Recap of CNBC's Fast Money TV Program, Tuesday March 3.
Look Who's Recommending Stocks
Obama said stocks make a good long-term investment in spite of the "fits and starts" in the market. However, the S&P broke its critical point of 740 to the downside, and many are blaming the budget. Dylan Ratigan said two reasons the budget is blamed for the problems with the market are because of the proposed tax increases and the deficit problems it will create. Daniel Clifton, Strategas Research head of policy research, commented, “We’re going to spend about $4 trillion and we only have $2 trillion in revenue. Not only will we have to raise taxes but we’ll probably have to create new taxes.”
However, the White House defends its policy and calls it an "engine" for economic growth.
On Tuesday the S&P fell below 700 for the first time since 1996 on continued worries about the recovery of the financial sector. Ben Bernanke's sharp criticism of AIG added to the bearish sentiment; "If there is a single episode in this entire 18 months that has made me more angry, I can’t think of one other than AIG. AIG exploited a huge gap in the regulatory system, there was no oversight of the financial- products division, this was a hedge fund basically that was attached to a large and stable insurance company.” Dylan Ratigan thinks the market is reaching a point of understanding and expressed hopes AIG is going to be investigated. Jeff Macke thinks such an investigation and prosecution of the "crooks" at AIG might help heal sentiment.
General Electric dropped despite CEO Jeffrey Immelt's proposals to reinvent the company. Immelt said he intended to trim some of the company's large financial segment and commented Obama's stimulus plan would help parts of the company connected with energy and healthcare information services. In spite of this announcement, GE shares fell 8%. Najarian said the options activity in the June 2-and-a-half puts was ridiculous and added GE is not a bank. Jeff Macke commented, "They need to have an investor day and lay out what’s in that opaque box otherwise known as toxic assets." Karen Finerman thinks investors need more information on credit quality before they can get behind the stock.
Commodities moved up; crude oil futures rose to $42 and then fell 10%. . Chris Jarvis, senior analyst, Caprock Risk Management said, "Commodities want to go higher but we've got the equities markets going down so there's no reason to go crazy and go long on them." Tim Seymour thinks the oil chart the last 3 months looks good. Najarian said puts should be used for protection when trading commodities and if copper breaks over 160, it should mean good things for Freeport.
Blackstone Chairman Stephen Schwartzman took a 99% pay cut to reduce expenses at Blackstone, a company which depends on a healthy lending environment. Pete Najarian had this to say about Blackstone: "Options action suggests to me that this private equity firm could start turning during the next quarter. As credit begins to ease it seems to me Blackstone could be sitting in the sweet spot. They’ve got $25 billion dollars in dry powder out there looking."