MARKET ON HOLD BEFORE ELECTION
The Dow ended little changed on Monday with investors unwilling to place significant bets ahead of the presidential election.
Dismal economic news also dragged down shares. A report from the Institute for Supply Management showed manufacturing activity hit a 26-year low.
Strategy Session with the Fast Money traders.
A McCain victory would be a surprise at this point, muses Karen Finerman. And I’m delighted to see the decrease in the VIX . Hopefully we’ll get back to fundamentals.
I don’t think we’ll see the market pricing in anything else until we get some policy response from the new administration, adds Tim Seymour.
I think the market is going to move sideways for a while, says Guy Adami.
Stocks are down on average of 30% over the last 6 months, says Jeff Macke. That suggests investors are looking ahead to weakness economically.
I think what's going be more important as the week goes on will be how the retailers' same-store sales figures look Thursday morning and how bad the unemployment number is on Friday," says Michael James, senior trader at regional investment bank Wedbush Morgan in Los Angeles.
I’m most comfortable buying stocks of companies that have solid balance sheets, adds Finerman. They have to have a solid cash position to attract my interest.
The market seems to be pricing in a recovery for this time next year, adds Adami.
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GM OCTOBER SALES DROP 47%
General Motors October U.S. sales plunged 45 percent and Ford's dropped 30 percent, as low consumer confidence and tight credit combined to scare customers away from showrooms.
The results released Monday—along with a 23 percent drop at Toyota and a 25 percent decline at Honda—are strong indications that sales for the industry as a whole may perhaps be the worst in 25 years.
GM said themselves the industry is not sustainable at this level of production, explains Karen Finerman. That could translate into a ton of job losses.
I think the trade here is to short Toyota, says Jeff Macke. As the stock gets into the mid-80’s I’d be building a short position because the stock usually hits resistance at that level.
GOLDMAN TO POST 4TH QTR. LOSS?
Goldman Sachs will likely post a fourth-quarter loss, its first ever as a public company, due to the "stressed" equity environment over the past two months, which will also weigh on Morgan Stanley's quarterly results, Merrill Lynch analyst Guy Moszkowski said.
Moszkowski, however, said that Morgan Stanley should be in a relatively better position than Goldman because of its business mix -- limited private equity and very little proprietary equity trading at this point.
"We still think GS remains in many ways at the forefront of the capital markets industry, but if it can't consistently produce a premium return on equity (ROE), it's not going to be able to continue to have the premium valuation multiple that it has enjoyed," he wrote in a note to clients.
They’ve got problems, exclaims Jeff Macke. I’d stay away from them.
Just as they figured how to make money in the 90’s, Goldman is now trying to figure out how to make money in this environment, explains Guy Adami. And I believe they will figure it out.
It’s still too early to understand what the new Goldman will be, counters Karen Finerman. They made a lot of money from their trading desk so I’m not sure what happens from here forward.
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OIL KEEPS SPUTTERING
Oil fell nearly 6 percent on Monday as falling demand and fear of recession offset OPEC plans to reign in output.
"The most devastating blow for crude oil today is data showing that U.S. manufacturing activity in October fell to the lowest level in 26 years, which means more worries for oil demand," said Phil Flynn, an analyst at Alaron Trading, in Chicago.
"Manufacturing used to be a great forward indicator for oil demand, but if the manufacturing sector is down, it will be a struggle to keep oil demand up," he added.
As a trading opportunity you tend to see oil bottom around this time of year, says Tim Seymour. I’d get back in.
Instead I’d get long the stocks related oil and not the commodity itself, adds Karen Finerman.
Oil like every other bubble before will probably over correct to the downside, says a disgruntled Jeff Macke.
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Trader disclosure: On Nov.3, 2008, the following stocks and commodities mentioned or intended to be mentioned on CNBC’s Fast Money were owned by the Fast Money traders; Adami Owns (AGU), (C), (BTU), (GS), (INTC), (MSFT), (NUE); Macke Owns (UUP), (SDS), (MSFT), (WMT); Macke Is Short (TM)
Finerman's Firm Owns (MSFT); Finerman's Firm Owns (OIH) Puts; Finerman's Firm Is Short (USO), (IYR), (IJR), (IWM), (MDY), (USO), (SPY); Seymour Owns (AAPL), (EEM), (F); Terranova Owns (VLO), (AAPL), (EXM), (FCX), (FTO), (POT), (X), (NOV)
Terranova Is Chief Alternatives Strategist Of Virtus Investment Partners, Ltd.; Virtus Diversifier PHOLIO Owns (IGE), (DBC), (DBV)
Terranova Is Co-Portfolio Manager Of The Virtus Diversifier PHOLIO; Virtus Investment Partners Owns More Than 1% Of (ABD), (ARE), (BIG), (CLB), (DLR), (EPR), (EXR), (MAC), (SLB), (SKT), (UA), (IGE), (DBC), (DBV),Virtus Investment Partners Owns More Than 1% Of Seagate Tax Refund Rights, Virtus Investment Partners Owns More Than 1% Of Shares Of Essex Property Trust Inc., Virtus Investment Partners Owns More Than 1% Of Shares Of Corporate Office Properties Trust SBI MD
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