Cramer's 'Mad Money' Recap: Nov. 14
Click here for an archive of Jim Cramer's Mad Money recaps.
What would the economy look like if the government allows
General Motors
(GM) - Get General Motors Company Report
to fail? Jim Cramer pondered that very question on his "Mad Money" TV show Friday.
Cramer said it's no secret GM is borrowing billions of dollars that it doesn't have the ability to repay. And it's no secret that things at the company are getting worse by the day. But the economic consequences of a GM failure would be staggering, said Cramer.
GM and its suppliers employ millions of Americans, said Cramer. The resulting mass surge in unemployment if GM failed would be felt immediately by the two-thirds of the U.S. economy that depends on consumer spending. Cramer predicted the impact would translate to another 2,000-point drop in the
Dow
. General Motors, he said, would have double the impact of the Lehman Brothers collapse.
Cramer said he's not sure which way the federal government will go with General Motors, but until then, he sees two options: Sit on the sidelines and wait, or sell ahead of the news. He said investors simply can't buy into the markets unless they're sure GM will be saved.
"If GM is saved," said Cramer, "only then would I be a bull." He said that if GM were left to fail, he'd be a buyer only after his predicted 2,000 point free fall.
Cramer and Cutler
Cramer talked with Sandy Cutler, chairman and CEO of power management company
Eaton
(ETN) - Get Eaton Corp. Plc Report
, a stock he owns for his charitable trust
TheStreet Recommends
Action Alerts PLUS, to find out if this pick has what it takes to weather the looming recession.
Cutler said the most important asset in his business is the ability to recognize when the business cycle is changing, that's why Eaton began preparing for the downturn last year. Cutler said he was one of the few CEOs who saw the bubble in housing begin to burst and the credit cycle begin to tighten.
Today, Cutler said he still sees markets in Europe continuing to be very tight and said it usually takes six months to see the effects of interest rate decreases. However, he said he's pleased with Eaton's current mix of businesses and expects them to continue to deliver growth, even in the downturn.
When asked about Eaton's dividend, Cutler said the company's dividend remains solid and he's continuing its policy of basing dividend increases on earnings expectations.
Cramer said Eaton is exactly the kind of stock he wants to buy on the big down days in the market. The company's once 2% dividend yield is now more than 4.8%, and the company doesn't need monster growth to continue paying.
Change of Heart on AMD
In a surprising about-face, Cramer surprised viewers and recommended chipmaker
AMD
(AMD) - Get Advanced Micro Devices, Inc. Report
as one tech stock that simply can't go much lower.
Cramer said he still doesn't expect a rally in technology stocks anytime soon, but after falling 67% so far this year, AMD may be one speculative stock investors should consider. He said that while no company wants to be a $2 stock, AMD has worked hard to achieve this level, disappointing Wall Street quarter after quarter, year after year.
AMD, said Cramer, still makes CPU and graphics chips and still competes with giants
Intel
(INTC) - Get Intel Corporation Report
and
Nvidia
(NVDA) - Get NVIDIA Corporation Report
. But unlike years past, the company is now focused on profitability, not marketshare. The company recently sold many of its manufacturing assets, along with nearly $2 billion in debt, and now has squarely taken bankruptcy off the table, said Cramer.
With the company now trading near its cash value of $2.20 a share, Cramer said the news is beginning to look up for AMD and he'd be a buyer.
Mad Mail
In the "Mad Mail" viewer feedback segment, Cramer told a viewer that while
L-1 Identity Systems
(ID)
fits his model for what to buy in this market, he's holding judgment on the company until he can talk with its CEO.
Cramer told another viewer that if forced to choose, he likes
Kinder Morgan
(KMP)
more than his favorite utility
Duke Energy
(DUK) - Get Duke Energy Corporation Report
.
Lightning Round
In the Lightning Round, Cramer was bullish on
Kinder Morgan
(KMP)
,
Nordic American Tanker
(NAT) - Get Nordic American Tankers Limited Report
,
Lender Processing Services
(LPS)
and
Duke Energy
(DUK) - Get Duke Energy Corporation Report
.
Cramer was bearish on
Inergy LP
(NRGY)
,
SunTrust Banks
(STI) - Get SunTrust Banks, Inc. Report
,
Teekay Shipping
(TK) - Get Teekay Corporation Report
,
MGM Mirage
(MGM) - Get MGM Resorts International Report
and
FPL Group
(FPL) - Get First Trust New Opportunities MLP & Energy Fund Report
.
Want more Cramer? Check out Jim's rules and commandments for investing by
.
Read more of Cramer's Mad Money Lightning Round insights
.
For "Mad Money" performance statistics and other links, check out Mad Money stats
