Fast Money Recap: Intel's Chips Are Down (11/12/08)

Recap of CNBC's Fast Money Program Wednesday, November 12.

They All Fall Dow

The Dow fell to its lowest level in five years after Treasury Secretary Henry Paulson announced TARP was not going to bail out bad mortgages it right now. Jeff Macke says investing in the market is nearly impossible because the rules keep changing. Pete Najarian observed that the only sector that has not participated in any of the rallies was the financials. Finerman says she sold her position in Google after it broke below $300 because she doesn’t feel it is worth fighting the tape. She suggested keeping positions small and hedging. Tim Seymour is looking forward to the CPI number next week, and if it indicates low inflation, commodities may be a good play. “There’s nothing wrong with cash,” said Macke. “This isn’t the market to learn in.”

 

Carnage in Tech: Intel (INTC) and Best Buy (BBY)

 

Stocks dropped on news from Intel that its fourth quarter revenue will be less than expected because of falling demand. CNBC reporter Jim Goldman commented, “This is not just an Intel story…this is going to send a ripple effect in the rest of the chip industry…this is shaping up to be a dismal time for any tech investor.” News of spending cuts for Best Buy added to the general pessimism. Macke says the Intel news will take investors over the selling edge and the stock could be a trade at $2 or $3. Najarian added "I'd also grab Intel stock but I'd sell some upside calls and hope for a short term rally off the lows.”

 

Oil Drops to $56

 

Investors wondered why oil was climbing so high in July, and now they are wondering why oil is falling so far. With oil dropping to $56 on weakening demand, Dylan Ratigan commented, “The trade is unraveling before your very eyes.” Some say the rise to $145 was a bubble and the current levels are realistic, while others think oil is an economic indicator of a deep recession.

 

Addision Armstrong, director of research for Tradition Energy said it looks like doom and gloom for oil, which he sees going to $45. The losses could be heavy, because many companies were hedged for oil at $200. The only good news is that lower gas prices could mean more consumer spending over the holidays. While Finerman said oil is a proxy for fear in the market, she wouldn’t divest from oil stocks as long as one owns oil equity stocks and is short oil itself.

 

In the Hedges

 

As the hedge fund redemption window is coming up on November 15^th and investors are worried about a huge selloff. Well-known investor Doug Kass commented, “There is no joy in Mudville these days. I think the outlook for the next 3 to 5 years have been jarred. And our social, political, and economic futures have materially changed owing to the muddy financial ditch.”He added; “The scope and duration of the meltdown really has placed our economy well past the tipping point. It’s going to have enduring negative consequences.”

 

Paulson’s About Face on TARP

 

On Paulson’s announcement TARP would be used for other types of loans rather than for mortgages, stocks plunged. Macke says “Paulson was in effect saying ‘I don’t know what’s going on, you don’t either so we’re not going to fix anything.’” CNBC reporter Steve Liesman said the treasury is going to start another “Fed” to buy bundled auto and credit card loans. “I think the money is still out there, it just might not be going out as quickly as once thought.”

Final Trades: Macke is selling Proshares Ultrashort S&P 500, Tim Seymour: Ultrashort MSCI Emerging Markets Proshares (EEV), Finerman: shorting Capital One Financial (COF), Najarian: Archer Daniels Midland (ADM)

 

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Comments

[BxCapricorn:]

Tim Seymour, great call. Would have bought EEV at over $100 only to see it drop to $75 within three hours. NIce, and you do this for a living. Macke, sitting right next to you said he's selling SDS (and was big time correct). Always listen to bald guys. We don't care how we look when we talk, so our words mean more.

2008 Nov 13 06:42 PM