COUNTRY FRIED FINANCIAL:
The headline: Countrywide (CFC) Plummets 13% On Merrill Downgrade, Bankruptcy Speculation;
Pete Najarian says the Countrywide sell-off worsened on reports of a significant jump in its borrowing costs. Pete also says options volume suggests to him that CFC has further to drop. Pete tells the panel he’s short CFC.
On a related note, Pete Najarian says the bank stocks rolled over Wednesday as countrywide plummeted. If Goldman Sachs and Morgan Stanley are having problems, it will likely ripple through the entire space, says Pete. He sees a lot of put buying in the Financial Select Sector SPDR(XLF).
Finally, Pete recommends investors buy the volatility. In other words if you buy stock in this environment, buy a put spread as protection.
Guy Adami adds that Warren Buffett sees something in Bank of America (BAC). Guy suggests that BAC might not have much exposure to the subprime slime.
Tim Seymour reveals he bought materials companies today. He also says that as liquidity dries up, the dollar benefits. Consequently, he recommends buying CurrencyShares Canadian Dollar Trust (FXC).