Fast Money Recap - Suffering in the Citi (11/17/08)

by: SA Editor Miriam Metzinger November 18, 2008 | about stocks: AA / ADM / AGU / BBT / C / COP / GM / HD / IYR / LOW / LTD / POT / ROH / SCHW / VNO / XLF    
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Recap of CNBC's Fast Money program, Monday November 17.
 
 Painful Days and Mondays: XLF (XLF), BBT (BBT), Vornado (VNO), IYR (IYR)

Amid news of a spreading global recession reaching Japan, Citigroup’s 52,000 job cut, and Treasury Secretary Henry Paulson’s postponement of a concrete solution until the next administration, stocks dropped dramatically on Monday. Guy Adami said the situation is “extraordinarily precarious” and thinks if the Dow closes below 7800, it will dip further to 6000. Tim Seymour said with so much uncertainty about policy, he wouldn’t trade in this market. Pete Najarian noted that the financials have not participated in any of the rallies. Karen Finerman said she is shorting banks such as BBT and financials with broad exposure to real estate including REIT Vornado.

 Oil Below $55: ConcoPhillips (COP)
 
Oil dropped another 3%, and Adami says he doesn’t think it is worth trading the commodity, except perhaps to buy ConcoPhillips as a play on Warren Buffett’s position.
 
Suffering in the Citi (C)
 
America’s second largest bank announced a 52,000 job cut, on top of the 23,000 reduction in its work earlier in the year. Dylan Rattigan expressed frustration that while working people lose their jobs, CEOs receive such handsome compensation, even when they mess up. He suggested former Merrill Lynch CEO should admit the company didn’t work under his leadership and should return his $100 million compensation package.
 
 Anything Good? Loews (LOW), Limited Brands (LTD)
 
Jon Najarian, who keeps his eye on options trades, said two stocks to watch are Loews and Limited Brands.
 
GM (GM) Crisis
 
The Democrats are trying to push a bill through Congress that would dedicate $25 billion to aid the auto industry. Under the plan, the automakers would have to give the government a plan of “long-term financial viability,” halt bonuses for executives making more than $250,000 a year and aid to unemployed workers. The Fast Money group was upset to hear the government was again giving handouts, but Najarian noted at least they were putting a cap on bonuses.

Finerman made the following suggestion; the government should say to the big three auto companies,“We don’t have enough money to save all 3 of you. Knowing that, come back with the absolutely best plan and we’ll make some decisions.”

Larry Kudlow would allow the big three to declare bankruptcy, but Guy Adami was concerned that Chapter 11 would turn into Chapter 7 and “Who would want to buy cars from a bankrupt entity?”  In addition, if suppliers are not paid, the entire industry could collapse.

Many doubt whether the Democrats will have enough votes to pass the legislation.

 Who Will Inherit the Problems?

Main Street and Wall Street alike are anxiously awaiting the announcement of the next Treasury Secretary; Tim Geithner seems to be the most likely candidate, followed by Larry Summers, John Corzine and Paul Volker. Larry Kudlow blames the delay in the announcement for the selloff on Monday and thinks the economy could easily rebound;
"I think in the long term we’re going to be fine," Kudlow said. "The Fed is pouring money into the system, prices at the pump are diving and credit is getting easier. These are the seeds of recovery. Now we just have to sow them."

Will Commodities Be Next to Rally? Archer Daniels Midland (ADM), Potash (POT), Agrium (AGU)

While things look dire for stocks and even funds are cash-heavy,  there have already been nine rallies in this crisis, and the group discussed the next sector to see an upturn. Guy Adami thinks commodities will be the next to rise, although not until January. Those who want to get in early should buy Agrium, Potash and Archer Daniels Midland. Some of these numbers are “just stupid.”

 Final Trade: Tim Seymour, Alcoa (AA), Guy Adami, Schwab (SCHW), Finerman Rohn and Hass (ROH), Najarian, Home Depot  (HD)

Seeking Alpha is not affiliated with CNBC or Fast Money

 
 
 

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