Cramer's 'Mad Money' Recap: Don't Blame Bernanke
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NEW YORK (TheStreet) -- You can blame the Democrats, you can blame the Republicans but "don't you dare blame Ben Bernanke" for the failure to avoid the fiscal cliff, Cramer told "Mad Money" viewers Wednesday.
The Fed chairman made it clear today the Fed is doing everything it can to get people to work by keeping interest rates at near zero until the unemployment rate drops to 6.5%, Cramer said."Going over the fiscal cliff could cost the country about two million jobs, jobs we cannot afford to lose," Cramer pointed out. That, in turn, has an effect on the direction of the market. When employment goes up, jobs are being created and the largest number of stocks go up. But the converse is also true and "you need to sell when people are being fired left and right." Cramer said Bernanke, who first came up with the term "fiscal cliff," "seems to think we're going to go over it," Cramer said. "I think Bernanke is doing everything he can do to deal with the inaction in Washington." Republicans won't budge on raising taxes and the president isn't offering any real spending cuts. "The problem isn't the Fed," Cramer said. "The problem is elected officials in Washington being unable to compromise. Falling over the fiscal cliff is looking more and more likely and it could wreak havoc on the U.S. economy." Bernanke can't do it all by himself. That's why we need people to "rise above and get a deal, almost any deal, before it is too late."
Executive DecisionWhen it comes to the Bakken and Eagle Ford shales, you have to think of EOG Resources, Cramer said. So Cramer sat down with EOG Resources (EOG) CEO Mark Papa about the oil business and well his company has done, making money for investors in the process. EOG has been pulling so much oil out of the ground the company has raised its outlook three times this year. "We're not being coy," Papa said. "We really underestimated" just how strong oil production would be. The company has 20 rigs and 320 net wells in the Eagle Ford this year alone. Horizontal drilling is producing the biggest oil boom the U.S. has ever seen, Papa said, and he expects by 2020 the U.S. can be oil-independent -- meaning, it won't have to buy oil from OPEC. "That is a major, major change in the U.S. energy picture," he said. That increase in U.S. production will have little effect on international oil prices, however, he said. As for natural gas, he remains bearish, saying it will be around $4-$5 per 1,000 cubic feet for the next five to eight years. This is not good for producers but it's "excellent for the U.S. economy," he said, as companies from around the world flock to the U.S. for natural gas that is cheaper in comparison to the price in other countries.
An Electrifying DealCramer likes Eaton (ETN) so much, particularly after its acquisition of Cooper Industries, that ETN is a holding in his charitable trust, Action Alerts PLUS. Cramer spoke with Chairman and CEO Alexander Cutler after noting the diversified manufacturer is a "best of breed" among companies that have taken control of their own destiny. It is first or second in virtually every market in which it competes, and that was before the Cooper buy, Cramer said. Eaton operates in electricity and power management, one of the fastest-growing businesses in the world. Now, with Cooper, 50% of Eaton exposure will be in the U.S. and 25% in emerging markets. Cutler said that all the products Cooper is involved in are complementary to Eaton. "There's virtually no overlap from a product point of view." He said the real power of the acquisition is that the "end markets -- oil, gas, utilities -- are areas where we bring the strength of two companies together and now can provide a more integrated solution." Power management is trending "towards more efficiency and having a grid that works well and brings these kinds of electricity solutions to our customers. It's a really powerful trend," Cutler said. Cooper "brings big vertical end markets in oil and gas, in industrial, in utility, so we actually end up with a better balance across the economy," explained Cutler. Cramer pointed out that investors will have a hard time breaking down Eaton's fourth-quarter earnings, which will include three months of Eaton, one month of Cooper and various acquisition costs. Cutler suggested he watch how their markets are trending. Cramer asked for Cutler's take on the fiscal cliff. Cutler said, "It's about finding a solution for the U.S. which is good for employees, retirees, investors and it takes care of the unemployed -- that can be done. We've done it before. We need to bring our pressure and our support to our elected officials to get that deal done by year end." Cutler said he is personally optimistic we will find a solution to avoid the fiscal cliff. Eaton is doing so well at a time when we have no growth. Who knows what happens when we really get some?" asked Cramer, who said Eaton is "going to be one of the best stocks of 2013."
Lightning RoundIn the Lightning Round, Cramer was bullish on MGM (MGM) and Colfax (CFX). He was bearish on Ceasars Entertainment (CZR), Baidu (BIDU), Precision Drilling (PDS), Abiomed (ABMD), Dana (DAN) and BGC Partners (BGCP).
Am I Diversified?In the "Am I Diversified?" segment, Cramer spoke with callers and responded to tweets sent via Twitter to @JimCramer to see if investors' portfolios have what it takes for today's markets. The first portfolio was based on single-letter ticker symbols: Citigroup (C),Dominion Resources (D), Ford Motor (F), Macy's (M) and U.S. Steel (X). Cramer said that while the stock selection process was unusual, the portfolio was perfectly diversified. The second portfolio included: Diogeo (DEO), Walt Disney (DIS), ExpressScripts (ESRX), JPMorgan Chase (JPM) and Matrix (MTRX). "Bingo," said Cramer, this portfolio is also properly diversified. The third portfolio included: Abbott Laboratories (ABT), W.P. Carey (WPC), Northern Tier Energy (NTI), SandRidge Energy (SDR) and Phillips 66 (PSX). Cramer said this portfolio was too oil-heavy. He suggested keeping Phillips 66, removing SandRidge for Eaton and dropping Northern Tier for Tanger Outlets (SKT).
No Huddle OffenseCramer addressed the origin of the bull market that marked the Clinton era in the 1990s when the Dow went from 3200 to 11,000. The Nasdaq rose more than 1,000% from 1990 to its peak at the top of the Internet bubble in March 2000. "The greatest thing about the bull market in the 1990s was how little Washington mattered at all," Cramer observed. Cramer's conclusion of that era is the bull market came from corporate profits and the hiring, once the government stayed on a certain and predictable course. "Tax rates just weren't much of a factor on the decision-making of business, not as much as the certainty of knowing what they were and what they would be," Cramer said. "Washington wasn't a big concern during the 1990s and I think that helped the private sector prosper." Enough of the Washington obsession, he said. "It was about corporations spewing cash as the world's economy expanded at a terrific pace," Cramer said. "Get that to happen again and you can bet the Clinton bull market will be repeated." To sign up for Jim Cramer's free Booyah! newsletter with all of his latest articles and videos please click here. To watch replays of Cramer's video segments, visit the Mad Money page on CNBC. -- Written by Anthony Buccino and Margo D. Beller in New York.
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