Strategic investor Doug Kass tells us he just paid $13 for the XLF . He thinks banks can rally a quick 10-15 percent. The selling is overdone, he says.
”I can see where Doug’s coming from,” adds Fast trader Brian Kelly. “They have gotten beaten up so much.”
When Kass and Kelly say overdone and beaten up, they’re not kidding.
For the month the Bank ETF is more than 10% lower. And that kind of pullback is hardly unique to the banking sector. Over the past month or so, investors have punished many, many stocks; consumer discretionary names have slipped about 10% and industrials are down more than that.
”Across asset classes there’s a bear market in risk,” muses trader Brian Kelly.
Largely all the selling is tethered to concerns that the US may be slipping back into recession. The funny thing is -- someone forgot to tell Corporate America.
Companies from Deere to Target reported better than expected results. And Staples CEO Ron Sargent says "I'm not an economist at all but from what I see we have no chance at another recession... I don't have any worries about a double-dip at this point."
Nonetheless stocks rolled over on Wednesday, providing a catalyst for Doug Kass to hit the buy button. Are the market’s concerns about a double dip over done – should you buy when so many others are fearful?
Instant Insights with the Fast Money traders
Trader Jon Najarian believes fear may be trumping fundamentals - and agrees with Kass that the selling is largely overdone. Najarian, however, thinks its overdone across the entire market and points to results from Target, Staples and even Apple. “Revenue numbers are strong and they’re strong both here in the US and abroad. Consumers are still buying.”
Trader Zach Karabell is also cautiously optimistic about the market. “Target, Staples and Apple show us that there are areas of the economy is thriving,” he says. “We spend a lot of time talking about the problem areas (of the economy) yet we tend to gloss over areas of strength.”
Trader Brian Kelly is more cautious. “In the UK 10-year bonds hit their lowest yield since 1989,” which he takes as a sign that investors still prefer safety to risk assets.
And looking at the financials, he adds “I can see where Doug Kass is coming from, but that doesn’t mean it’s time to buy the financials and load up the truck forever.”
Trader Stephen Weiss is on the other side entirely; he's bearish. Weiss is concerned about the weakness in Europe as well as the weaker than expected results from Dell . “As far as I can see, there have only been a couple data points that have been positive,” he says.
What do you think? We want to know!
HIGH END ROLLING OVER?
Turning to retail, high-end stores such as Tiffany and Coach had been outperformers this year but they’re starting to lose momentum. Is the high end starting to crack?
What’s the trade?
If you think buying among affluent European and Asian shoppers will begin to slow, then Brian Kelly says it makes sense to bet that we’ve seen a top in some of these names.
Trader Zach Karabell tells the desk that not all retailers can be painted with the same brush. “I see a lot of shifting spending patterns in a fairly stable pie,” he says..
Hear more. Get the latest from Brian Sozzi, of Wall Street Strategies.
* you can find out interview with Brian Sozzi about 9 minutes into the video clip.
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Trader disclosure: On Aug 17, 2011, the following stocks and commodities mentioned or intended to be mentioned on CNBC’s "Fast Money" were owned by the "Fast Money" traders; Najarian owns (CSTR) call spreads; Najarian owns (TGT) call spreads; Najarian owns (GLD) call spreads; Najarian owns (WFC) call spreads; Karabell owns (AAPL); Karabell owns (GOOG); Karabell owns (GS); Weiss owns (VZ); Weiss owns (UGL); Weiss owns (EUO); Weiss owns (AAPL); Weiss owns (DE); Weiss owns (NAV); Weiss owns (JPM); Weiss owns (AGU); Weiss owns (BTU); Weiss owns (NIHD); Weiss owns (TWM)
For Zach Karabell
Rivertwice Capital & Karabell own (IBM)
Rivertwice Capital owns (TGT)
Rivertwice Capital is short (GLD)
Rivertwice Capital is short (XLF)
For Brian Kelly
Accounts managed by Brian Kelly Capital own the Euro
Accounts managed by Brian Kelly Capital own (JJG)
For Michael Olson
LLNW has been an investment banking client of Piper Jaffray during the past 12 months.
Piper Jaffray makes a market in the securities of the following companies, and will buy and sell the securities of these companies on a principal basis: AAPL, ADBE, AKAM, ATVI, AVID, CSTR, CTRP, DTSI, ERTS, EXPE, LLNW, NFLX, PCLN, RNWK, ROVI, TTWO
For Brian Sozzi
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