Hide in the Fetal Position - Fast Money Recap (10/2/08)

Recap of CNBC's Fast Money, Thursday October 2.

Economically Sensitive Stocks - General Electric (GE), Goldman Sachs Group (GS)

Dylan Ratigan opened the discussion about how the most economically sensitive stocks were sold off today. He pointed out that whether we get a bailout or not on Friday, it might not matter. Ratigan mentioned that borrowing at the Federal Reserve's discount window was up 50% from last week at $400 billion. Pete Najarian said it's terrible when you have companies like General Electric and Goldman Sachs Group that are forced to do "sweetheart deals" with Warren Buffett. Tim Seymour says short-term borrowing is dead. "I don't think General Electric has huge liquidity issues, but I do think it's a backstop at an amazing cost," he added.

Room to Fall

Seymour mentioned that China had some numbers out this morning that showed the commodity sector has more room to fall. Jeff Macke says cash and the fetal position are the only two things you can get away with right now.

Healthcare and Biotech – Church & Dwight (CHD), Johnson & Johnson (JNJ), Novartis (NVS), Biogen (BIIB), Amgen (AMGN)

Ratigan said the health care names were strong today. Guy Adami said Church & Dwight and Johnson & Johnson are the names that will get you through it if you need to be in the market right now. He told viewers to look at Novartis, which was down for a play on valuation. Najarian says health care names like Biogen and Amgen continue to work because of the "need basis" and exposure level. "You don't suddenly stop needing your medication," he said.

Commodities No Safe Haven

Ratigan brought up the major declines in commodity names that were the global growth proxy. Seymour pointed out that Merrill Lynch started the fall by downgrading oil and saying crude could fall to $50 by next year. Macke says if you're looking for a bottom on these things, you will be waiting for a long time. "These stocks were ahead of themselves, and the funds are getting liquidated," he said. Adami pointed that gold was down big Wednesday and today, and if you're piling into it for a short-term "safe haven" trade, you're wrong.

The Chart of the Day - iShares Dow Jones Transport Average (IYT)

Macke said shorting the IYT is high risk. "The snapback rallies are tougher, because you're dealing with fear and enormous volatility," he said. Najarian said shorting the commodity complex doesn't make sense because it's all about people getting redemptions. "I was getting pinged all day long about coal stocks and oil stocks, but the problem is that everything is getting rolled out of these hedge funds," he added. Seymour says the hedge fund community is getting angry because the rules of the game are changing. "A lot of very smart guys are saying, 'I am out,'" he said.

Will the Market Get Past It? - Bank of America (BAC), JPMorgan Chase (JPM), Wells Fargo (WFC) and U.S. Bancorp (USB)

Ratigan asked the traders, if the bailout plan gets passed on Friday, will it change their sentiment on the markets for more than a day or two? Najarian said we will get a couple of days out of this thing before reality returns. "It won't change anything about the jobs number or home sales numbers," he added. Seymour says the market has totally looked past this. Adami said he would buy Bank of America, JPMorgan Chase, Wells Fargo and U.S. Bancorp if you can stomach a 5% move like you saw today. Macke says we will get a snapback rally, and he would use that strength to sell down positions.

The Federal Reserve’s Discount Window

Tony Crescenzi, a market strategist at Miller Tabak, joined the traders to discuss the 50% jump in borrowing from the Federal Reserve's discount window this week. Tony says that typically the market would see $60 billion accessed at the window, but this week we saw $409 billion. "People say the credit markets are frozen, but it's not an express, it's the real deal," he said. However, Crescenzi said the government is planning to buy back a large amount of Treasuries and pump more money into the system. "First we have to get through another few months of anxiety," he added.

Trader Radar - eBay (EBAY)

Shares of eBay were among the most actively traded stocks on the Nasdaq today.

Finerman’s Views - Microsoft (MSFT), Philip Morris International (PM), Apple (AAPL), McDonald's (MCD), Wal-Mart (WMT)

Karen Finerman joined the traders to discuss her views on the day. She said the day was painful, and panic set in. She said it was interesting to see how hard hit the commodity names were. "I think we are likely to get a bailout bill passed, but I don't know if that makes things better. But it should stop things from getting worse," she added. Finerman said she is looking for companies with the best balance sheets and with strong cash flows. She likes Microsoft and Philip Morris International. Adami said the banking industry will be the big winner out of all of this. Najarian told viewers to take a look at Apple for its large cash position. He also likes McDonald's, which trades at P/E ratio of 16. Macke said Wal-Mart is a good place to hide in this tough market. But other than that the best way to hide is in the fetal position.

Final Trade – Your First Move for Friday October 3.

Guy Adami likes Oracle (ORCL).
Tim Seymour recommends long Embraer (ERJ).
Peter Najarian thinks Burger King (BKC) is a buy.
Jeff Macke says just “duck and cover.”

Seeking Alpha is not affiliated with CNBC, or Fast Money
 

Comments

[User 265729:]

Cramer and CNBC = Afterbirth

2008 Oct 02 11:19 PM

[Norman Lepo...:]

These flakes are almost as bad as Cramer.

2008 Oct 03 10:39 AM

[cashew:]

macke is right cash is it !!!!!!!!!

2008 Oct 03 09:04 PM

[cashew:]

Macke is right cash is it !!!!!!!!!!!

2008 Oct 03 09:05 PM