Thrown Overboard - Fast Money Recap (10/3/08)

Recap of CNBC's Fast Money, Friday October 3.

Still Seized Up

Dylan Ratigan began with a discussion of the drop in the stock market following the passing of the bailout bill. He also mentioned the credit markets did nothing in response to the bailout bill news. Joe Terranova said the credit market did nothing because we need to see a globally coordinated easing effort from all central banks. Guy Adami said to give the credit markets two to three weeks to respond. He says the hedge-fund liquidation is causing selling into every single rally. "Even hedge fund Greenlight Capital -- which shorted Lehman Brothers all the way down -- is losing money this year," he added. Tim Seymour said we will get $100 billion from "fund of fund" just in redemptions for the fourth quarter. "We're talking about 1% of global market cap that could come off going forward," he said. Zach Karabell says emerging-market liquidity and credit isn't a problem. Seymour disagreed. He said things have seized up on the corporate credit level in emerging markets. "If you think it's scary in the U.S., well, things are scarier abroad," he added. Karabell said he doesn't agree with the China slowdown story based on the exposure to the U.S. and Europe. "There is maybe 10% to 15% of exposure to China's economy to exports," he added. Terranova explained that hedge funds are massively exposed to emerging markets, and now they're moving out as redemptions hit.

Thrown Overboard - Freeport-McMoRan (FCX), Celgene (CELG), CME Group (CME)

Ratigan asked the traders which stocks right now are value plays. Adami said Freeport-McMoRan is now trading at five times forward earnings. He says FCX is setting up for a capitulation bottom. Terranova compared Freeport to Celgene and CME Group, which he says were thrown overboard earlier this week.

International Pain

Joe Terranova said the credit market did nothing because we need to see a globally coordinated easing effort from all central banks. Guy Adami said to give the credit markets two to three weeks to respond. He says the hedge-fund liquidation is causing selling into every single rally. "Even hedge fund Greenlight Capital -- which shorted Lehman Brothers all the way down -- is losing money this year," he added. Tim Seymour said we will get $100 billion from "fund of fund" just in redemptions for the fourth quarter. "We're talking about 1% of global market cap that could come off going forward," he said. Zach Karabell says emerging-market liquidity and credit isn't a problem. Seymour disagreed. He said things have seized up on the corporate credit level in emerging markets. "If you think it's scary in the U.S., well, things are scarier abroad," he added. Karabell said he doesn't agree with the China slowdown story based on the exposure to the U.S. and Europe. "There is maybe 10% to 15% of exposure to China's economy to exports," he added. Terranova explained that hedge fund are massively exposed to emerging markets, and now they're moving out as redemptions hit.

Credit Markets

Brian Westbury, chief economist at First Trust Advisors, joined the traders to discuss the credit markets. Westbury says nobody really understands what a panic looks like. He says we will have short period of where people pull back in every area. "Productivity is strong, this is a short-lived period of panic, and we will come out of this really strong in the early part of 2009," he said. Westbury says we have lived through periods that were worse in terms of total losses. "Back in 2000-2002 we lost $7 trillion of stock market wealth, and consumer spending never fell once for one quarter of negative growth," he said.

Bank on Banks - JPMorgan Chase (JPM), PNC Financial (PNC), U.S. Bancorp (USB), Wells Fargo (WFC), BB&T (BBT), Bank of America (BAC), Citigroup (C)

Dick Bove, a banking analyst at Ladenburg Thalmann, joined the traders to discuss what will happen with the banking system now that the bailout has passed. Bove pointed out that JPMorgan Chase, PNC Financial, U.S. Bancorp, Wells Fargo, BB&T and Bank of America are all up 75% to 100% from their lows, which shows that something is wrong with the analysis of this industry. "Most of the information being pushed out about banks not making loans is wrong, and the data from the Federal Reserve shows it," he added. Bove says it's not accurate that banks aren't making loans to each other. "We have so much misinformation being driven on this industry that it boggles the mind," he said. He told viewers that if he was going to build a portfolio of banks right now, he would buy PNC Financial, BB&T, Bank of America and he would have a huge position in Citigroup.

Dollar Talk With Gartman

The traders spoke with strategic investor Dennis Gartman, author of the Gartman Letter, about the U.S. dollar. Gartman said the only place you can be long right now is the U.S. dollar, because our banking system is in better shape than Europe's. Government bailouts and job losses are mounting in Europe. “It seems to me Europe is just waking up to the fact that their banking system is in trouble.” Gartman says he's long the U.S. banks and short the stock market in general. "Our banks aren't injured, but our investment community probably has been," he added. Gartman says China is just pausing from 15% growth to 8%, and this is "a tidal wave that isn't going to stop anytime soon," he said. Gartman says that for the first time in 45 years he has been frightened. "I think the legislation that has been passed will allow everyone to take a deep breath. I think in one year from now everything will be fine," he said.

Final Trade – Your First Move for Monday October 6.

Guy Adami likes Novartis (NVS).
Joe Terranova selected Target (TGT).
Tim Seymour picked Coca-Cola HBC (CCH) which is Coca-Cola’s branch in Greece.
Zach Karabell suggests long BHP Billiton (BHP).

Seeking Alpha is not affiliated with CNBC, or Fast Money
 

Comments

[fatcat:]

I used to think these people might have a clue,but just like Bove,they don't know shit...

2008 Oct 04 10:50 PM

[Bettyblue:]

Amen.

2008 Oct 05 02:44 AM

[surgcare:]

These guys are good at "BLOVIATING" but do't know #%&*@ about th market .

2008 Oct 05 12:26 PM

[107Sid:]

These guys tend to shoot from the hip. THey tend to react to whatever moved that day and.or has a rumor surrounding it (usually a well-known one), half of which will be denied overnight.

2008 Oct 05 05:48 PM

[Socialism c...:]

Are you *freakin* kidding me?? The Bush/Paulson/Pelosi/Fr... cabal took the American people for a FLIPPIN' RIDE!!! It was sooo bloody urgent to get the deal done in a matter of days. "We must act now..." -- blah, blah, blah. And then Paulson comes out after it passes and comments that they won't begin buying any of the bad debt off the banks for about a month!!

1) Yeah, sounds really urgent to ya. Way to get right on that, Hank. Doin' it for Main Street, were ya?
2) A month...that'll take things just about after the election. Nice timing, y'all.

Lookin' out for Main Street?? Or attempting to cover your own sorry @sses?!?!

Unreal. This country needs a damn good revolution!!! I vote we march on D.C. and throw the whole stinking bunch of them out...elect a completely new House and Senate this November. And mandate to them that there be a completely new tax code: a flat tax never to exceed 10%. Government will simply have to reign itself in and cut the crap out. Get the bloody hell out of the way of the American people.

A flat tax would be the hugest transfer of power from the government back to the people since the founding of this country!! (Read the Flat Tax Book, by Neil Boortz, et al.)

2008 Oct 06 01:12 AM