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In a surprising change of heart, Cramer said President Obama, who he said is responsible for much of the market's recent declines, may have inadvertently set the market on fire Wednesday.
Cramer, a vocal critic of the Obama agenda, said on his "Mad Money" TV show that Obama's plans will crimp interest rate deductions on homes, raise taxes on investors , turns healthcare companies into non-profits, hurt the utility stocks and raise taxes on those responsible for most of the job creation in this country.
Yet despite all of Obama's ill will towards Wall Street, Cramer said the president's recent comments that stocks were attractive given their low P/E ratios has fueled the market.
"Obama's coming to Cramerica," said Cramer, who hoped that the new president is finally learning that you can't separate Main street from Wall Street any longer.
According to Cramer, this rally could last if the market momentum is met with any good corporate news in the coming days. "Obama's started the thundering herd," he said.
What will go down in history as one of the worst corporate blunders of all time?
Cramer said the answer is big stock buybacks. He singled out three HMOs,
, as among the worst offenders.
Cramer said there are many ways a company can return value to shareholders, but in recent years companies have chose buybacks over dividends, in increasing numbers. In fact, since 2004, the companies in the
have spent $1.73 trillion on buybacks, while spending only $907 billion on dividends.
Why single out the HMOs? Cramer said these three companies have spent billions on their buyback programs, but now have absolutely nothing to show for it. The plans did nothing to increase shareholder value, he said, and only artificially inflated earnings per share numbers so insiders could profit.
Since 2006, Aetna spent $5.8 billion buying back its stock, in contrast to one $59 million in dividends, only to find shares now trading at less than half what they paid for it. Cramer said if the company had put that money into dividends, it would now have a 6% yield.
At Wellpoint, the company spent $14 billion on buybacks, with no money towards dividends. That company would have a 4.7% yield if it did, said Cramer. At United Healthcare, shares have fallen 71% since it spent $11.6 billion buying back it's stock.
Cramer said it's ridiculous that these companies have been wasting money instead of returning it to their shareholders.
Cramer talked with Tom Farrell, chairman, president and CEO of
, to learn how this utility is facing the changing economic and political times.
Farrell announced that Dominion's directors and officers just purchased 75,000 shares of the company's stock because they feel the shares are under valued.
Regarding Obama's cap-and-trade initiatives, Farrell said Dominion should fare well, as the company is already in the bottom third of utilities when it comes to carbon intensity. He said the company is looking into expanding its natural gas, bio mass and nuclear fleets. "Dominion is a lot more than just a utility," said Farrell.
When asked about the credit crisis, Farrell said the company has a strong credit rating and has never had difficultly getting credit. Admittedly, he said, Dominion is paying more for credit, but the company has successfully issued $1 billion in new debt throughout the crisis.
Finally, Cramer asked Farrell about Dominion's clean energy philosophy. Farrell said the company has a number of pilot programs in place, including subsidizing 2 million compact fluorescent light bulbs and developing smart meter technologies.
Cramer called dominion an Obama resistant utility and said if Farrell is buying shares, he's buying too.
With a war brewing between President Obama and the coal stocks, Cramer welcomed
president and CEO Mike Sutherlin to the show to discuss the outlook for coal in a new cap-and-trade world.
Sutherlin remained upbeat about Joy Global's outlook, noting that while the company's top line growth is slowing, Joy Global is increasingly focusing on efficiency and improving the bottom line.
One bright spot for Joy Global has been China, which he said is serious about its stimulus plan and about getting their economy back on track quickly. Sutherlin said they're seeing some good early signs of recovery in China. The company is ramping up a new factory in China.
When asked about recent order cancellations, Sutherlin confirmed that he did indeed let a few customers out of their contracts, but he called the move "good, long-term relationship building." He said many of those orders are not lost forever, but rather just delayed until the economy recovers.
When asked about the overall outlook for coal given Obama's cap-and-trade initiatives, Sutherlin said he takes solace in the fact that 80% of new coal plants will be built outside of the U.S. in coming years. He said the world needs reliable energy until renewable energy becomes mainstream, and coal is the best fuel to bridge that gap.
Cramer gave a thumbs up to Joy Global for being resilient in tough times.
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At the time of publication, Cramer was long Caterpillar.
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