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Halftime: Top Trader Pulls The Trigger on Goldman

Tuesday, 19 Apr 2011 | 1:53 PM ET

On Tuesday, traders were parsing through results from Goldman Sachs very carefully after the venerable bank posted a 72 percent decline in quarterly earnings as trading revenue dropped.

Also, the bank warned there were fewer opportunities to make money in the current environment.

On a related note, widely followed bank analyst Dick Bove downgraded Goldman Sachs to ‘Neutral from ‘Buy’. He cited a seasonally weak period for trading revenues and said the ability of Goldman to manage its assets will be hindered by regulatory pressure.

Goldman has long been viewed as an earnings machine, consistently generating some of the highest returns on Wall Street. But financial reform threatens profits from what historically have been key sources of revenue for Goldman, including trading for its own account and trading derivatives with clients.

How should you trade it?

Trader Steve Cortes is a buyer. In fact, he pulled the trigger live during the Halftime Report. “I really do like Goldman. In the 140’s it’s a buy,” he says. “On a valuation basis around 1.2 tangible book it’s a value, and historically it rallies from here. The firm is still making money on principal investments. And I still think it’s best of breed,” he says.

Trader Patty Edwards is somewhere in the middle.” I think Goldman will continue to make money, but I wouldn’t get in here,” she says. “But if I was long, I wouldn’t sell either.”

Trader Joe Terranova is cautious. He thinks gains going forward will be largely tethered to Goldman's ability to accelerate FICC revenue. “I’m not sure they can,” he says .

Terranova says he’s rather to put money to work on banks that will benefit from credit improvement. “I’d look at Regions or Zions ,” he says. "These and other regional names that you wouldn't have owned over the past 12-18 months are now worth a look," he says.

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Analyze This: Chip Confusion
The Fast Money traders, and Craig Berger, FBR Capital Markets weigh in on trades you should put down today.

CHIP TRADE

The traders are also keeping a close eye on the chip space after Texas Instruments said production setbacks due to the disaster in Japan hurt its first-quarter results and will also weaken second-quarter growth.

What’s the trade?

Trader Brian Kelly reminds the desk he’s short the SMH .

Hear from Craig Berger Of FBR Capital: Find out why he tells us he thinks , “things get better for the chip sector in the fourth quarter.”

Watch the video now!



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Trader disclosure: On April 19, 2011, the following stocks and commodities mentioned or intended to be mentioned on CNBC’s "Fast Money" were owned by the "Fast Money" traders; Terranova Owns (VRTS); Terranova Owns (JPM); Terranova Owns (V); Terranova Owns (BX); Terranova Owns (UPL); Terranova Owns (HOC); Terranova Owns (TCK); Terranova Owns (BAX); Terranova Owns (OXY); Terranova Owns (XOM); Terranova Owns (AKAM); Cortes Owns (SDY): Cortes Owns (EXC): Cortes Owns (RIMM); Cortes Is Short (BAC); Cortes Is Short (F); Cortes Is Short Nasdaq Futures; Cortes Is Short EUR/CHF; Cortes Owns (GS)

For Patty Edwards
Edwards Owns (GLD) For Clients
Edwards Owns (JNJ) For Clients
Edwards Owns (MSFT) For Clients
Edwards Owns (QCOM) For Clients
Edwards Owns (QQQQ) For Clients
Edwards Owns (SLV) For Clients
Edwards Owns (SPY) For Clients
Edwards Owns (GLW) For Clients

For Joe Terranova
Terranova is Chief Market Strategist of Virtus Investment Partners, LTD
Virtus Investment Partners Owns More Than 1% Of (ABAX)
Virtus Investment Partners Owns More Than 1% Of (AMKR)
Virtus Investment Partners Owns More Than 1% Of (CCG)
Virtus Investment Partners Owns More Than 1% Of (CASS)
Virtus Investment Partners Owns More Than 1% Of (CSVI)
Virtus Investment Partners Owns More Than 1% Of (EXR)
Virtus Investment Partners Owns More Than 1% Of (FCFS)
Virtus Investment Partners Owns More Than 1% Of (IGE)
Virtus Investment Partners Owns More Than 1% Of (KRC)
Virtus Investment Partners Owns More Than 1% Of (LDR)
Virtus Investment Partners Owns More Than 1% Of (NCRI)
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 (XLE)
Virtus Investment Partners Owns More Than 1% Of (XLF)
Virtus Investment Partners Owns More Than 1% Of (XLI)
Virtus Investment Partners Owns More Than 1% Of (XLK)
Virtus Investment Partners Owns More Than 1% Of (XLU)
Virtus Investment Partners Owns More Than 1% Of (WDFC)
Virtus Investment Partners Owns More Than 1% Of (YDNT)
Virtus Investment Partners Owns More Than 1% Of DOMINO'S PIZZA UK & IRL PLC

For Brian Kelly
Accounts Managed By Brian Kelly Capital Own (AGO)
Accounts Managed By Brian Kelly Capital Own (CLNE)
Accounts Managed By Brian Kelly Capital Own (EWP)
Accounts Managed By Brian Kelly Capital Own (GLD)
Accounts Managed By Brian Kelly Capital Own (SLV)
Accounts Managed By Brian Kelly Capital Own (JJG)
Accounts Managed By Brian Kelly Capital Own (DBA)
Accounts Managed By Brian Kelly Capital Own (TSN)
Accounts Managed By Brian Kelly Capital Own (MCP) Calls
Accounts Managed By Brian Kelly Capital Own VIX Calls
Accounts Managed By Brian Kelly Capital Own (SPY) Puts
Accounts Managed By Brian Kelly Capital Own (CLF) Puts
Accounts Managed By Brian Kelly Capital Are Long Wheat
Accounts Managed By Brian Kelly Capital Are Long Soybeans
Accounts Managed By Brian Kelly Capital Are Long Natural Gas
Accounts Managed By Brian Kelly Capital Are Short (XLF)
Accounts Managed By Brian Kelly Capital Are Short (SMH)

For Craig Berger
FBR Capital Markets Is A Market Maker Or Liquidity Provider For (INTC)
FBR Capital Markets Is A Market Maker Or Liquidity Provider For (AMD)
FBR Capital Markets Is A Market Maker Or Liquidity Provider For (NVDA)
FBR Capital Markets Is A Market Maker Or Liquidity Provider For (MRVL)
FBR Capital Markets Is A Market Maker Or Liquidity Provider For (MXIM)


CNBC.com with wires.

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TXN
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ZION
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