GO
Loading...

Halftime: Are Bank Gains Sustainable?

Despite the cold and snow on Wall Street, investors are wondering if things may be heating up in a big way – at least on the trading floor.

Most investors believe that in order for the bulls to really drive this market considerably higher, financials must lead the way.

And on Wednesday, banks stocks were sharply higher.

Driving the gains were positive comments made by JPMorgan CEO Jamie Dimon in an exclusive interview with CNBC’s Maria Bartiromo (Click here to see it.) in which he said banks are about two thirds of the way through the housing crisis and that the consumer is 'half repaired'.

Also fueling gains were positive comments on the sector from Wells Fargo, which raised the U.S. bank sector to an "overweight" rating, citing a decline in credit costs and positive loan growth

Wells analyst Matthew Burnell named Bank of America, PNC Financial , Comerica , JPMorgan and Goldman Sachs as top picks.

Are banks stocks on the brink of a big break out? Or are the gains even sustainable?

Instant Insights with the Fast Money traders

OptionMonster Jon Najarian is solidly bullish. He finds Dimon’s commentary particularly encouraging, “he didn’t talk about share buybacks but I think that’s coming,” says Najarian. “I can’t imagine looking to short any of the names.”

Brian Kelly however, can more than imagine a short position in banks; it’s likely his next move. “I don’t know if Jamie Dimon told us anything we didn’t know, Kelly argues. I think a lot of what he said is priced in. If I was long I’d use the rally to take profits. Personally, I’m more interested in shorting banks in the future. The Massachusetts ruling is a tremendous overhang.”

Steve Cortes expects banks to trade higher, but he sees the gains largely tethered to the steeper yield curve. ”Banks seem to be trading in tandem with the yield curve,” he explains. "It’s almost the exact same view. As long as the yield curve stays steep I expect banks get a bid.”

But Cortes doesn’t recommend playing the space with big banks. Instead he says, “I think the play is long Goldman and Morgan Stanley . True to his contrarian nature he explains, “Too many investors are focused on the trading at these firms and not focused enough on their banking revenue. M&A deal flow has been incredible in this new year and I think that continues.”

Patty Edwards tells the desk she’s already long Citi and Goldman, “and I plan to hold these stocks for a while longer but I’m not a believer in most large cap banks.”

And in case you’re wondering how the options pits weigh on all this, Jon Najarian tell us us he’s seeing a lot of bets on Citi to the upside. The volume of Jan 5 calls, Feb 5 calls even April 5 calls suggests to him the stock could have room to run.

--------------

HOTTEST TRADE RIGHT NOW: SOFT COMMODITIES

The hottest trade right now just may be the soft commodities. After a bullish USDA crop report, corn and soybeans hit limit up on Wednesday.

What’s the trade?

We recommend owning companies that are going to sell inputs like seeds and fertilizer says Morgan Stanley analyst Vincent Andrews on Fast Money and avoiding companies that must buy corn and soybeans to use in products they sell to customers.

What’s the trade?

I’m a buyer of Potash as well as Syngenta, says Patty Edwards.

Hear more from Andrews. Watch the video now!

Read More:
Click here to go to Crops and Conglomerates: Hot Trades This Year?


______________________________________________________
Got something to to say? Send us an e-mail at fastmoney-web@cnbc.com and your comment might be posted on the Rapid Recap. If you'd prefer to make a comment, but not have it published on our Web site, send those e-mails to fastmoney@cnbc.com.

Trader disclosure: On January 12, 2010, following stocks and commodities mentioned or intended to be mentioned on CNBC’s "Fast Money" were owned by the "Fast Money" traders; Jon Najarian owns (C), is short (C) calls; Jon Najarian owns (JOE), is short (JOE) calls; Jon Najarian owns (NFLX), is short (NFLX) calls; Jon Najarian owns (BBY), is short (BBY) calls; Jon Najarian owns (BP), is short (BP) calls; Jon Najarian owns (CHK), is short (CHK) calls; Jon Najarian owns (PBR), is short (PBR) calls; Jon Najarian owns (GM), is short (GM) calls; Jon Najarian owns (F), is short (F) calls; Jon Najarian owns (AXP), is short (AXP) calls; Jon Najarian owns (AAPL), is short (AAPL) calls; Jon Najarian owns (QCOM), is short (QCOM) calls; Jon Najarian owns (STI), is short (STI) calls; Jon Najarian owns (ARUN), is short (ARUN) calls; Jon Najarian owns (EXPE), is short (EXPE) calls; Cortes is short (LVS); Cortes is short (XRT) vs. S&P; Cortes is short (XHB) vs. S&P; Cortes owns (EXC); Cortes owns (TSN); Cortes owns (SVU); Cortes is short Gold; Cortes owns U.S. Treasuries

For Brian Kelly
Accounts Managed By Kanundrum Capital Own (TBT)
Accounts Managed By Kanundrum Capital Own USD
Accounts Managed By Kanundrum Capital Own (XLE)
Accounts Managed By Kanundrum Capital Own (ANDE)
Accounts Managed By Kanundrum Capital Own (DE) call spreads
Accounts Managed By Kanundrum Capital Own (GLD)
Accounts Managed By Kanundrum Capital Own (IPI)
Accounts Managed By Kanundrum Capital Own (JJG)
Accounts Managed By Kanundrum Capital Own (JJC) calls
Accounts Managed By Kanundrum Capital Own (MON)
Accounts Managed By Kanundrum Capital Are Short
Accounts Managed By Kanundrum Capital Are Short
Accounts Managed by Kanundrum Capital Are Short The Euro
Accounts Managed by Kanundrum Capital Are Short The Yen

For Patty Edwards
Edwards owns (SPY) for clients
Edwards owns (XLB) for clients
Edwards owns (GLD) for clients
Edwards owns (SLV) for clients
Edwards owns (AMZN) for clients
Edwards owns (F) for clients
Edwards owns (GM) for clients
Edwards owns (TTM) for clients
Edwards owns (V) for clients
Edwards owns (MA) for clients
Edwards owns (JNJ) for clients
Edwards owns (AAPL) for clients
Edwards owns (VZ) for clients
Edwards owns (MSFT) for clients
Edwards owns (RIMM) for clients
Edwards owns (GS) for clients
Edwards owns (C) for clients
Edwards owns (BMO) for clients
Edwards owns (BCS) for clients
Edwards owns (FXI) for clients
Edwards owns (SYT) for clients
Edwards owns (POT) for clients

For Vincent Andrews
As of December 31, 2010, Morgan Stanley beneficially owned 1% or more of a class of common equity securities of(CF), (IPI), (MON)
Within the last 12 months, Morgan Stanley managed or co-managed a public offering of securities of (CF), (POT)
Within the last 12 months, Morgan Stanley has received compensation for investment banking services from (CF), (IPI), (MON), (MOS), (POT)
In the next 3 months, Morgan Stanley expects to receive or intends to seek compensation for investment banking services from (AGU), (CF), (IPI), (MON), (MOS), (POT).
Within the last 12 months, Morgan Stanley has received compensation for non-investment banking services from (AGU), (MON).
Within the last 12 months, Morgan Stanley has provided or is providing investment banking services to, or has an investment banking client relationship with, the following company: (AGU), (CF), (IPI), (MON), (MOS), (POT)
Within the last 12 months, Morgan Stanley has either provided or is providing non-investment banking, securities-related services to and/or in the past has entered into an agreement to provide services or has a client relationship with the following company: (AGU), (CF), (IPI), (MON), (POT)
Morgan Stanley & Co. Incorporated makes a market in the securities of (AGU), (CF), (IPI), (MON), (MOS), (POT)

GE is the parent company of CNBC
NBC Universal is the parent company of CNBC


CNBC.com with wires.

Symbol
Price
 
Change
%Change
BAC
---
C
---
CMA
---
GS
---
JPM MLP ETN
---
MS
---
PNC
---
POT
---
SYNN
---
SPDR FIN SEL
---

Contact Halftime Report

  • Showtimes

    Halftime Report - Weekdays 12p ET
    Fast Money - Weekdays 5p ET