DOW RECOVERS FROM 213-POINT SLIDE:
The headline: Credit Crunch Worsens, Hedge Fund Losses Mount, But Fed Stabilizes Sstock Market; Is It On Sound Footing Or Is Fed Just Propping It Up?
It worked for today, Pete Najarian says, but “I’m not really excited about it.” If you look at the Financial ETF (XLF) or any of the major indices, they weren’t actually struggling that bad, he says. People are nervous – and they should be – but this was an overreaction on the Fed’s part, he says.
It’s a correction, Guy Adami says. He thinks the Dow won’t bottom until 12,700, but until then there are still “great opportunites” to buy. This market still comes down to earnings, Guy says, and so far earnings have been solid. “That will rule the day – at some point,” he says.
The Fed “solved nothing” today, Jeff Macke says. It’s $38 billion of injected liquidity was a “lousy investment” and investors still need more information before they can sort things out, he says.
The Fed came in three times today and equities still barely made it out, Tim Seymour says. He thinks the problems with hedge funds are not over and more will show up next week.
Pete doesn’t see relief from the volatility for two more weeks. These systems tend to run through the whole cycle, he says, and they typically last at least four weeks – so investors should expect, at a minimum, another two weeks of wide volatility.
THE WEEK: FINANCIALS:
The headline: Despite Apocalyptic Headlines, Financial ETF (XLF) Is Up Nearly 4% For The Week; Bloomberg: Global Bank Shares Are At Cheapest In More Than A Decade
Many of the big financials actually ended the week unchanged or up. Goldman Sachs (GS) was up 0.2%, Merrill Lynch (MER) was up 6.1%, Lehman Brothers (LEH) was up 5.6%, and Morgan Stanley (MS) ended the week down just 1%.
“That’s why I think this was a panic situation,” Pete says. Despite all the hand-wringing, some of the financials are actually working.
Tim is a bit more skeptical until the financials show more transparency. We don’t know how bad the financials have it, he says. “It’s impossible to value these guys here.”
If you’re looking for a quick trade in the sector, Guy recommends American Express (AXP) as less of a consumer credit story and more of a sea change story as “more people use plastic.”
THE WEEK: TECH SHARES:
The headline:Cisco (CSCO), Broadcom (BRCM), Tech Stocks Among This Week’s Better Performers
Telecom is growing and it’s doing so through the network names like Cisco and Juniper (JNPR), Pete Najarian says. Also keep an eye on e-commerce names, including Yahoo! (YHOO) and eBay (EBAY).
Jeff Macke is still bullish on tech, with the exception of Yahoo! The only thing that gives him pause is that it has already become a cliché that people are “hiding in tech.” That said, the entire complex is still much better than the financials, he says.
THE WEEK: STEEL:
The headline: Steel Shares – One Source Of Explosive Global Growth – Get Knocked Around This Week; Are Steel Stocks Still Attractive Buys?
U.S. Steel (X) is trading at 7 times next year’s earnings, Tim says. The company is growing in Europe, it’s in an M&A sector and, even off 28% from its highs, X is a “very attractive play here” as it makes money globally, he says.
THE WEEK: GOLD:
The headline: Is Gold ETF (GLD) A Good Bet If Fed Cuts, Dollar Falls? Gold Prices End Week Flat But Goldcorp (GG), Barrick Gold (ABX) Jump
With a Fed rate cut now on the table in many people’s minds, gold is going to get more popular, Guy says. If a rate cut happened, it would probably “obliterate” the dollar and people would turn to gold. Guy would buy GLD here.
Central banks across the world are diversifying out of the U.S. dollar and into precious and hard metal reserves, Tim Seymour says. There’s no better reason to buy GLD.
TAKE YOUR POSITION: BLACKSTONE:
The headline: Battered Blackstone Group (BX) To Report Earnings Monday Before The Bell
Blackstone takes a lot of heat, but it just raised another $21.7 billion for another fund, Tim says – so it looks like they seem confident about their ability to raise money in this environment. Look for them to send that message along with their earnings, he says. There’s a 25% upside on BX if you look at the Street’s consensus on a 12-month target.
“Why should they say anything?” Guy asks. All you have to do is look at Bear Stearns (BSC) to know to “keep your mouth shut.”
Jeff still wouldn’t own this stock, but Pete is beginning to warm up to it. “It’s almost time to put your feet in the water with Blackstone,” he says.
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Trader disclosure: On Aug 10 2007, the following stocks and commodities mentioned or intended to be mentioned on CNBC’s Fast Money were owned by the Fast Money traders: Macke Owns (INTC), Najarian Owns (GS), CBOE Volatility Index (.VIX) Options; Seymour Owns (AAPL), (BX), (GLD), (SBUX), (X), (BBD) Seymour Owns Bank VTB OAO