Word on the Street

" Yeah one day wow. July live on the NASDAQ market site this is fast money I'm Melissa -- yeah. -- show you tonight. How to protect and the profits with the market on -- let's get right thing here is the word on the street. Anyways I forgot the preeminent black finished listening session lows what was though the catalyst. That brought us down today I'm."

" Surprise there was a catalyst to bring us down this much actually think the purchasing managers to me. Was a very good number that's the kind of data that are really like as opposed to backward looking GDP that really has lot of noise so I was perplexed."

" Not sister means -- Castro -- guessing 90% of the GDP yesterday's nonrecurring I mean I'm not a big fan that GDP number I think the fact we relatives say was. Unbelievable to me this is what we should be doing I think is just beginning -- something -- people -- positive by the depth."

" Well yes relay. -- I. I didn't -- dad that's even more prominent."

" I did the last couple okay sure and I end -- battle. There until ninety."

" Percent down days across the -- people 175 out of 500 stocks we had this the two -- the last three days and you haven't seen this back since February so the market is telling you something. Clearly rotation out of risk clearly rotation and a higher quality big cap to small caps getting crushed you're -- all risky assets emerging has been down more than. Any asset class of the last couple days and it's telling you that people are questioning the quality of this rally certainly every -- and we've talked about his broken down."

" I think it goes back to week to -- last Friday the market made several. Intraday were Brussels all week the entire market was playing defense. Being a fan of the giants like giants fans on this desk you know you -- defense on the field too long sooner or later it's going to give and I think that's not what the market you had several attempts to recover some of the losses this week we tried Monday we tried yesterday we couldn't do -- the technical spell part. And here we sit right now on the practices that are precedents of what could be a march larger decline."

" Let's get to the chart of the day because we talk about potentially a large decline we've got to take a look at the volatility index because we did see big search -- 24% let's move higher. About sorry for the first time since some late July. And of course you know we call them that fear index that really this is just a measure of what the potential moves injured and the markets. Could be -- you are higher volatility earlier when it was down in the twenties."

" It hit in his load when he and change that was a great move what do you do here I think you sell volatility here and in a 50% move in the -- is a very dramatic move not going to camp require it certainly can't we -- much higher levels -- in here but. A 50% move is enough that you have to start selling them at some of that protection."

" Okay and now we -- two and a half time report we had Brian selling who. Specializes in volatility he set a close about 28 could be a buyer volatility we should know that for all the average folks out there you I think the question gets asked a lot of how to live by volatility how to excel volatility yet sex isn't ETF that tracks. The volatility index so. There you have -- let's talk about the other big bucks killed in today's session certainly that was the financials a group accelerating their losses -- A note by Italian securities Mike Mayo saying -- zags -- eight. To have ten million dollars in fourth quarter write downs. I'm with his thoughts is Chris Whalen managing director at institutional risk analytics -- always good to have you with -- sacred to be back. Admitted the know specifically mentions ten billion dollars in fourth quarter write down of deferred tax assets normally defer it and -- if I'm wrong wrongly deferred tax assets. Not a problem unless you believe that the company cannot earn their way out."

" Well that's correct demeanor at the management of the company takes some view on the tax assets but -- may have to look at their -- insurance in the auditor customer agree with the so you have a situation that city we all know about the tax upset by the way this was not a new issue but I think what Michael did. Very appropriately will remind everybody of reality. There's enormous denial right now when it comes to financial spoke with respect issues like this sort of intangible. Off balance sheet exposures as we talked about before so he kind of woke everybody up a little bit and I think we're going to see more distance we're going -- the New York."

" it's Karen what I what about today made India that is there anything specific or they started to have you and discussions with their auditors now I didn't see any particular filings today."

" no you won't -- you won't see the paper on this care until next here but what happens is Yorkers have to start the conversation now. And it will be a process that actually takes almost five months between the close of the year and there when they actually drop the today. Coming up on the annual meeting it'd take so long taught respect sometimes you auditors actually can't get the work done by the -- the -- have to be filed. -- may have to drop an amendment before their annual meeting."

" The ten million dollars looks like correct number in your view."

" Well yeah happen and it's it's complicated because you have both US tax assets in foreign tax that's. -- got about 38 billion on the books now and ten night because a reasonable right off a -- when do we think Citi is going to be profitable again that's that's the question. And say that you don't to me like I say this is not a new issue but Michael I think really refocused everybody's attention on the fact that there's forty billion dollars. Where the tax intangibles -- city's books that you know arguably could read the whole."

" Putting all right Chris it's joke see only put 802 million it's a loan loss reserves in the last quarterly earnings report do you think that was too little do you think that under reserve now going forward in 2010."

" Our course everybody's on to reserve look you have to remember. The stress tests of the Fed did were -- darn cute three -- how to do well on Q3 with what they call pre provision revenue. In order to qualify and show them that you could the market got capital. Plus pre provision revenue people's loss estimates for the bank that's the formula that the produce and so everybody did well in the third quarter because they had to. This is yet another head -- but what."

" Christie had mentioned before that -- certainly is not a new concern in fact I've got an article from American banker. -- written at the end of last month which also highlight some other of the banks out there which have potentially huge deferred tax assets. Are there any other concerns out there do you think that investors are not paying attention to when it comes to likes of perhaps a Bank of America our Wells Fargo or PNC."

" Well what BankAmerica and wells drilled off balance sheet I mean if you looked at wells earnings release. They're bringing importing eight billion and off balance -- on -- cheap but they're always talking about variable interest Benedict there are not even talking about all of the US believes that the -- beer is going to get rid of at the end of the year. We're played a game will eventually the banks are going to have to address this issue but they don't have to until the end of the year and souls -- higher. Investment community I think -- sleep walking. When it comes to the accounting issues of the banks but it's quite a basic."

" Took his return them to a way to solve this would be to issue equity in DC Wells Fargo Bank America had city. Doing --"

" Well before you -- figure out some very good question -- nation would have been issuing equity now. This was their window we'd been in the eye of the hurricane for the last four months. They were in August when you saw volatility for this group dropped 400%. That was -- this -- upon the raise capital but they don't want to do that they're all pretending everything's all right. My view is that they should raise capital now -- here is going to be tough."

" Alright press always great to speak with you thank you very much for your analysis on this topic which really took the market sob. Not by surprise but so really we focused disease said."

" Look amen -- we took Mattel about sort of bank stocks Wells Fargo report on October 21% that day you know bail out of this thing if anything you want to be aggressive get -- I still think. You can get -- Wells Fargo look at that they attended a 113 million shares that day. Ten of the 3112 this squeeze out all the sorts it's going down go back to the UBS analyst comments twenty dollar price target. Obey says 45 I agree and if these guys mean they keep sane. They'll pay back the TARP and -- shareholder friendly way out like this it I still think it's secondary back in the spring we're talking about good bank."

" At bank you're really analyze balance sheets I think it's time to do that again I think that's what this earnings season has shown you have to look at the commercial banking sector and say okay who's got the strong balance sheet you look at that a name like JPMorgan clearly stands out they are clearly best of breed. The rest of those things they are. Clearly suspect when you look at what they have in terms of withstanding for the right what are the."

" The other opportunities let's focus on the opportunities come Monday because this whole sector sold off but of course not everybody is like. A city metro are well I mean -- he --"

" Opportunities yeah -- short is an opportunity don't -- here don't like to play it that way but that's what I'm seeing -- opportunity right now. If you want to stay on the sidelines that's fine as well but -- by the tip on Monday I think he's stepping into something it's not unlike buying rim after the reported seven while fighting in fact that I want to get ready if not how I don't think so I think the tapes and."

" The other thing that was biggest it was the talk about the commercial real estate -- yet every big market mobile out there talking it down and if you look at some of the regional banks that we talked about in the show having the most exposure. They actually held in somewhat you know reasonably well but if you look at the our camp guard -- key -- usually which is the regional bank. ETF this was down 5%. They may be also tell you about the next move here I think Monday if you're going to see more follow through on this rhetoric from again George Soros. Wilbur Ross. Mohammed Al -- all these guys can talk about commercial real estate but I think what is going to be a bad day but let's not. Clearly Goldman Sachs is the first place that you want to look. It's the capital markets play that's what the first names that you do want to -- would reflect the market's kind of stabilize Karen are getting a little bit worried about your bank about America holdings now I mean."

" Amateurs in the long term investor -- clearly has been a terrible week for Bank of America but it doesn't really change my outlook we actually you know we have been short BB NT throughput and we sold some of those today which is the same is getting along so. I mean I think the commercial real estate story is not. New at all yeah I was did you know that they all talked about -- why is I don't know if it was the commercial real estate bear meeting I don't really know -- is out -- today to let -- does -- want to be observable to commercial real estate investor I mean there's friends of money out there that is looking to capitalize. On the downturn in commercial real estate times."

" You want to look that trigger though for the double but I think we sort of talked about that night go back to CSX when they reported earnings -- earlier this month we talked about UPS -- people we said guess what. They missed on -- side it wasn't as big a -- we've seen in prior quarters. Those stocks have gotten cross now be an -- on Friday last Friday obliterated people -- one look at the signs. You have to look at the signs of transports believe in the double top and CSX. These continue to go lower -- the market will consider that in and."

" Also it's important understand what's gonna go on this -- get around the tables across America is the conversation is it time to pull out of the market is the market over how deep is this going to be as the topic and or is it a correction. I think here what you have to anticipate is a very very weak tape on Monday and you have to see. How do you navigate your way through the I sent FO MCN unemployment next week. If we come out of next week unscathed. Then this is nothing more then a nominal pullback of maybe five to 8%."

" Let's delve deeper into you out once after the market that fell today and we've been talking about a potentially an area breakdown when it comes to market leadership. And in fact take a look at the chart on Apple because Apple giving up all of its gains basically. From when the time it reported earnings. Gave back all that earnings --"

" Had that we -- someone -- didn't we -- look at the huge mind that Apple's good trade after the quarter but isn't in love without -- up all the upgrades price target raises and we had flat out get out around to all five level. So we missed it by three box we -- said the crest of folks out there. Get order and it will underperform -- allowed to tape it is done exactly that I think will continue to do they absolutely had to."

" Call right the only problem was the upgrade just like I said you've got to give it data it's a trade school. You gotta give it a day hits you when you see these earnings come out you see positive earnings you're going to get. The price targets -- you're going to get upgrades that's exactly what happens with Apple it lasted a day and then the next state that was at the top was it."

" The other thing I'd say that you and you can tell an Apple two that the risk factors are changing in the market when they start looking Apple news and buying -- negative and it's so they're opening up there's the big announcement and they indeed the iPhone in China China unicom carrying out a lot of people pointing to this news big catalysts. -- when in fact he would analysts and -- Telekom -- that they don't think Apple's gonna get a big rise -- as an example and there over -- thousand dollars and -- service contract and and -- a lot of places they don't have the three -- services to really drive this -- so you know Apple is is clearly exploring new frontiers not only in this country but abroad but they're not all going to turn in the money tomorrow on this this is -- case that's true. But you would still be in favor of Nokia. I think at this price points I think a lot of bad news is priced in there I I think the downside is limited I agree Nokia stuck in Iraq they have to prove it to the market I think we're going to be waiting for next quarter's earnings and Nokia. Because those are two donuts and Roanoke and allow -- to."

" What do you make of the move in the F Philadelphia semiconductor index now below 300 which a lot of people have been pointed to as a key technical level this was the area of the market that led technology pirates and intern. Flood the markets hired here we have potentially. A technical breakdown on the index."

" Again I go back and -- go back to October 14 and -- let's say that day -- a 165. Million shares should have the 2127. Was a high we said pull the rip -- on this thing into the crowd of traders. Get short tight stop it's playing out according to plan. I don't like the base that still think Intel has for the reminded downside and I'll say this all the -- clearly rim is not that but rim is a Bellwether stock. Take a look at what that's going to -- traded on the 65 level we thought it would bounce. Now what's -- sixty not good."

" And it's not just rivers the entire smart throne trade that has gone on to the wayside this week its pomp it -- it's it's all about the they are right now getting obliterated and technology. Broke its fifty day moving average is weak and clearly it has had a technical breakdown for the first time since the beginning of the year."

" I just it's the Philly semiconductor index is it not -- now he's. And it is breaking down exactly what I think happened our attitude let's move on let's. Our biggest -- we certainly the dollar the greenback rebound is is closed higher by one and a half percent so has the dollar crawling down. Its bottom let's head straight to the pets with the Pixar. -- and telling. Risk."

" Well I'll tell you Melissa that when I look at and talked to so my trading friends. And I look at who's had the best run for the last six months it's actually a little bit scary let's put up a chart -- six months charge. Of the Euro yen and I'll tell you why it's scary because what they're doing -- this chart -- every time the Euro yen gets to around 138. They know that it's going to -- at least that's what their programs tell them we'll think about what their fates that means hero goes down. When the Euro goes down for the most part against the yen and then also goes down against the greenback which kicks up the dollar index. They placed their shorts based on this trade to short the stock market and the reason it's scary is they don't know what GDP even is they're not. Fundamentally driven at all and they're not sure why this relationship work so good. But they have some great programmers they're so many different trades like this in the marketplace that we really opens up so many. Areas of debate as to why markets move these days when you throw in the high frequency aspect all around. It's really tough to look at anything on a day to day basis in drug huge fundamental economic conclusion Richard talk."

" Send guys that are watching next week's fed meeting to -- as the expectation the dollar moved is partly due to a change next week when the Fed or is this truly a feeling that we're taking away all the risk. Appetite and we're just comment back home and returning some -- where we Bart. I think it's a bit of betrayed and I."

" Because the dollar was moving down other relationships became cute. I don't think all the issues driving the dollar down or being addressed they still haven't found anybody that's going to qualified to be than any of the dollar in any department -- government. I'm aware of and as interesting as the Fed meeting is and I would just governor. Debate on the flow at some revenue traders. They think the word movement the statement might give him some volatility. In the end I can't imagine. Any rate increases for a long time I think it's all going to be a rorschach statement game but it will give a little horsepower. To some market volatility."

" records show on the direction of the dollar clearly what monetized in the dead and clearly if you look at the economy and I both know this economy's not going to grow much. That then means a standard of living here domestically has to go down anger what happens to the dollar yeah."

" What we have guests today who summed up better and I have ever done he said listen. The people want this recession. To ending growth to begin they're going to talk down the dollar to help exports in the stock market the standard of living will go down. Around with a dollar that's pure and simple which side of the blocker he -- part of it is -- you own stocks on the right stocks do you own any stocks and I think that's a huge issue. Yeah I I personally think the dollar could have a reprieve here for a while remember all currencies can't go down he canceled away from each other. They do want to pay particularly close attention know this Euro yen spread for another couple months."

" All right guys or anything else out there are you know on the heels of the salt that we had today that that scares you."

" Well you know I would go back to this I think it was just three months ago Martin Feldstein ugly was -- wrote a great editorial in journal. Talking about how we're going to get some good quarters just because head winds at things like housing and disappear and inventories. He had it -- I think it's one of the reasons stocks moved up so what's scary is is that all we get this number they tried to price and again yesterday I think today makes sense and that's really scary. -- what do you mean following. But what does -- following these random gossip right now. What am I going to be for Halloween that's easy I'm gonna go as some care during good those I just haven't described. Actually I'm all dressed."

" I think it's good or -- they're all -- that irregular."

" Thank you have always had this and spooky music it was very I was tired I was forced into music in the scenario you're -- you've got you know if -- It's it's fun filled day."