Jim Cramer fills his blog on RealMoney every day with his up-to-the-minute reactions to what's happening in the market and his legendary ahead-of-the-crowd ideas. This week he blogged on:
- the market's lies,
- the sunny side, and
- this inept administration.
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Lies The Market Told Me
Originally published on Monday, Aug. 25, at 12:21 p.m. EDT
The market's telling a lot of lies today. All you have to do is look at the stocks that are providing the upside, on a percentage basis, to whatever strength there is to the
Let's go down the list.
Nos. 1 and 2 are
( FRE) and
( FRE). I don't know a soul who thinks these two pieces of common stock are worth anything. If the preferreds may be worth nothing, who the heck wants these two? They are just little jumping beans that people short and cover on, because they can't be used to raise any money and no one wants anything these two companies issue. Witness that the preferreds -- thought to be such bargains when they were issued -- are down 50%. I continue to believe that Treasury Secretary Paulson doesn't want to take on these two companies until that common goes to zero, and it will, given the decline in housing prices today. The notion that they are "fully capitalized" gets sillier by the day. But they do have some worth in the out years just from the fee income.
rallying a tad. That's a bond equivalent situation. All that has happened there is a dropping of a glaucoma drug. It's more of a sell than a buy today. Good chance to sell it.
: OK, I get it, the company's not going out of business anymore, and the PC business isn't that bad. So what? The stock's had a bit of a run already.
: The fact that SE can rally even though natural gas is at its low is a little counterintuitive. The CEO already came on my show and said the decline in natural gas has eliminated the possibility of an upside surprise. If you like Spectra, go buy
, which is the better bet at these levels.
: I like Cummins on diesel and on engineering, but I don't see a catalyst to give it strength beyond today.
: Maybe still one more reorganization is exciting someone? Citigroup's problems now look more manageable than
( LEH) or
( LEH) or
? I am not even bothering to include FNM and FRE anymore. If Citigroup goes above $20 and then don't do an equity offering, they are truly pathetic. Maybe someone likes the possibility that Bob Rubin's power is diminishing, which it seems to be with this new hierarchy? Or maybe Rubin's getting ready for another four-year trip to Washington for the Obama coronation.
Bank of New York
: I think this one's been knocked down too much. It just isn't deserving of the tarring it has gotten. I don't see a lot of upside, but the downside is a tad overdone given less exposure to real estate and good fee income.
: The biggest puzzle, along with
( PMI). How did this company get off the hook for its
( MER) obligations? Houdini stock. Undeserving rally, though, because there's no real case for earnings acceleration -- or earnings, for that matter.
: Oil has a bit of a bid now, and whenever it does, people have been using this as an oil proxy. Nothing here vs. a
-- which, by the way, foretold Friday's oil collapse perfectly.
At the time of publication, Cramer had no positions in the stocks mentioned.
It's Never Quite as Dire as It Seems
Originally published on Tuesday, Aug. 26, at 6:59 a.m. EDT
When nothing's working, something's working. I know sounds counterintuitive. but there is simply no reason to think, as bad as this market is -- and it is really, really bad -- that there isn't something to buy.
We are gripped by the fear of the remaining black holes --
-- and we all know it. They are
convenient whipping boys. They are the Seven Deadly Stocks, and they aren't going away.
But are they really hurting
? Can I see selling
Procter & Gamble
because of them? After we know the price increases are all baked in? And don't hit me with that strong-dollar stuff, because GIS doesn't have that much overseas exposure. Same with
: This is a national company with an international arm that is generating oodles of cash and doesn't have as much bad commodity exposure as it did a few months ago.
I am not saying that these Seven Deadly Stocks are a recipe for good news out of housing or retail. Far from it. I have now read through every conference call of every retailer, including
to give you some granularity, and not a single one's success had anything to do with demand. It all had to do with supply -- more importantly, a lack of it.
I am simply saying that in the worst economic downturns -- and this is one of the worst, but not yet
worst I have seen -- there's always something working, and that has more to do with the structure of the market than it does with the structure of companies' businesses. The reason I never give up looking isn't because I am insane optimist -- and believe me, it is bewildering and beleaguering to come in every day and look at your screens drenched with red, except if you are 100% short -- it is because there is so much money dedicated to equities that you are not going to see every penny leave here and escape to bonds. There are so many companies that are flush with cash that you cannot expect a total rollover. Some of these declines -- and the emphasis is strictly on
, because they are in the minority -- are actual buying opportunities created by the
futures and their immense power to knock down stocks in thin markets like we have.
Take heart? Take heat: Yes, but keep looking. When things turn -- amazingly, they do now and then -- you get your chance.
: Today it hit me why I am sometimes really steamed at the
-- actually, it has hit me many times, but this time it felt particularly bad. They are more than happy to call an end to the mining party with an excellent piece about the problems of raw costs, accentuated by the folks who run
( RTP) after this morning's earnings. But did they ever invite us to begin with? Nah. You would have sat it out and with it, one of the great times we have had in many a year.
At the time of publication, Cramer was long General Mills, Procter & Gamble and Pepsi.
This Lazy Government Will Cripple Capitalism
Originally published on Wednesday, Aug. 27, at 10:59 a.m. EDT
Get ahead of the story. That's what we want from someone --
-- from the FDIC, the Treasury, the
. Someone has to get ahead of the story.
Instead, we get the opposite. We get reassurances about
( FRE) and
( FRE), even though they are now not only not helping housing to be affordable, they are making it
affordable, thereby knocking down the commercial banks. The losses are too great at FNM/FRE, so they have no room to buy more mortgages and they are paying up for money, making everyone
pay up for money, as you don't want to buy paper from a bank that is lower coupon than from FNM and FRE. Notice that every time FNM/FRE go up, the banks go down? Today's typical. What a nightmare.
And we get word from the Fed that despite the single most deflationary trend in history, the wipeout of value of the principal asset in individuals' net worth, the major worry is
! You can't make this stuff up. They want to take rates up, which would simply annihilate the only stream of earnings besides ATM fees: the net interest margin of the banks.
It's tough to run a laissez-faire government in a time of crisis. You can't very well be preventive, because that's interventionist. You have to be reactive, because you need events to justify actions. So we get this chronic post-crisis message.
Plus we have powerful individuals in the Fed, like Dallas President Richard Fisher, endlessly warning about inflation, even though the inflation is caused by ethanol/food, oil and steel shortages, with the latter caused by China.
No matter that July gave us the biggest commodity collapse on record, the Fed refuses to recognize the deflationary trend of housing prices because houses aren't in the consumer or producer price indices.
All of this begs the question: We have the biggest crisis in financials since 1932, and the Fed wants to be make money tighter -- just the course Herbert Hoover recommended to fight the Depression.
Of course all of this was predictable. But it's the philosophy, not just the out-of-touchness of these entities, that is at fault.
Just take the FDIC. Shouldn't it be recommending that we have a Resolution Mortgage Trust as a way to dump the bad loans of the IndyMacs so the rest of the banks can be sold? Do you know they have no ability to sell these banks that they are closing, and they will have to run them? You think they can run 100 banks? You think they even know how to run a bank? No. They should be selling the banks to the banks that didn't screw up, like a
. But why should those two banks, or any bank for that matter, buy a bank with so many bad loans? They should be setting up a "good bank, bad bank" model and getting ready for private-equity firms to buy whole bad banks.
But all of this kind of thinking implies a change in philosophy from reactive to proactive, and that's just not allowed in a laissez-faire government that extends all the way to the Federal Reserve.
Ironically, what happens now is that their lassitude and indifference and insistence that the government has no role in influencing the market will produce a gigantic tax bill that will then allow the growth of a regulatory behemoth that will dwarf any that might have occurred under a government that was pro-regulation. This moronic strategy is going to produce a regimen of intrusiveness that could hobble capitalism in this country for years.
If Treasury got ahead of things, simply wiped out the common of FNM and FRE, put them in receivership and canceled the dividends of the preferred until FNM and FRE made the money back, you would see a gigantic amount of mortgage money --
mortgage money -- flood the market, as the banks that own FNM and FRE paper could mark it up and lend much more.
Nah, that requires intervention. And intervention is the enemy of this regime. Public enemy No. 1.
To which I say, the next regime will be the most interventionist in history because of these clowns.
Thanks a lot guys, you really have it figured.
At the time of publication, Cramer had no positions in the stocks mentioned.
Jim Cramer is a director and co-founder of TheStreet.com. He contributes daily market commentary for TheStreet.com's sites and serves as an adviser to the company's CEO. Outside contributing columnists for TheStreet.com and RealMoney.com, including Cramer, may, from time to time, write about stocks in which they have a position. In such cases, appropriate disclosure is made. To see his personal portfolio and find out what trades Cramer will make before he makes them, sign up for
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