After the bell on Monday, investors were asking one another what to make latest negative headline out of Europe.
This time jitters were triggered by a the threat of an EU downgrade; S&P put Germany, France and 13 other nations on credit watch negative due to deepening economic and political turmoil.
Whispers of S&P’s warning made their way into the US market late session. The chatter was enough to send investors running for the exits, worried that the crisis in Europe was about to flair ahead of the big EU meeting later in the week.
”The S&P is generating needless chaos in the market,” says a clearly aggravated Tim Seymour.
”Nothing has changed in the Eurozone,” concurs trader Brian Kelly.
Both traders think the warning, which is predicated upon dissent in the EU’s leadership and the need for greater fiscal austerity, is already factored into the market.
”I consider the S&P clueless,” adds trader Stephen Weiss. As an example he says, “They have a higher rating on Soc Gen than JPMorgan.”
In fact all the traders are disgusted with S&P’s warning.
Although it may be counter intuitive, the Fast Money pros think the downgrade could generate gains – you read that right – gains.
Brian Kelly thinks the downgrade could compel Germany to take more aggressive action at the EU meeting later in the week.
Stephen Weiss adds that the market’s reaction to the warnings wasn’t terrible and that alone could trigger a relief rally.
”The S&P 500 has been struggling with it’s 200-day at 1265,” adds Tim Seymour. “I think we break above that level.”
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Trader disclosure: On Dec 5, 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 is long AAPL; Seymour is long MCD; Seymour is long RIG; Adami owns C; Adami owns GS; Adami owns INTC; Adami owns MSFT; Terranova is long EMC; Terranova is long SU; Terranova is long NCR; Terranova is long UPC; Terranova is long TRLG; Terranova is long VRTS; Terranova is long LQD; Terranova is long MUB; Terranova is long AXP; Terranova is long IBM; Terranova is long HES; Terranova is long CAT; Terranova is long SWN; Terranova is long CNI; Terranova is long DECK; Terranova is long SBUX; Nathan has Dec put fly AAPL; Nathan has Jan put spreads MS; Nathan has Jan call fly NFLX; Nathan has Jan put spreads INTC; Weiss is long QCOM; Weiss is long MOS; Weiss is long EUO; Weiss is long DE; Weiss is long CNX; Weiss is long COP; Weiss is long CSC; Weiss is long VZ; Weiss is long KO; Weiss is long MDRX; Weiss is long SHAW; Nations is long SPY; Nations has long call spreads AMZN; Nations is long MSFT; Gartman is short EUR; Gartman is long X; Gartman is short AMZN; Dicker is long RI
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