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NEW YORK (
) -- The
signaled it's staying the course and you should, too, Jim Cramer told
viewers Wednesday as he responded to the Fed's decision to leave interest rates alone and not repeat history.
Cramer said there's no denying that some parts of the U.S. economy, such as retail and housing, are heating up in a big way. But as
both showed us today, other parts of the economy -- mainly manufacturing and exports -- still have a long way to go.
So why would Fed Chairman Ben Bernanke risk raising interest rates when clearly the economy isn't completely back on its feet? Add to that the looming sequester, which promises to lay off thousands of government workers, and it's easy to see why Bernanke has chosen to be cautious, Cramer said.
But more than that, Bernanke is a student of history and is attuned to the mistakes made in 1937, when the government threw our post-Depression economy back into recession by jumping the gun on increasing taxes and interest rates. That recession, he noted, was only stemmed by World War II.
Add it all together and, Cramer said, it is easy to see why Bernanke has chosen to stay stock market-friendly and why his public goal of not raising rates until unemployment hits 6.5% may well remain in effect until, well, it does indeed hit 6.5%.
That's why Cramer remains bullish on the sectors that are working, mainly the regional banks along with retail and tech, while advising investors to avoid manufacturing and anything that exports to the rest of the world.
Executive Decision: Ken Powell
In the "Executive Decision" segment, Cramer spoke with Ken Powell, chairman and CEO of food giant
, which delivered a seven-cent-a-share earnings beat on a 7.5% rise in revenue today after seeing strength across all regions of the globe.
Powell said last year General Mills was faced with high food inflation and a consumer who wasn't buying a lot. This year, inflation is moderate and the economy is doing better, both of which have led General Mills to prosper. He said his company plans on continuing its marketing efforts and growing its advertising in line with its sales growth.
Among the bright spots for the company were soups and frozen foods in the U.S., while Powell noted that yogurt sold well in Europe and ice cream was hot in Asia and China. Even in the company's troubled cereal aisle, Powell said price points have been adjusted and brands are being reinvigorated. There are lots of ways for General Mills to win, Powell concluded.
When asked about the company's dividend, Powell said General Mills remains committed to both its dividend and its stock buyback program and he hopes to continue the 11% compound annual growth they've been able to deliver in the dividend over the past few years.
Cramer said stocks like General Mills are how investors make money. He told them to buy some shares, reinvest the dividends and hold on for the long run while Powell does the hard work of making the money.
Working on the Railroads
Continuing with his week-long "Oligopoly" series, Cramer turned his sights on the railroads, where a mere four players now control 90% of all rail freight in the U.S.
Cramer explained that in 1978 there were 36 major railroads in the U.S. but thanks to deregulation that number shrank to just nine players by 1997.
Today, there are only four, with
operating in the east and
and Burlington Northern, now part of
, in the west.
Cramer said he's a fan of Berkshire because the company also has exposure to insurance and housing. In addition he likes
Kansas City Southern
, which primarily operates lines from Mexico into the central U.S. He noted that shares of Kansas City are up 40% since he first got behind that stock in December.
With natural gas prices on the rise and the prospect of increased coal usage likely, Cramer said shares of Norfolk Southern will be the biggest benefactor. He was also a fan of CSX, which has been adding trains to transport oil from the Bakken shale region.
In the Lightning Round, Cramer was bullish on
Cramer was bearish on
Executive Decision: Tony Sanchez
In his second "Executive Decision" segment, Cramer spoke with Tony Sanchez III, chairman and CEO of
, an oil and gas producer that just announced the purchase of 43,000 acres of prime Eagle Ford land from
for $265 million.
Sanchez called the land acquisition "transformational" for his company, noting that it will accelerate growth by a full 18 months. He also noted his company remains fully funded for the next two years, so it will be able to take fully advantage of the new acreage.
Also, Sanchez said the acquisition currently has a full infrastructure buildout, so oil from the wells that will be drilled can easily be piped to market. He said about 75% of this year's production has already been hedged at great prices, and even more will be once the deal closes.
When asked about natural gas, Sanchez said 80% to 90% of the gas that comes out of his company's wells is currently being sold to the market and is a great source of incremental revenue for the company.
Cramer said that with this one deal Sanchez has transformed his company into a major Eagle Ford player. Cramer said he'd be a buyer of the stock.
No Huddle Offense
In his "No Huddle Offense" segment, Cramer celebrated just a few of the companies that delivered stellar news to their shareholders.
He said General Mills continues to execute on its plans and deliver terrific results, as does
, all of which had great things to say today.
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-- Written by Scott Rutt in Washington, D.C.
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At the time of publication, Cramer's Action Alerts PLUS had a position in FB, KEY, ORCL and VALE.
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