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Trade Bank Stocks But Don’t Own Them, Guy Adami Says

U.S. bank stocks led a late market decline and could still have a way to go, “Fast Money” experts said after Wednesday’s close.

“We’ve talked about it for some time, that these are trading instruments but they’re not investible, I don’t think,” trader Guy Adami said. “Financials, you can trade them, but you can’t own them

JPMorgan led losses in the banking sector, along with Goldman Sachs and Morgan Stanley.

Adami said Morgan Stanley could head back down toward “that $13 level” — and “the same type of thing” for Bank of America.

All 10 S&P sectors posted declines after a Fitch report highlighted the U.S. banking industry’s exposure to European ongoing debt crisis.

But it’s not just Fitch.

Moody’s also downgraded German public banks, trader Tim Seymore noted.

“Everybody knows that Germany’s the only linch pin of strength, and if you start to see deterioration, you’ve seen blends widen this week,” he said.

The market is absent any catalyst, said trader Joe Terranova.

“There’s not really much out there,” he said. “If you must play, where do you look?"

Terranova said the following banks were in decent shape:

  • US Bancorp: “They do not have the exposure, the concerns that potentially you have in Europe.”
  • Bank of Montreal: “That’s pulled back to a level valuation that I believe is attractive.”
  • Blackstone: Worth a look, he said.

While fallout from the European crisis could bring long-term effects, Terranova said there was a potential backstop of last resort.

“At the end of the day — this is not a popular statement — but if need be, I think the Federal Reserve would step in,” he said. “They would actually have to put on their balance sheet ownership of some of this European debt.”

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Trader disclosure: On November 16, 2011, the following stocks and commodities mentioned or intended to be mentioned on CNBC’s "Fast Money" were owned by the "Fast Money" traders:
Seymour owns BAC; Seymour owns WFC; Seymour owns FCX; Seymour owns INTC;
Terranova is long VATS; Terranova is long LQD; Terranova is long MUB; Terranova is long SU; Terranova is long HES; Terranova is long AXP; Terranova is long IBM; Terranova is long STLD; Terranova is long CNQ; Terranova is long CAT; Terranova is long SBUX; Terranova is long CF; Terranova is long EMC; Terranova is long SCSO; Terranova is long HPQ; Terranova is long LULU; Terranova is long AAPL; Finerman has AAPL short calls; Finerman is long GOOG; Finerman is long JPM; Finerman is long IBM and has short calls; Finerman is long WNT and has short calls;
Finerman is long TGT;
Adami owns C; Adami owns GS; Adami owns INTC; Adami owns AGU; Adami owns NUE; Adami owns MSFT; Adami owns BTU;

For Brian Kelly
Shelter Harbor Capital is long GLD
Shelter Harbor Capital is long AAPL
Shelter Harbor Capital is long NLY
Shelter Harbor Capital is long DE
Shelter Harbor Capital is long GLNG
Shelter Harbor Capital is long LNG
Shelter Harbor Capital is long OIH
Shelter Harbor Capital is long LO
Shelter Harbor Capital is long PM
Shelter Harbor Capital is long SYY
Shelter Harbor Capital is long STD
Shelter Harbor Capital is long V
Shelter Harbor Capital is long IBM
Shelter Harbor Capital is short SPY

For Brian Stutland
Stutland is long VLO and short calls
Stutland has GOOG ratio put spread for credit
Stutland is has AAPL short puts
Stutland Volatility Group is a market maker holding hedged positions in VIX and VXX underlying and options Holds hedged positions between SPX and SPY underlying and options

For Sanjay Shrestha
Lazard Capital Markets LLC makes a market in FSLR securities

For Anthony Chukumba
BB&T Capital Markets makes a market in the securities of the subject company (DLTR)
BB&T Capital Markets expects to receive or intends to seek compensation for investment banking services from the subject company (DLTR) in the next three months.
An affiliate of BB&T Capital Markets received compensation from the subject company (DLTR) for products or services other than investment banking services during the past 12 months. The analyst or employees of BB&T Capital Markets with the ability to influence the substance of this report know or have reason to know the foregoing facts.

For Dana Telsey
No disclosures

For Chris Danely
Lead or Co-manager: J.P. Morgan acted as lead or co-manager in a public offering of equity and/or debt securities for Texas Instruments within the past 12 months.

Client: J.P. Morgan currently has, or had within the past 12 months, the following company(ies) as clients: Texas Instruments.

Client/Investment Banking: J.P. Morgan currently has, or had within the past 12 months, the following company(ies) as investment banking clients: Texas Instruments.

Client/Non-Investment Banking, Securities-Related: J.P. Morgan currently has, or had within the past 12 months, the following company(ies) as clients, and the services provided were non-investment-banking, securities-related: Texas Instruments.

Client/Non-Securities-Related: J.P. Morgan currently has, or had within the past 12 months, the following company(ies) as clients, and the services provided were non-securities-related: Texas Instruments.

Investment Banking (past 12 months): J.P. Morgan received in the past 12 months compensation for investment banking Texas Instruments.

Investment Banking (next 3 months): J.P. Morgan expects to receive, or intend to seek, compensation for investment banking services in the next three months from Texas Instruments.

Non-Investment Banking Compensation: J.P. Morgan has received compensation in the past 12 months for products or services other than investment banking from Texas Instruments.

For Rick Summer
No disclosures

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