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Cramer's 'Mad Money' Recap: The Fed's Reckless Moves

TheStreet.com Staff

Click here for an archive of Cramer's "Mad Money" recaps.

The Federal Reserve's latest measures to ease the liquidity crisis have done the reverse -- they have actually put more pressure on banks, brokers, savings and loans companies and homebuilders, Jim Cramer told viewers of his "Mad Money" TV show Wednesday.

Cramer said Wachovia (WB Quote), Ambac (ABK Quote) MGIC (MTG Quote), Countrywide Financial (CFC Quote), Washington Mutual (WM Quote) and the two worst of them all -- Fannie Mae (FNM Quote) and Freddie Mac (FRE Quote) -- were all hurting Wednesday.

Meanwhile, defensive stocks like PepsiCos (PEP Quote), Procter & Gambles (PG Quote), Colgates (CL Quote) and Diageos (DEO Quote) all did well, he said.

While the Fed may think it has solved the problem with this intervention, any investor knows the plan looks like it's pointing straight toward the supermarket stocks and far away from the banks, he said.

What the Fed needs to do is its homework, Cramer said. It needs to get out of the tower and onto the trading desk. They haven't made the phone calls and done the research they should have before they acted, he said.

The Fed sees robust employment and good business from companies that do a lot of business overseas, Cramer explained. But what it needs to do is take a step back and look at the bigger picture.

The market is in trouble, and the people who are supposed to help are locked in the ivory tower acting recklessly under the guise of prudence, he said.

Fed Cut Benefits Tech Stocks

Even though the Fed "screwed up royally" by not giving the market the half-point cut it needed, there are still ways to make money, Cramer said.

"If we had a bigger cut, there would be a lot of companies that would be worth betting on," Cramer said. But with a smaller cut, it only makes sense to bet on a few sectors and tech is one of them, he said.

Apple (AAPL Quote), Hewlett-Packard (HPQ Quote), which Cramer owns for his charitable trust, Action Alerts PLUS, Google (GOOG Quote) and Research In Motion (RIMM Quote) are in great shape, Cramer said.

In addition, Intel (INTC Quote), Nvidia (NVDA Quote) and Texas Instruments (TXN Quote) seem to be working, he said.

Cramer singled out one tech stock for investors to consider: Sigma Designs (SIGM Quote), which he described as a play on the slow demise of cable companies and the rise of telephone companies competing for those services.

Cable companies are losing tons of subscribers, he said. Meanwhile, AT&T (T Quote), in addition to a big buyback, has announced plans to spend $5 billion on its U-verse TV service in the next few years.

Sigma, Cramer said, should get a big cut of that money as it designs and makes the chips for the set-top boxes. The company, he said, blew its earnings out of the water last time it reported, which caused analysts to aggressively raise their price targets.

Cramer said he's been waiting for a pullback to recommend the stock. It's come down, he said, because they can't make enough product to meet demand. That's a high quality problem to have and leaves SIGM with pricing power.

Medicis' Anti-Wrinkle Treatment

Medicis Pharmaceutical's (MRX Quote) Jonah Shacknai joined Cramer on his show, where Cramer asked the CEO about his company's new anti-wrinkle treatment it just submitted for approval to the Food & Drug Administration.

"How is it different from Botox," Cramer asked.

The drug, Shacknai said, was the first neurotoxin approved anywhere in the world. Medicis licensed it from its French inventor and has been working really hard to bring it to market in the U.S., he said.

After many trials and tests, the data for the drug has come together regarding the safety and effectiveness of it, and Shacknai said he hopes it is approved.

He said Allergan (AGN Quote), the maker of Botox, is a very good company and respects its management. However, he believes Medicis is more connected to its customers than Allergan is.

Concerning the company's Restylane drug, Shacknai said Medicis is dominating that category as well, despite Allergen's rival Juvederm drug. Shacknai said he expects Restylane's business to go up.

Cramer said Medicis may be a stock to take a look at when the year-end tax-loss selling dies down.

Am I Diversified?

During the "Am I Diversified?" game, Cramer's first caller asked if his portfolio was diversified with these five holdings: Google (GOOG Quote), Countrywide (CFC Quote), Fannie Mae (FNM Quote), Morgan Stanley (MS Quote) and GameStop (GME Quote).

"You have got to take radical action now," Cramer warned the caller. Countrywide, Fannie Mae and Morgan Stanley may as well all be cut from the same "toxic cloth," he said, adding that the viewer should consider switching to a health care stock and a defense stock.

The second player called out the following five names: Flotek (FTK Quote), Zumiez (ZUMZ Quote), Barrick Gold (ABX Quote), Kendle (KNDL Quote) and Stratasys (SSYS Quote).

Cramer told the caller that while he was "totally diversified," but said the stocks are not his first picks.

The next caller asked Cramer about these five stocks: Kimberly-Clark (KMB Quote), Lundin Mining (LMC Quote), Walgreen (WAG Quote), Liz Claiborne (LIZ Quote) and SAP (SAP Quote).

Cramer blessed the portfolio as diversified, but said he prefers Jones Apparel (JNY Quote) to Liz Claiborne and CVS Caremark (CVS Quote), which he owns for Action Alerts PLUS, to Walgreen.

The last caller named these five plays: Apple (AAPL Quote), General Cable (BGC Quote), General Dynamics (GD Quote) Potash (POT Quote) and Goldman Sachs (GS Quote), the latter of which Cramer owns for his charitable trust.

Cramer congratulated the caller on a great portfolio.

Sudden Death Round

During the "Sudden Death" round, Cramer was bullish on Tenet Healthcare (THC Quote) and bearish on Acxiom (ACXM Quote).

Lightning Round

Cramer was bullish on Intuitive Surgical (ISRG Quote), Textron (TXT Quote), Siemens (SI Quote), Philips (PHG Quote), Syngenta (SYT Quote), Bunge (BG Quote), Monsanto (MON Quote), SunPower (SPWR Quote), First Solar (FSLR Quote), Solarfun Power (SOLF Quote), Cisco Systems (CSCO Quote) and Pre-Paid Legal (PPD Quote).

Cramer was bearish on Force Protection (FRPT Quote), US Airways (LCC Quote) and Cognizant Technology Solutions (CTSH Quote).

Want more Cramer? Check out Jim's rules and commandments for investing by clicking here.

For more of Cramer's insights during the Lightning Round, click here.