On Tuesday, investors were trying to make sense of the Paris summit in which the leaders of France and Germany issued proposals in an attempt to quell the recent European financial crisis.
On the surface it seemed like a number of positive developments came out of the meeting including new coordinated efforts to police for financial ills.
However, dig down and there was nothing but disappointment.
Pro investors were hoping to see advances in two areas, and according to strategic investor Dennis Gartman, the leaders didn’t provide either. “It was a failed meeting, I think it was disastrous to be honest,” he says.
Largely investors were hoping for the following:
- a EuroBond or joint bond in which members of the Eurozone would sell bonds jointly to investors.
- increased funds for the the European Financial Stability Facility or EFSF.
”They didn’t come up with a euro bond, and I think a lot of people were expecting an announcement. And more important they said the EFSF was sufficiently large. "That’s just absurd,” says Gartman. On the news the Dow was lower by triple digits.
The major takeaway is that the lone wolf in Europe is now the ECB, Gartman explains. “They will have to come in and buy the sovereign national bonds. They have no choice.”
And if you’re looking for a trade Gartman thinks developments are bullish for gold . “Gold is a currency and it’s the one currency everyone seems to be moving to.”
Trader Zach Karabell interprets the Paris summit rather differently. He thinks it was much more political and that neither German Chancellor Angela Merkel nor French President Nicolas Sarkozy were speaking to investors.
”It was a press conference,” he says. “The leaders were speaking to the electoral constituents. It was not intended to calm financials markets.”
And Karabell suggests the outcome was, in fact, constructive.
“There’s a long history of more integration at a trans-national level in Europe, being done very much in spite of popular opinion.” In other words, the press conference was intended as a response to critics.
And Karabell expects the leaders in France and Germany will continue with "aggressive action to make sure there isn’t massive default and liquidation,” he concludes.
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On a related note, if you're looking for trading ideas, Brian Kelly thinks the best thing to do is wait and watch. “I covered my position in the euro/dollar,” he says. It’s just too difficult to anticipate the direction that politicians are going to take.”
Trader Joe Terranova suggests a big picutre trade. He thinks investors can extrapolate events in Europe as another big sign that developed nations of the world will monetize debt, one way or another. And he thinks the biggest proponent of the strategy is our own Federal Reserve. As a result he expects the USdollar to trade lower and energy and commodities higher. “In a pullback I’d go long energy and commodities,” he says.
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Trader disclosure: On Aug 16th 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 (XOM); Terranova owns (CVI); Terranova owns (CAT); Terranova owns (OXY); Terranova owns (AAPL); Terranova owns (DAR); Terranova owns (FCX); Terranova owns (CACI); Terranova owns (ARUN); Terranova owns (ORCL); Terranova owns (EMC); Terranova owns (NCR); Terranova owns (VMW); Terranova owns (IBM); Terranova owns (AMZN); Terranova owns (LULU); Terranova owns (LTD); Terranova owns (WFM); Terranova owns (WFC); Terranova owns (JPM); Terranova owns (AXP); Terranova owns (FXA); Terranova owns (VRTS); Terranova owns (LQD); Terranova is Chief Market Strategist of Virtus Investment Partners, LTD
For Dennis Gartman
Funds Managed By Dennis Gartman and Dennis Gartman own Gold
Brian Kelly
Accounts managed by Brian Kelly Capital own (SLV) puts
Accounts managed by Brian Kelly Capital own (JJG)
Accounts managed by Brian Kelly Capital own (SPY) calls
Accounts managed by Brian Kelly Capital are short the British Pound
Patty Edwards
Edwards Owns (GOOG) For Clients
Edwards Owns (AMZN) For Clients
Edwards Owns (AAPL) For Clients
Edwards Owns (C) For Clients
Edwards Owns (FRX) For Clients
Edwards Owns (MSFT) For Clients
Edwards Owns (TGJ) For Clients
Edwards is long Gold For Clients
Edwards is long Silver For Clients
Edwards owns the Canadian Dollar
Edwards owns (XLK)
Edwards Owns (GOOG) For Clients
Zach Karabell
Rivertwice Capital & Karabell own (AAPL)
Rivertwice Capital & Karabell own (CSCO)
Rivertwice Capital & Karabell own (GOOG)
Rivertwice Capital & Karabell own (GS)
Rivertwice Capital & Karabell own (IBM)
Rivertwice Capital owns (IBM)
Rivertwice Capital is short (GS) puts
Rivertwice Capital is short (XLF)
Rivertwice Capital is short (HPQ) puts
For Joe Terranova
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 Building Materials Holdings
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 (KRC)
Virtus Investment Partners Owns More Than 1% Of (LDR)
Virtus Investment Partners Owns More Than 1% Of (LHO)
Virtus Investment Partners Owns More Than 1% Of (NRCI)
Virtus Investment Partners Owns More Than 1% Of Sun Pharmaceutical Industries Ltd
Virtus Investment Partners Owns More Than 1% Of (DBV)
Virtus Investment Partners Owns More Than 1% Of (RLI)
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 (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 (SUBK)
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 Maynard Um
UBS AG, its affiliates or subsidiaries beneficially owned 1% or more of a class of NetApp, Apple, Dell, EMC, HPQ common equity securities as of last month`s end.
CNBC.com with wires.
