Yesterday on Fast Money Final Call, Brian talked about bank excess reserves being at extremely high levels. Banks are borrowing at a discount window of zero and they are continuing to build excess reserves. Brian thinks banks need to start lending again. Banks just having the reserves sitting there isn’t helping the market, he feels once they start lending, the market will rally big time. If the banks continue to collect reserves and not lend them out, we could see a sideways market similar to what Japan experienced. The banks have almost a trillion dollars sitting in excess reserves, they are taking it as free money and keeping long term rates low. They must start lending again. Also, we have saw a huge move yesterday due to great earnings and a lot of company’s raising there outlooks. Brian feels this is sustainable due to the large number of company’s with positive earnings.
Brian also has a play on BlackRock. Yesterday it was up nicely and the fundamentals looked great. He suggests selling a put to get long in the stock instead of simply buying the stock. The play is to sell the Jan. 120 put for $4.50, which is about a 3% yield vs. the value of the stock. Below 115.5 we are forced to get long in the stock and we are put to the stock at 120. You break even at 115.5 and above there is where you will make money.