Jim Cramer fills his blog on
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:
- what to hope for from the Obama administration,
- the disturbing lack of mergers and acquisitions, and
- why Goldman Sachs will emerge stronger than ever.
for information on
, where you can see all the blogs, including Jim Cramer's -- and reader comments -- in real time.
Ending an Awful Year
This article originally appeared on RealMoney on Wednesday, Dec. 31, at 7:59 a.m.
Send out the clowns. That's how I am looking at 2008.
The people who got us in this mess, whether it be Chris Cox -- last-minute stifling of any accounting hopes ... thanks, Chris! -- or the incredibly overrated and somehow revered Hank Paulson, and, most important, President Bush. Not for a minute did that man do anything to get us out of this jam. It is telling that when people speak of the outgoing administration on Wall Street, they
speak of Bush. It's all Paulson and some Bernanke, a Bush appointee. But in the biggest economic collapse statistically since the Great Depression, the president has played no role and clearly doesn't understand most if not all that is happening around him.
When we speak of the next administration and domestic policy, it is clear that we are going to speak about President Obama. He won't fob it off or deny what's happening. And remember, this crisis got very deep because the man at the top said the fundamentals were sound, and repeated that over and over and over, right up until the beginning of 2008, which is why things are as horrible as they are. And they
horrible. The president's advisers, no doubt cowed by a clueless chief, never wanted to differ, and Bernanke reminds me of one of those academics around presidents Kennedy and Johnson, a brilliant man who has gotten us into the equivalent of a domestic Vietnam. He's finally bombing the heck out of the economy, but it was too late, and now a new administration has to clean up his and Paulson's and Bush's mess for him.
I don't think we are going to have a repeat of '32; in fact, the comparisons are absurd. I would call what we are going to have a "garden-variety depression," if the term wasn't such an oxymoron. Put simply, though, we are at a loss for comparisons between the recessions we have had since he Great Depression and now, so the lack of analogues brings us to the '32 debacle. Suffice it to say that we are nowhere near that era when it comes to
piece of the data: production, unemployment, retail sales, GDP -- none of them. So the comparison is fatuous. But we are well past the data of the recessions of at least my lifetime, albeit without the inflation of the Carter period. In fact, that's a more apt comparison if we need one, of the depth of trouble we are in.
Everyone wants to say we have bottomed, and lots of people like "the action." I simply want to point out that we may be in a prolonged period of nothing happening. That's right: nothing. All of the actions of the administration of late are good, but all they do and all they have done have not brought us back to where we were before the disaster of Lehman Brothers.
When we look back at 2008 we will see two moments, Before Lehman and After Lehman. Before it, we might have had a chance to avert the all-out collapse that is occurring. After it, we haven't been able to, no matter what we do, and from now on, all of the things we have to do will obviously come back to haunt us when we come out of this, which we will eventually. The Before Lehman/After Lehman divide is so important that I do hope that one day we will have an authoritative history of the wrongness of what happened, without all of the lies and alibis and the astonishing apotheosis of Tim Geithner after that event.
But that's history. The simple fact is that credit has not come back since then, and even while I hail a decision to give GMAC money, it is just another form of the government lending because the private sector won't. The perception, by the way, is that the private sector is "scared" to lend. In reality, the private sector is shrewd not to lend until collateral, which is in free fall, stabilizes.
The new administration knows this, which is why I think things will stabilize. That's what the market is saying with
stabilizing. In a stabilized world there will be opportunity.
My sincere hope is that the new president remains understanding that the most important thing that he can do for this economy -- the thing that would make credit flow -- is to help stabilize the price of housing. While mocked most of the year, the projection I have made that housing will bottom in 2009 will come true if the administration gives us that big tax credit for housing, the supply continues to dry up, mortgage rates continue to go down and prices decline another 10% to 20% -- all of which now seem
by the middle of the year.
Only then, when housing collateral stabilizes, will I trust any rally to get us anywhere,
including the rally I expect at the beginning of the year
when the vicious tax-loss selling abates.
Fortunately, if the bottom is only six months off, the prospects of owning stocks that are not all acyclical can make sense -- hence why I am busy buying
Black & Decker
. But I still think the best values rest in the stocks that do well with no real economic activity but are down horribly nonetheless, the ones that benefit in a world where unemployment is still going up, the economy isn't stabilizing, the dollar is going lower and so are commodities:
(the best-acting stock in the market, by the way, and a big Obama stock because he actually recognizes that AIDS is a problem),
Johnson & Johnson
Procter & Gamble
are the kingpins of that strategy.
I, like everyone else, will be very glad to see this year end, a year that singularly wrecked equities
for a generation of Americans whether they be with the Bill Millers or the Bernie Madoffs. A truly revolting year.
Let's hope next year's a better one. Hard not to be.
At the time of publication, Cramer was long Eaton, Black & Decker, Johnson & Johnson, Gilead and Procter & Gamble.
Dearth of Deals Is a Real Downer
This article originally appeared on RealMoney on Monday, Dec. 29, at 1:12 p.m.
Deals aren't getting done, and that means that we are sinking further into the notion that there is no real value at these levels -- or at least the dealmakers don't think there is.
I am talking about the astounding collapse of the
deal coupled with the concomitant potential collapse of the
Rohm & Haas
deal. The Kuwait walk-away says, "We don't have the capital to complete this," which is astounding given the endless proclamations that the deal is fine from both sides.
What worries me so much about this deal is that Dow Chemical is the biggest user of nat gas in this country, so it is actually a gigantic beneficiary of what is going on. The company is hardly on the ropes. The chemicals that the deal was supposed to make also were beneficiaries in cost.
My takeaway: The only support in this market comes from yield for now. The targeted measures like LIBOR might be better, but the money's not there to fund anything, including allegedly done deals like this one.
In many ways this is a real negative. If the Kuwaitis can't do a deal with a company that has sworn by the transaction to the point that it based another whole transaction on it, my bet is that there will be no deals come the new year, even though we universally think that stocks are beyond cheap given their declines.
At the time of publication, Cramer had no positions in the stocks mentioned.
One of the Best
This article originally appeared on RealMoney on Friday, Jan. 2, at 7:27 a.m.
Remember the craze to own deposit banks? Remember the thought that if you had oodles of deposits, you could make it through this period with much more aplomb than if you were an investment bank, an investment bank like
? Or, of course, obviously,
The stocks are saying that the judgment -- the judgment in favor of deposits against so-called "hot money" -- may be inaccurate or at least premature.
The judgment, as meted by Goldman Sachs' stock, in fact, is saying that the deposit game may be dead wrong for 2009.
You can see what's happening with the Goldman Sachs base and the lack of erratic trading, perhaps because the goal of breaking Goldman Sachs didn't happen. It didn't happen by now, it ain't happening -- that's what the stock's screaming.
And the subtext can't be lost on people -- the deposit banks are hostage to the consumer, who without stimulus, without tax credits, without
, can't be counted on. Goldman Sachs, on the other hand, has morphed into something that might turn out to be, not the hedge fund bank, but
advisory bank, the one without the consumer addiction that might turn into the 2009 version of the bad hedge fund/bad leveraged loan scenario that almost wrecked Goldman in 2008.
Just as we embrace and give a premium multiple to
-- however undeserving given the asset-backed nonsense that plagued them -- as the custodian banks, we now have one company truly dedicated to advising the rich and the corporate, and that's Goldman Sachs. With no bad loans to consumers.
I still like the exposure to the big banks --
-- because when they come back, they will roar. But the obituary for Goldman Sachs (and to a lesser extent Morgan Stanley) just didn't happen in 2008.
And therefore, given the reform of the Goldman balance sheet, it isn't going to happen in 2009.
It will, instead -- even with this level of activity -- be one of the best stories out there, one that should quickly go to a premium of book value, to $100, given the benign market we have suddenly and unequivocally discovered.
At the time of publication, Cramer was long Goldman Sachs, Morgan Stanley, Wells Fargo and JPMorgan.
At the time of publication, Cramer was long Eaton, Black & Decker, Johnson & Johnson, Gilead, Procter & Gamble, Goldman Sachs, Morgan Stanley, Wells Fargo and JPMorgan Chase.
Jim Cramer is co-founder and chairman 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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