (BAC) In Past 12 Mos.
(JPM), (BAC) Was An Investment Banking Client Of Sandler O'Neill In Past 12 Months
Sandler O'Neill Expects To Receive or Seek Inv. Bank. Comp. From (BAC), (BK), (JPM), (C), (NTRS) In Next 3 Mos.
(BAC), (C), (JPM), (MS), (BK), (NTRS) Are Clients Of Sandler O'Neill
Sandler O'Neill Has Received Non-Inv. Bank. Comp. From (C), (JPM), (BAC)

(GS) Is A Non-Inv. Bank. Client Of Sandler O'Neill
Sandler O'Neill Is A Market Maker In (NTRS)

Other Relevant Disclosures
Najarian Owned (VRSN) Calls On 5/18/10

CNBC.com with wires

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S&P 500
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C
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GS
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MS
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OXY
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SU
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VIX
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SPDR TEC SEL
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