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pur. good, clean water. ben bernanke gives the market the best of both worlds. low rates and a better economy. welcome to "fast money." live from the nasdaq market site. i'm melissa lee. these are your traders. a big, big show tonight. moments away rick stand telly with the fed's action today. theater shift, does this rally have him change his tune? buying bank of america shares after the bell, your way to play along with this hedge fund king. let's get to the word on the street today. a nice broad-based rally. it was so remarkable that even after the statement was released by the fed the rally strengthened. why? >> here's the challenge right now in the marketplace. if you're bearish, you're waiting for the possible correction and you're underinvested. think about this, if you're under invested, you're waiting

for a sign. last friday, post unemployment 2:00 p.m., s&p 500 futures got below 1012. they still have not recovered yet this week. they tried again today late in the day, couldn't do so. rolled back over.. so again at some point all these people that are under invested are going to come in but it seems like everyone's waiting at the sidelines. i think we're in no man's land. >> this is a very difficult tape. we basically just got back what we lost yesterday. let's get ourselves on an even keel here. i still think we're going lower. everybody's saying the worst is over, this market's going higher. but i feel it in my heart that the next big move is lower. when i say the next move, i'm talking about 40 or 50 s&p points. >> karen, what do you feel? >> i kind of agree. i think some of these stocks have had such a big run-in we've had this divergence. between what's happening in the economy and what's happening in the stock market. and the stock market has discounted a huge return, a huge v-shaped recovery in the economy

that maybe will come and that's great. if it does, stocks might be fairly priced already. i can't get wildly bullish here. >> volatility, pete? >> i think what you've got to do is flip around yesterday into today.y. that's what you got, a lot of trash stocks moving to the upside. then you have participation with goldman sachs. nice intel rally when you look across the chip sector. energy didn't hurt. it came down to volatility. volatility has been hanging around the 25.5 level. on a day with the s&p closing at 1,005. protections are being put in place. everybody keeps looking for this big pull-back, including myself. the more protection that's put in place, the less need to panic out of the marketplace. that's what you're seeing right now been 800,000 puts against 400,000 calls today on an up day. that doesn't normally make sense. but it makes sense in a market up over 1,000. >> what's the fundamental catalyst to take the market down? we're all bearish, even myself today. i did actual put buying.

we navigated our way through earnings. we navigated our way through unemployment. what will be the fundamental catalyst to get this impending correction going? it's going to just have to be price action, also valuation. >> i was on a panel this morning hosted by charles schwab, an panelist there saying the next growth is revenue growth. that's not going to happen until september. we're in the no man's land, as you said, guy. there's no reason to move higher, not to be the bear here, but there's no reason that's going to come out to be that catalyst for stocks. >> we didn't see revenue growth. we saw eps better than expected. you can only manage costs for so long and the government can only bail you out for so long. that's why the next big leg is lower. >> the potential catalyst, look

at the performance of the market right now and look at how many people who have missed the performance. longer we get deeper into this year, people need to start fighting for that performance level. that's the next catalyst. right now like you mentioned, we're getting through most of the major catalysts. they all performed like you had hoped but now that money on the sidelines, how long can it sit there as the s&p sits at 1,000. >> one sector that did well, gold man, jpmorgan up. more than 2% apiece. citigroup surging and after the bell, good news that could last into tomorrow's session, and that is hedge fund giant john paulson buying shares. this could bode well for the entire financial space tomorrow if one wants to invest alongside one of the top performing hedge funds. >> we talked about goldman sachs being a leader for the market. but post-fed comments, think about the entire banking sector, the financial sector. they will still have the steep yield curve working in their favor. capital markets are clearly improving right now. consumers will be able to

service their debt on a better level if you keep the interest rate environment low. fed today obviously said they're going to din to do that. everything lines up well in the financial sector for a potential return to normalized earnings. that's what you are hoping for there. >> i am watching bank of america. it's a really interesting story. this is a huge turnaround story. i think of this as back from the edge of the abyss. if you think about the year bank of america had ending i guess today, ironically, with paulson taking a position which is huge, they managed to step on nearly every land mine that was out there to be stepped on in 2008. whether it was the countrywide acquisition which is synonymous with subprime lending, whether it was the acquisition of merrill lynch, t.a.r.p. 1, $15 billion. t.a.r.p. 2, $15 million to merrill lynch. then the alleged bonus fiasco. everything went wrong here until they needed $20 billion from the government in early this year and then the stress test. where they came out to be very

under capitalized. but then things started to turn. they were able to raise $13.5 billion of equity. they then did a convert to $14.8 billion. then they sold assets for another $7 billion. 30-some-odd billion dollars -- ish. it is an extraordinary amount of money. if you think about this franchise, they're in 1 of every 2 homes in america. you got countrywide cranking it. that refinancing business is huge. they've got the thundering herd. good or bad depending on how you look at it but the potential profitability here is enormous. they have survived the onslaught of all of this crap from 2008. and here they are. i like bank of america. we are early -- common shares, i am long. preferred shares, i think the preferred that have less risk, less return. the common, it is nice to have a

guy like john paulson, yes winl's the fourth largest shareholder now. he it buy these as of uni30. the stock wasn't priced that different from here. it is a big vote of confidence. this is a turn around place for the long-term. >> we should note just to give credit where credit is due, our on-air editor broke the story of john paulson picking up the shares in bank of america. he broke that after the bell today. you did see the after hour surge in bank of america. bank of america stepped in every single land mine of the financial crisis. does this give us more confidence in a name like citigroup, for instance? >> i think it is a completely different animal than bank of america. back to bank of america, karen and pete's point, you have a tremendous amount of asset managers on the site under investments. mutual funds moved away from ownership from bank of america at the beginning of this year. now that bank of america is rising, we're all getting comfortable again with the bank of america model, might have hads -- mutual funds are completely under invested.

>> what is a similar animal that might get some sort of, you know, wind on its back in tomorrow's session based on the polls and headlines we're seeing tonight? >> wells fargo is a similar, big premier money center, certainly of a scale that's enormous. they've stepped in a lot of it, too. >> wells fargo, a lot of people have gotten short on things we've start talking about. pete saw some put buying. i still the best place in a lot of these financials are the downstream plays. piper jaffray we'll talk about later. look at that stock. raymond james. those are the places to go for my money. >> piper jaffray, talk about a stock when they actually raise the next price target for them, absolutely incredible. also keep an eye on some of these regionals. if the commercial industry's not as bad and you look at companies like bank of america, they're exposed to just about everything. bank of america is a big bet on the consumer. i would put them in the city category as far as comparables.

i like what's happening there. they average $1.3 billion a day for the month of august. that's 20% of the nyse follow um is in citi as the stock has gone from 3 to 4. small pull-back yesterday, i think that name can perform just as well, if not outperform bank of america. >> you said "if" commercial isn't that bad. that's a big "if." the different could be that they're writing it down up front right now, putting aside enough reserves to offset those losses and maybe we aren't seeing that at same degree -- >> federal realty yesterday put out 1.7 million shares out to the public at $57.50. the stock's $60 today. there is a risk tolerance at least coming into the commercial area right now. i like what this is showing us right now. at least the risk is there. doesn't mean it's over, but risk is coming back into that sector. >> brookfield properties today, a very big new york office space exposure, they did an enormous

offering, snapped that up, $900 million they raised. they cures a lot of ills when you can raise thatch money. markets there, why not. i think we'll see more offerings coming. >> the fomc, they'll come in and buy commercial mortgage-backed securities. they'll support tose risky asset prices if they need to. when you look at commercial real estate you think this is the other shoe to drop, i done think it will be a heavy boon. probably more of a slipper. we're getting headlines in that john paulson, the hedge fund manager has also acquired a small number of capital one financial shares. potentially we could see if we can pull up the after-hours chart. potentially we could see an uptick. i believe it's also courtesy of charlie gasparino. we are seeing that higher in the after hours session. any buyers of capital one following in the footsteps of john paulson? >> no, thank you. >> no, thank you. why? >> why is mr. paulson missing? >> i wouldn't know.

i wouldn't know. far be it from me to say what he's missing. you know, just stick with my bank of america, got my preferred. that is interesting that here is one of the obviously biggest bears on financials for two years and what a right two years it was to be bearish on financials now seemingly more bullish. >> you wonder if there are bets on the other side of these things. in a vacuum, you can say he's doing nothing else but buying bank of america and capital one. there are a lot of other moving parts. >> for instance, you might not know an options position that's being put out in conjunction -- >> would have been on fire. and we've talked about these volumes and more and more folks -- somebody earlier today was talking about putting on these derivatives in the form of protection. that's been pushing these volumes. the more people use this the more i'm telling you, this is something that's almost like the pa parachute holding on to the market.

because the fact that people aren't panicking out. people don't see this market tumbling over. >> let's move on to another slice of the market. home builders, toll brothers up, 14%. we got a lot of the home builder shares higher today, ethan allen for one saying that business trends are stabilizing. they beat on earnings. for a long time people simply were not buying sofas and chairs, lamps an things like that. now they seem to be doing a little bit bet person. >> i thought the most interesting out of toll brothers, cancellation rate was 8%, it was 21.7% last quarter. that's a pretty significant improvement in the cancellation rate. that's very interesting. doesn't want to make me go out and buy toll brothers, frankly, because i think this stock is way every extended. it leads me again to a name -- the best retailer in the space is home depot. i think we have a chart. chart of the day.. throw a little graphic up there, folks. >> there you go. >> this is the stock -- we've been talking about this for a while. they guided higher june 10th. the highest level for home depot since the fall. frank blake has done a great job

turning these guys around and navigating tumultuous waters. i don't love home depot at these levels, this stock has gone $24, $27, back to $25. that's the way you've got to play it. but home depot you still have to play for the long side. we are just getting also some headlines that paulson, 35 million regents financial shares in the second quarter. he's really going all out in the financials. this is courtesy of dow jones. paulson getting into regions financial. and again, that's an after hours move. >> that's a name that's had absolutely incredible options activity. you look for volume, that's a big leader in volume. regions financial almost on a daily basis a monster as far as financials. >> overall, does this sustain this rally that we saw today into tomorrow's session? >> probably means it is a hop.

>> you got to remember two things. you brought up one very important point. we don't see all the portfolios. he may have anything on the other side that we wouldn't see. the other thing is, remember, this is a holding as of june 30th. we've had a pretty big run in the markets since then. i think of him more as a long-term investor than a trader. the price may be very different from where he acquired stock in the quarter ending june 30th. following along with some of the whales operating out there. next trade, fed leaving interest rates near zero today but suggesting the economy's on more stable ground saying inflation suggests economic activity is leveling out. is it possible that the fed may leave interest rates unchanged for too long or may becoming too accommodating? time for some answers. rick santelli, the big sir, live in the pits of chicago. rick, i thought that fed was -- ben bernanke, i should say, not the fed. the man at the fed was has been a student of the great

depression and that he should know, of all people, when to exit the strategy of easy money. >> he might be a great teacher at university. he's navigated some rough waters. in the end, i can't really look to mr. bernanke to pull the punch bowl away, for the party is so far extended into the wee hours of the morning, it won't be the lights going out, it will be the sun coming up. >> i got disagree with you on one point here on bernanke. the entire situation on soaking up liquidity. if you go back to his "60 minutes" interview, he said he was concerned about the political will. i will tell you this, the obama administration, he's the pilot light right now landing the plane. they are going to rip the pilot out of the chair, put their own guy in the chair. they won't allow him to soak up the liquidity. it won't be his decision. >> i completely agree but i'll take it even a step further. what do you believe he would have done differently today or the last meeting if his term didn't come up for another year? >> he's up in january.

correct? >> yes. let's say it was january of '11 instead of january of '10. >> if it was january of '11 i think he would be far more aggressive in his policy. >> exactly. he's already less independent. i think they're going to rip him out of the cockpit regard lls of whether he makes a three-point perfect landing. >> who do you think they're going to put in? >> i don't think there is any good chair woman to put in. some names thrown around i don't think will be as well prepared but i do believe that there is political issues here. why do i think they'll pull him out? because they've had nothing positive to say and they think of fed chairman as doing kind of infomercials on cbs, "60 minutes," it's just shocking at this point. >> is the most political ad out there with president obama? with all do respect to our nation's leader, if he ripped bernanke out of the helm right now, i mean, the stock market will not like that. can he afford to not have the

markets go along with him? go against him and he loses some of that political capital. >> i'm not saying they're going to pull him out but i think there is a lot of tea leaf reading that would think there is a chance. even more so, you think stocks might go down aggressively. i understand the logic. but they're certainly not going to put a pilot in there that's going to remove liquidity any faster than mr. ben. we know how the equity traders think. look at the fed's statement today. pete, did they not punt on third down? they didn't even wait until the money runs off. they bought themselves a meeting to come up with a reason to potentially buy more assets. >> think what the equity markets are telling us right now though, is that they're confident and they're comfortable. we look at volatility bhp we look back a year ago and we were pushing $80, lehman and bear stearns was plummeting and falling out of business, when you look at markets now, i think equity markets, people have at

least more comfort. i think they are looking at mr. bernanke and saying, hey, the president better not remove this guy at any time. >> couldn't they also say, listen, we're looking at mr. bernanke but maybe the president will put somebody in that will make a bigger punch bowl? >> rick, last question. say bernanke has a plan to soak up liquidity. he's allowing to pay interest on bank reserves which means no lending whatsoever. say he goes ahead with that plan. is the president going to allow the banks not to lend so they can soak up liquidity? >> i think that's an interesting question. we'll get the consumers and if they're able to borrow, but an even bigger question is, a lot of these programs might snug up rates an curtail borrowing. but the bond markets rates can move much higher no matter who's in the cockpit or what the fed does. >> rick, thanks so much. the great santelli joining us from chicago.

big sur. great santelli. all of that. >> he brings up an interesting point, melissa. it is a problem going for the markets exactly who it is that is going to pull this liquidity out of the market and what's the instrument that they use to to do it. let's move on to the next one here. last night was a great night. regis philbin was our special guest. before we made him an honorary fast money trader, he decided to pick on poor guy adami. >> look at him staring at me. ever see him in the camera? put the camera on me. are you looking at me? >> i don't have nice teeth like you do. i can't smile. that's just the way it is. >> but he wasn't done doing his best yet. he brought it to the regis and kelly audience as well. >> i got to go do "fast money."

they get in, they get out. sell, buy, sell, buy. it's mind boggling. karen finerman and guy adami. guy has a way with his eyes of looking right into the camera. i'm going -- >> his impersonation days might be numbered. one of his viewers actually sent him the following e-mail after his show this morning. it reads, "regis, your serious face made my children cry. shame on you!" guy, what do you have to say to that? >> you want me to be all soft? i'll tell you this, lady -- get tougher kids! you want a friend? buy a dog. wall street's tough. >> look at those eyes! >> if i were a kid, i'd cry, too. coming up next, why the man who saw the credit crisis from a mile away says a recession was

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welcome back to "fast money." we're live at the nasdaq marketsite in new york's times square. people who refused to believe the u.s. economy is in fact on the mend, one of those is an nyu professor. he was on "squawk box" early this morning. here's what he had to say. >> i see two risks. the first one is we're very large margin. this is being monetized by the fact at some point bond market especially next year might worry about these large fiscal debts. back to the 2005 level and inventories are high. >> joining us, peter schiff, president and chief global strategist. the voice of pessimism well

before the markets blew up. is this permabear finally ready to go into hibernation. time to play our favorite game here. bull market or b.s.? peter, welcome back. >> i'm not a permabear. being bearish has been the right thing to do. but at the same time, i've been bullish in other parts of the world an i've been investing accordingly. >> pete, that's a great point. you've been bullish in other parts of the world and you've done well in those other parts of the world. you've avoided the u.s. but at what point do you step in and say i'm all in on the short side here in the s&p? at some point it has to be attractive to somebody like you. >> i'm not short anything. i'm not all in. i'm out of the dollar. i understand that we're in trouble economically. the reason we got into trouble is because of all the mistakes that greenspan made and all the mistakes that bush and congress made. everything we've done under bernanke and under obama is even worse mistakes now than we've made in the past.

the consequences are going to be more disastrous for our economy and our market. >> my question to you is, at some point the s&p -- i'm not saying you're all in short. at some point it has to be an attractive short for you to be short the tp. are we close? or are you avoiding it entirely? >> i'd rather be short the dollar which i am. the thing is, if you have a very weak dollar, if you have an inflationary environment, it's possible for u.s. stock prices to rise rather substantially in nominal terms. but still lose value in real terms. so if you're simply shorting u.s. stocks, if the dollar goes down more than the stocks you're shorting, you could end up losing. i think it is better to invest abroad, take a look at opportunities that exist outside of the united states and to own those assets. to invest in companies where central banks are not making as enormous the mistakes as we are. we're basically the fundamentals of our economy are sound. they aren't living in an illusion. >> what's it going to take for you to become more bullish about the u.s. stock market

specifically? i understand you're short the dollar. but when it comes to the stock market, when are you going to change your sentiment? >> first of all, i like to see the government reverse course. i'd like to change the policies. instead of continuing to make the market worse, create an economy where the free market can make the problems better. instead of having easy out, your show is "fast money," but ben be bernanke's show is about loose money. we need to put that to an end. we need to raise interest rates. we need a realistic interest rate in this country. i know he's saying that he's not going to buy treasuries anymore. he's not telling the truth. fed will keep on monetizing this debt. >> go back to march. economy's improved. what has bernanke done that's incorrect? if you look at the policy and supporting risky assets and actually purchasing risky assets in a deflationary environment, that was the right thing to do. >> no, it wasn't the right thing to do.

>> the market's telling you that it was. >> the market goes up and down. >> the market's not going up and down. the market's going straight up. >> no, it went down first and now it is going up. maybe it will go down again. >> it went straight up after bernanke supported risky asset purchases. >> he shouldn't have done that. >> if he didn't, where we would be? >> look, we would be trillions of dollars less in debt. we've dug ourselves into a deerp hole under ben bernanke. ben bernanke's policies have helped prevent the economy from correcting the imbalances that led to the problem. we need less consumer spending dramatically. we need less borrowing. we need to make more things, save our money. the government is undermining that progress. we need to allow the government to shrink. by buying all this government debt, by keeping interest rates low he's let congress off the hook. instead of contracting government spending, he's monetized it all. he's made it possible for the government to expand. he should be reining in the government. he should be taken away their

punch bowl, he should be aggressively maintaining sound money and higher interest rates and forcing the government to cut spending and reining in all these excesses. >> peter, always good to have your insight. what do you think of peter's argument? >> i agree something had to be done. we were on the precipice of an absolute financial crash. think a lot of what bernanke did made sense to me. i do think he's going to be able to pull it in a little bit. a little. >> why does very to pull it in today? i think you allow mr. bernanke to continue this policy. then when the time is right is when you move. i think goldman sachs when they basically called the bottom just a couple of months ago, in multiple sectors, all we've done is go higher, they were basically talking about the consumer and comeback, industrials. a lot of those various stocks have done nothing but start to improve. once they've gotten past the point, that's the time for them to start moving. >> there are many ways to pull it back.

>> plenty of ways to pull it back. everything they've done has improved the economy, has improved the markets. e plenty of ways to pull it back. we sit right now at 1000. it is the sentiment that peter portrays -- he's a brilliant guy. but the sentiment that he brings is one of the reasons why the market's not going down, because no one believes the move. moving on to the next right here, biopharma missing the big bernanke rally today. the sector could be a volatile close to the end of the week. key decisions loom from the fda. joining us, mike, what are we looking for? >> even though he went to notre dame and he loves the fighting irish whose butts sc's going to kick in a couple of months. but regis was here yesterday literally pounding this table for pfizer and not in a good way.

>> pfizer, another turkey, when is pfizer going to make a move? i'm so sick and tired of hearing what a great pharmaceutical is. when is the stock going to move? >> it did nothing for the stock today. it went up a whole 3 cents, you guys. not even the relatively influential pharma analyst at deutsche bank could move this needing today. she put out a note saying i think they're going to raise their dividend again by 15% to 25% in november. remember they cut the dividend in half when they announced they were buying wyeth earlier this year. >> i got to ask you. in this whole space, we talk about big pharma, talk about the big biotechs. it's always very exciting. how about generics? are they overvalued right now? that's the sector that is really taken off, all moving to the up side. are they too far in front of themselves? the growth is incredible. >> i don't make valuation calls but you guys all know tens of billions of dollars of brand

name drugs are going off patent in the next few years. some might perceive that as a boon for the generic drug industry. analysts say there are too many generic drug companies out there. they all rush in to make the exact same drug. profit margins get skissed big time, prices come down like 90%. it is a consolidating sector. maybe you want to play it that way. >> talk about some things that could move things. we're expecting a decision on an amgen drug. >> big day for amgen tomorrow. it goes before an fda panel that will make a recommendation whether to approve a key osteoporosis drug. no longer called the thingamabob. they have now called it prolia. this panel will vote toward the end of the day tomorrow typically to recommend -- not approve but to recommend whether the fda say yes or no to this drug. >> mike, thanks for joining us. great to have you here on set.

moving on, big story of the hour, the financials. specifically bank of america shares higher in post market after on-air editor charles gasparino reported john paulson has taken a stake in the company. charlie, what do you know? >> pretty amazing. he bought a lot of stock, $2.7 billion worth of it from bank of america. what we don't know is what he's short -- what else he's short. he might be short every other banking stock except for these guys and a few others. i think regions financial he also picked up some shares of that. this is a pretty big bet in the context of what's going on in financials. john paulson, give a little context on paulson. this is the guy that famously went short financials, went short the the subprime market. went short the financials because of subprime back in 2006-2007. made a lot of money out of it. a handful of hedge fund managers. john paulson was one.

phil falcone was another. goldman sachs went short the market as well. they would say as a hedge. some people draw other conclusions. frauds, for example, we don't take those too seriously. now paulson is turning around and buying a substantial stake in b of a. $168 million shares right now at $16 a share. that gives him a stake of $2.7 billion. is my math right on that? what's interesting about this, about a month ago he kind of signaled i think -- i just spoke with somebody who's an investors in his hedge fund who said about a month ago a letter came out where paulson basically said he was going to go long on bank of america. this is really interesting. bank of america's a company that gets beat up on all the time. right? because of its -- lot of people would say some of the mismanagement of ken louis

buying merrill lynch and the company imploding, merrill lynch having a $15 million loss in the fourth quarter of last year. >> charlie, one question. does this leave pressure off keb louis? will he keep his job now? >> i will only say this. eddie lampert bought a fairly significant stake -- just shows you how old i am -- back 2006, early 2007 in citigroup. we asked the same question, does that mean that eddie lampert who's been right on so many things at the time, that pressure is off chuck prince, this is a bullish sign for chuck prince. maybe it was for a little bit. but as you know, chuck prince blew up anyway, had to believe. >> you're saying no. >> i would give you a tentative yes, but i gave you the reason why sometimes it doesn't work out. >> chaz, thanks so much. on-air editor. coming up next, he's got the action on best buy. we'll tell you if he thinks it

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welcome back to the second half of "fast money." we have unusual action today in best buy. >> that stock's been churning between $35 and $40. trading just under $40 a couple of days ago. they got a downgrade from goldman sachs. today the stock was moving lower, yet they were buying the up side. after the august call, at least worth a look. when you see these things trading at 30 cents, 35 cents, cheap shot. only a week for them to perform. but look at what also goldman added, they raised the price target from 41 to 43. the fed left interest rates near zero today. will we see higher rates in the future or extraordinarily low rates about to become just ordinary? joining us today, greg fisher from fisher and associates with more how to trade alongside the fed. great to have you. what's your best case scenario for the fed and how do you trade

along with the fed? >> what's important is for investors to remember the linkage between monetary policy and their investments. when we look back over time we've seen plenty of history, '40s, '70s, with rsion, inflation. when interest rates are low, make sure you have exposure to small company stocks in your portfolio. which is a little counterintuitive with everybody thinking about what will happen with all of this cash put out there? everybody thinking about inflation, what can i do with my portfolio. to the extent they're going to own equities anyway, they may want to have exposure to smaller companies instead of the big cap names. >> what is small cap to you? what's a new small cap? >> it's a bit subjective as to who looks at that. we break the market up into ten aisles. look at the bottom four. we would look at the bottom four layers.

>> like russell 2000? >> if you look at the smallest of small caps, that's probably where you'll get the largest bang for your buck. the russell 2000 is the way to go for most investors. >> if you take the s&p 500 versus the s&p 500, we've seen that outperform. >> big time, if you look from march 9th, small cap stocks whether you're in other countries, the basket of foreign small caps or domestic are up something slik like 70%. >> specifically the sector that you like the best when you talking small caps. industrials? >> as a general rule of thumb, i prefer to be broadly diversified across all sectors. just have exposure to the overall asset class. if you want to dig a little deeper, look at some companies you think might do well if we have some inflation when we look out two, three years from now. probably not consumer durables and consumer cyclicals. you might look at things that will hold up better in an inflationary environment.

coming up next, madoff's right-hand man, and how many other people helped pull off the crime of the century? and the place where wall street suspects another madoff might be hiding. or just one brita filter. ( drop plinks ) brita-- better for the environment and your wallet.

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welcome back to "fast money." we're live at the nasdaq marketsite in times square. i want you to alert you to a fast flash. the stock has had some pretty unbelievable move lately. 20% in the last week, 85% gain in just the last month. the options market certainly has been pricing this one. >> they just started buying all of the calls in august, staying in august, and a couple of days ago last week, they came in buying the august 20 calls. stock went from $14 to $16. now it is $20. these guys have didn't dead-on. no one's chased any higher. >> hartford financial? we've been all over this stock. we talk about next year they'll be earning about $4 a share. you go back to april when they took guidance from $6 a share down to zero, one has to believe that pass probably the trough for these guys. don't think it is going to $33. i think it is going to $22. we got a lot closer. >> their stock offering they got $150 million more than they set

out to get. they actually got $900 million put in their coffers. giddyup to that. >> let's talk about walmart, shall we? they'll report earnings tomorrow morning. shares of the world's biggest retailer up a modest 1.5%. options market sense a discount in walmart shares? the president of suland equities. he is also, by the way, an options action contributor joining us from chicago. what is the options market pricing in for walmart? >> there's been a lot of activity going on in the options market. and one thing investors are doing is they're actually discounting some of the move over the last couple of days. by selling near-term august calls. we've seen buyers of the september call mean walmart after earnings could see the sizable move up. if you look at technicals on the chart, it seems to be breaking out slightly to the up side, could see walmart trade top upper 50s over the next month or so. >> karen, you've been long for some time. >> i am long.

i'm going to continue to -- by the way, it is ex-dividend, you'll receive a 27-cent dividend which adds up over time. as a riskier way to play, i like walmart the best. >> i think what the strategy is here and why they're seeing activity, people are trying to take advantage of the recent surge in volatility going into earnings. people are buying september, selling august, trying to get the front of that moved. not expecting a monster move out of earnings. but maybe through september seeing that stock get higher. >> one important thing about the retailer, discount and options have been extreme. volatility's come down a lot, option prices declined. retailers have a lot of question marks about the consumer. option trade remembers buying option premiums. to protect themselves to the downside or participate on the up side if things look better over the next couple of months. >> brian stutland, thank you. you can catch more brian in options action this friday when we move to our new time slot.

>> no. >> yes, earlier, 8:30 p.m. eastern time. yeah, moving up in the world. and more "fast money" coming up after this. mr. evans? this is janice from onstar. i have received an automatic signal you've been in a front-end crash. do you need help? yeah. i'll contact emergency services and stay with you. you okay? yeah. onstar. standard for one year on 14 chevy models.

welcome back. news of bernie madoff. victims have wanted to know one thing. did bernie have help? today they're one step closer to an answer and justice. ♪ breaking the law breaking the law ♪ >> reporter: it was all a fake. those are the words of frank dipascali, madoff's right-hand man by pulling off the biggest financial fraud in history. the one key sentence -- "i helped bernie madoff and other people carry out a fraud" is the first possible proof madoff didn't pull off his massive scheme alone. from fabricating fake trading record down to the bonds and paper type, the phony trading software meant to trick visitors at madoff's office. in laying out the inner works of a $50 billion ponzi scheme, dipascali will have to name names. as the list of accomplices grows, wall street is already fearing the next big fraud.

from flash trading to credit defaults plus, where is the next rip-off lurking? warren buffett once famously said -- you only find out who is swimming naked when the tide goes out. now that the tide is back on the rise how will we spot the next madoff? jake's no stranger to the evils of wall street. a securities lawyer, he has represented victims of eight ponzi schemes in just the last five years. business has been good. >> it is a bull market for ponzi schemes, unfortunately. >> absolutely. tell me this. if there were other people helping bernie madoff, should others with the last name of madoff be worried? >> if you have a last name of madoff, you're in a lot of trouble. this frank, the number two guy, knows where the bodies are buried. he's going to be singing like a canary. mark and andrew, the sons that ran the trading desk, well bernie said that he was not charging management fees just brokerage commissions. where are the trades. where are the commissions?

those guys are in a lot of trouble. peter, his brother, the chief compliance officer and general counsel was make reports to the s.e.c. i think they're going to be able to prove that he knew those were false reports. i think he's going down. ruth madoff, the bookkeeper, close to bernie, there may not be e-mail traffic to connect her but there are going to be a lot of witnesses coming out saying we believe ruth knew what was going on. i wouldn't want to have the last name of madoff. >> where is the next ponzi scheme? is it going to be a ponzi scheme? where is it? >> i'm seeing them pop up all over the country. agape in long island, cosmo stealing $400 million from teachers, firemen, policemen. we're looking at the bank's involvement. in that case it is bank of america. we're seeing banks involved with ponzi schemes all over the country. peter dawson, an investment advisor in island. we're looking at banks. i'm getting calls from florida, california and everywhere else about ponzi schemes and people believing that a bank is involved. >> jake, always a pleasure to

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who made the most money today? regis takes the top spot. remember yesterday, the traders told hem to hold on to his lsi, and unysis. up 2%. final trade, joe? >> regis wants to get out of his

three-point. regis is right. >> ibm. sell it. >> i like best buy. that action was pretty wild. i'm melissa lee, see you back here tomorrow 5:00 p.m. for more "fast money." have a great night. i'm racing cross country in this small sidecar, but i've still got room for the internet. with my new netbook from at&t. with its built-in 3g network, it's fast and small, so it goes places other laptops can't. i'm bill kurtis, and wherever i go, i've got plenty of room for the internet. and the nation's fastest 3g network. gun it, mick. (announcer) sign up today and get a netbook for $199.99 after mail-in rebate. with built-in access to the nation's fastest 3g network. only from at&t. you must be looking for motorcycle insurance. you're good. thanks. so is our bike insurance. all the coverage you need at a great price. hold on, cowboy. cool. i'm not done -- for less than a dollar a month, you also get 24/7 roadside assistance.