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Halftime: A Warning Sign in the Financials?

Is there a warning signal flashing in the financials? The S&P was up in thin mid-day trading Wednesday, but once again financials slipped. So the Fast traders turned their attention to the XLF exchange traded fund , which has been making a series of lower highs, to determine what it means for the sector and the economy.

“In terms of the economy, it’s not a great sign,” Stephen Weiss said. “Financials are supposed to be the leaders, not the laggards.”

However, trader Brian Kelly sees the possibilities in the financials and has jumped right in. He likes SPDR KBW Regional Banking and Wells Fargo because of the steep yield curve, which he thinks might get even steeper. He also sees the willingness to loan and demand for loans increasing.

“As long as they meet, the banks should make an awful lot of money,” he said.

But Pete Najarian cautions not to get in too deep to financials just yet. However, he said people are looking for a little bounce out of Citigroup Wednesday and perhaps into the weekend because of the weekly options that expire Friday.

Stephen Weiss sees opportunity in the sector too, but only in regionals.

“The worse gets for loan growth, the better for the regionals,” he said. “The worse it gets for regulation with the big guys and these nitpicky regulations, the better for the regionals.”

That's because Weiss thinks the only way regionals will be able to navigate a potential maze of uncertainty is to consolidate.

Patty Edwards agrees with Weiss that the regionals and other alternatives should be considered. She’s bullish on BlackRock Kelso Capital, which she said is doing well in this environment because “they’ve got the cash and if you can’t get the bank loans at the lower rate, you’re going to come to them for the higher rate.”

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China raised interest rates for a third time this year to tame inflation. Is the country bringing the economy in for a soft landing, or has it lost control? See what “Fast Money” China expert David Riedel has to say – watch the video now!




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Trader disclosure: On July 6, 2011, the following stocks and commodities mentioned or intended to be mentioned on CNBC’s "Fast Money" were owned by the "Fast Money" traders; Weiss owns (AKAM); Weiss owns (COP); Weiss owns (HBAN); Weiss owns (CMA); Weiss owns (KEY); Weiss owns (JPM); Weiss owns (TEVA); Weiss owns (QCOM); Weiss owns (VZ); Weiss owns (WFT); Weiss owns (PZN); Weiss owns (DE); Weiss owns (EMC); Weiss owns (ETP); Weiss owns (NS); Weiss owns (MDRX); Weiss owns (MSFT); Pete Najarian owns (AAPL); Pete Najarian owns (AKAM); Pete Najarian owns (C); Pete Najarian owns (MS); Pete Najarian owns (MOS); Pete Najarian owns (MRVL); Pete Najarian owns (RSX); Pete Najarian owns (TCK); Pete Najarian owns (VLO); Pete Najarian owns (GE); Pete Najarian owns (PEP); Pete Najarian owns (PFE); Pete Najarian owns (MRK); Pete Najarian owns (TEVA); Pete Najarian is long (F) bonds; Pete Najarian owns (SLV) calls; Pete Najarian owns (V) calls;Pete Najarian owns (HAL) calls

For David Riedel
**No Disclosures

For Brian Kelly
Accounts Managed by Brian Kelly Capital are long Australian Dollars
Accounts Managed by Brian Kelly Capital are long New Zealand Dollars
Accounts Managed by Brian Kelly Capital are long euros
Accounts Managed by Brian Kelly Capital own (TBT)
Accounts Managed by Brian Kelly Capital own (WFC)
Accounts Managed by Brian Kelly Capital own (KRE)
Accounts Managed by Brian Kelly Capital own (MOS)
Accounts Managed by Brian Kelly Capital own (IPI)
Accounts Managed by Brian Kelly Capital own (XLK)
Accounts Managed by Brian Kelly Capital are short U.S. Dollars

CNBC.com with wires.

Symbol
Price
 
Change
%Change
BKCC
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C
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KRE
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WFC
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SPDR FIN SEL
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JWF
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