Financials is now the worst performing sector year-to-date as rates stay low and fears surrounding energy exposure rise. Today on the "Halftime Report" the desk, which has been bullish on the sector for much of the last few years, discussed if it's finally time to sell.
Pete Najarian is still a long-term buyer since he thinks the financials are currently oversold. The contagion in European banks is dragging down U.S. banks, and the low interest rate environment makes it hard for banks to make money. Najarian points out that quarterly results for J.P. Morgan, Wells Fargo, and U.S. Bank "weren't so bad."
Jim thinks energy worry is weighing down the sector more so than interest rates. Amidst the current energy crush, he believes investors are concerned about banks' cash reserves for potential defaults from companies in the oil and energy sector. As he concludes, "for the banks to regain what they've lost this year wouldn't have to come from a change in the interest rate picture."
Jon has his eyes on Deutsche Bank, although he isn't buying just yet. Volatility is certainly a factor, but it's not even close to where it was when Bear Stearns and Lehman Brothers collapsed, he notes. He thinks we will see bottom in the next three months, at which point he'll be a buyer. In the meantime, he's closely watching options action in the space for indication of where sentiment stands.
Trader disclosure: On February 3, 2016, the following stocks and commodities mentioned or intended to be mentioned on CNBC's "Halftime Report" were owned by the "Halftime Report" traders:
Jim Lebenthal: Long AAPL, BA, C, CSCO, DCO, EEQ, GAIA, GM, INTC, JCP, KMI, MPC, OA, ORBC, PFE, QCOM, QRVO, SPLS, TIF, TRN, WGO
Pete Najarian: Long AAPL, BAC, BKE, BMY, BP, DIS, DISCA,FOXA, GE, KMI, KO, MRK, PEP, PFE. Long calls AAL, BX, CHS, DAL, GDX, GE,GILD, HAIN, LC, MSFT, MTG, NRF, SLV, SWN, UAL, WEN, WMB, WYNN, YDKN. Long puts FCX, MRO
Jon Najarian: Long calls BWLD, JNJ, MCD, MDLZ,MSFT, NBR, OAS, RCL, STO, SWHC, TWX, WEN