A Giant Pinball Game - Fast Money Recap (9/30/08)

Recap of CNBC's Fast Money, Tuesday September 30.

A Giant Game of Pinball

Dylan Ratigan began discussing the huge rally in the markets today. Right now, investing in the stock market seems tantamount to playing a giant game of pinball in which your portfolio is bouncing in every and any direction. He pointed out that the market exploded higher for the following reasons: Politicians reintroduced the possibility for a vote this weekend on the bailout plan aimed to unlock the credit markets, and the reintroduction of a conversation with the SEC around the way we back bonds related to the housing market and how they are accounted for on the books of the banks. Karen Finerman said the accounting change is helpful in the short term, but she says the new rules are ripe for abuse from corporate management. However, she says some things in the market are trading at irrational prices. Jeff Macke said management can now value these assets at whatever they please with the new rules. Joe Terranova said it doesn't feel like we were up that much in the market today. He reminded viewers that back in 1987 the government went in and bought S&P futures. "The government might as well just go in and buy the same futures, because at the end of the day they want the market higher," he added.

Banks Lift the Market - Wells Fargo (WFC), JPMorgan Chase (JPM) and U.S. Bancorp (USB), Wal-Mart (WMT)

Guy Adami said strong banks like Wells Fargo, JPMorgan Chase and U.S. Bancorp are setting up for the biggest rallies they might ever see, and nobody is talking about them. Ratigan moved the discussion along to the chaos in the credit markets and how can we move forward until the banks trust each other. Jeff Macke says we can move forward by buying equities because they never get punished by this. He explained that retailers are going to have a weak Christmas because of the issues with consumers getting credit. However, Macke says Wal-Mart should do well.

Dollar Has Record Gains - PowerShares DB US Dollar Index (UUP)

Ratigan asked the traders about the record gain of the U.S. dollar vs. the euro. Terranova said he would be a buyer of the dollar. "The Europeans are behind the curve in trying to fix their credit markets," he said. Adami reminded viewers that Japan waited too long to fix its credit markets and fell into a 20-year recession. "The trade for the second half of the year will be long the U.S. dollar," he added. Macke said he is back long the PowerShares DB US Dollar Index. Finerman told viewers that she is no longer short the British pound.

Strange Moves - Google (GOOG), Research In Motion (RIMM), Apple (AAPL), Dell Computer (DELL), Celgene (CELG)

Next, the traders talked about the huge move in the Nasdaq and the strange moves in some technology stocks like Google. Ratigan said the Nasdaq is where Main Street trades with companies like Research In Motion, Apple and Dell Computer. Terranova pointed out that there was a trade imbalance at the close yesterday for names like Celgene due to large redemptions from mutual funds. He says Celgene dropped to $53 a share at the close yesterday and opened back up today at $63 a share. Macke said that technically, he would rather wait to see if Apple can trade back over $120.
Scott Wapner joined the traders to discuss the strange moves in Google shares before the close. He said there was a tremendous amount of volume and volatility in Google before the close. "We saw $80 spikes in the stock and the Nasdaq busted some erroneous trades," he added. They determined the closing price for Google today was $400.52 a share and not $341 a share. Adami said this is what happens when you let machines do the work of human beings.

The Bailout Discussed

Douglas Cliggott, CIO of Dover Management joined the traders to discuss the proposed bailout plan. He said the bailout plan of $700 billion isn't a lot of money when compared with the balance sheet of the U.S. financial sector of $62 trillion. “I’m managing money very cautiously. I think the U.S. is in a recession, and the next six to nine months are going to be very rough no matter what gets legislated this year,” he tells Fast Money. "Most big lenders don't feel they have enough capital, and millions of borrowers already have too much debt," he said. Cliggott says there might be some companies in a position to borrow, but he doesn't think too many households can. As you can probably guess, Cliggott doesn't advocate taking risks in this environment. So, if you think this is a good time to buy financials, think again! Cliggott is very bearish on the sector. He expects car loans to default and credit card bills to go unpaid. As a result, "there are probably a lot of bad earnings ahead in this space." He said viewers shouldn't try to pick a bottom in financial stocks, and if they want to be long anything, get into health care and consumer staples.

Trader Radar - Intel (INTC)

Intel shares were among the most actively traded stocks on the Nasdaq today.

Barton Votes No Until Changes Are Made

Republican Joe Barton of Texas voted against the bailout bill. He joined the traders to discuss putting together a new plan new plan. He tells us that he advocates starting with a clean sheet of paper and then putting together a bill that “we know will pass before we put it up on the floor.” "If they put a re-warmed version of the Paulson plan I’m going to vote no again,” says Barton. “But if they use some fresh thinking then it could pass.” Barton wants changes. "I would do two things. Make the insurance program mandatory and address the trillion and a half debt ceiling increase which I think is unconscionable,” he tells us. When that happens he thinks the bailout will pass. He says the marked-to-market accounting for mortgage-backed securities is a problem because people don't know what they are valued at when their bundled. He explained that the exotic nature of these securities makes it hard to have transparency with marked-to-market accounting. "I think the government can provide an insurance mechanism for the people who want to perform the disentanglement of these securities," he added. Barton says he will vote no again on the bill if it is just a re-warmed version of the Paulson plan.

Tomorrow’s Plays – Goldman (GS), Bank of America (BAC), JP Morgan (JPM), Citigroup (C), Morgan Stanley (MS), Fifth Third Bancorp (FITB), KeyCorp (KEY), Noble (NBL), Jabil Circuit (JBL), UnitedHealth (UNH)

With the market being whipsawed by speculation and negotiations in Washington DC, Jon Najarian shared his thoughts for your first trade for Wednesday. I’m long Goldman, Bank of America, JP Morgan, Citigroup and Morgan Stanley, Najarian said. “I bought them on the dip and I’m going to hold them. I don’t think we have had enough of a rip yet to sell them.” Najarian also said he is watching Fifth Third Bancorp and KeyCorp along with the entire regional banking sector because they could rebound. He says these stocks should be very interesting. Najarian also highlighted unusual options action in Noble, Jabil Circuit and UnitedHealth. This action suggests to Jon Najarian that these stocks could go higher.

Final Trade – Your First Move for Wednesday October 1.

Jeff Macke said he likes the dollar, Wal-mart (WMT) and the fetal position.
Guy Adami thinks Intel (INTC) looks interesting.
Karen Finerman likes oil services; she mentioned Oil Service HOLDRs (OIH), Anadarko (APC) and Devon Energy (DVN).
Joe Terranova said to keep and eye on United Health (UNH). He likes regional banks including: First Horizon (FHN), State Street (STT) and BB&T (BBT).

Seeking Alpha is not affiliated with CNBC, or Fast Money
 

Comments

[Britishsteel:]

people vote against this bailout or you will be reduced to poverty not seen since the great depression, this was on kudlow tonite: 9/30/08

"Paulson and Bush threatened to veto the legislation if there was an explicit prohibition of transfers from foreign banks to an American subsidiary."

THE ASSETS DO NOT EVEN HAVE TO BE AMERICAN MORTGAGE ASSETS - THEY CAN BE AN OFFICE TOWER IN SHANGHAI!

YOU ARE GOING TO GET FLEECED FOR HUNDREDS OF BILLIONS OF DOLLARS IF THIS BILL PASSES - THAT MONEY IS GOING TO GO IMMEDIATELY OUT OF THE COUNTRY!




SEC. 112. COORDINATION WITH FOREIGN AUTHORITIES AND CENTRAL BANKS.

The Secretary shall coordinate, as appropriate, with foreign financial authorities and central banks to work toward the establishment of similar programs by such authorities and central banks. To the extent that such foreign financial authorities or banks hold troubled assets as a result of extending financing to financial institutions that have failed or defaulted on such financing, such troubled assets qualify for purchase under section 101.


votenobailout.org/

2008 Oct 01 08:44 AM

[Apple at 60$:]

yea sure YOU will be the only voting against the bailout

2008 Oct 01 10:22 AM

[carey_jim:]

If you could look back and do one thing for the last month, you would have doubled your money, at least:

Buy an ETF index fund at the end of a down day and sell it at the end of next day if it's an up day.

Casino America?

2008 Oct 01 10:30 AM

[solar jim:]

To Britishsteel: Actually, I can't vote for it. And I haven't ever seen any House representatives or senators on this site so I'm not quite sure why you're telling us to vote against it. Until it changes, US is a representative democracy and its the rep/sen who actually votes on behalf of us.

2008 Oct 01 01:32 PM

[solar jim:]

If its a foreign bank that bought a US unit that then got in trouble or was in trouble its the same as if it is a wholly owned US bank - less lending here and the system seizes up and the death spiral downward continues. It's a consequence of pushing globalization that this is affecting everyone everywhere as now the bad debt is everywhere. You know, it's funny - I don't see too many people pushing globalization and deregulation as much as they did a year ago.

2008 Oct 01 01:36 PM

[MSmailbox:]

Global trade is a good thing, but our financial institutions (and theirs) need to remain compartmented, just as the different areas of a ship are... If one area takes a torpedo, it floods just that area, not the entire ship. We don't need to expand our exposure to toxic debt, we need to limit it. Cooperation is OK, but not taking the doors off the hinges and the shades off the windows. We are still a discrete and unique country and we need to start acting like it.

2008 Oct 01 11:32 PM

[copper1987:]

Better off watching Family Guy on TV than fastmoney. A lot funnier and more realistic than fastmoney. They contradict themselves more than Cramer!

2008 Oct 03 11:34 AM