Fast Money Recap - HSBC Is Falling off a Cliff (1/12/09)

Recap of CNBC's Fast Money, Monday January 12.

Citi’s Saga: Citigroup (C), Morgan Stanley (MS)

The Dow was down for the fourth consecutive session as financial stocks took a hit. “Citigroup’s business model still stinks,” commented Jeff Macke, who would stay away from financials in general. Pete Najarian called Morgan Stanley’s bid for Citi’s brokerage unit Smith Barney a take under, not a take over, since Morgan is getting Barney for a steal. Guy Adami says that when crude is around $34.50 and closes higher, it is time to buy the S&P. Macke thinks a good support range for the S&P is 900-920. However, Najarian warned the Volatility Index is up again. Finerman thinks bonds look good and says the many deals being done are a reason to be short instead of long.

Alcoa (AA) and CSX (CSX) After Hours

Alcoa saw its first loss in 6 years, a net loss of $1.49 per share, caused by a decline in metal prices. Najarian said this is not surprising news. CSX reported a lower preliminary fourth-quarter profit because of a writedown. Adami notes CSX is at its 52-week low and if it holds, it is more interesting than Burlington Northern (BNI). Najarian also likes CSX.

Is HSBC (HBC) Falling Off a Cliff?

Options trading in HSBC looks bad. Really bad, according to Jon Najarian who compares it to Bear and Lehman’s options activity before these big banks stumbled. “It’s falling off a cliff,” he says. “They are buying puts at the 50-strike, 45-strike, 40-strike. I’ll get real scared if they start buying the 20-puts because that’s the kind of pattern we saw in Lehman and Bear. They (institutional investors) are buying 50% out of the money puts.” Najarian urges investors to keep an eye out.

Where Is the Economy Headed? iShares Dow Jones US Real Estate (IYR), Forest City (FCE.A), Excel Maritime (EXM), Dryships (DRYS), Wal-Mart (WMT), Target (TGT)

The troubled financial, materials and energy sectors have lifted a bit after their 08 lows, and the group discussed whether this is a sign of things getting better or worse. Karen Finerman thinks the economy is going to get worse before it gets better and is short IYR and ForestCity. Pete Najarian is looking to shipping stocks Dryships and Excel Maritime as trades. Guy Adami likes trading in pairs. For instance, he is long Wal-Mart and short Target and takes either trade off if there are big moves.

Toyota’s Star Car: Toyota (TM), General Motors (GM), Ford (F), Honda (HMC)

The big news in the auto sector is Toyota’s third-generation Prius hybrid, which tops the competition in sales and energy efficiency. The group thinks this could be huge for Toyota and discussed GM’s, Honda’s and Ford’s plans to release hybrid models. GM has an electric car that is due for release in 2010.

Abbott Labs (ABT), Medtronic (MDT), Genentech (DNA), Celgene (CELG), SPDR S&P Biotech ETF (XBI) iShares Nasdaq Biotechnology (IBB)

M&A activity is healthy in Pharma with Abbott Labs announcing its deal to acquire Advanced Medical Optics for about $2.8 billion, Medtronic’s plan to buy Ablation Frontiers for $225 million and Roche giving the green light for its acquisition of DNA. Pete Najarian says pharma outshines other sectors because it is flush with cash, and Buffett’s attention didn’t hurt. Guy Adami likes Celgene and Finerman would balance risk with XBI and IBB.

Seeking Alpha is not affiliated with Fast Money or CNBC.

Comments

[PeteK:]

Banks ? More like party gone wild !!

Jan 14 12:12 AM

[Eskin:]

Wow scary little bit about HSBC... wonder what another collapse of a major international bank would do today...

Jan 14 08:51 AM

[User 244930:]

The bulk of the trading activity in HBC Monday involved a customer purchase of 75,000 March 45 puts that traded along with the purchase of 650,000 shares at $47, 12,500 March 35 puts at $1.35, 12,500 March 40 puts for $2.45, and the Sale of 50,000 March 50 puts for $4.30. All these traded at the same time by same customer. It could be some rolling of positions. The March 45 puts saw the biggest increase in open interest.

Jan 14 01:24 PM