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:
- Bernanke's newfound bullishness,
- the way of the typewriter, and
- a mighty trio.
for information on
, where you can see all the blogs, including Jim Cramer's -- and reader comments -- in real time.
Bullish Ben Puts the Markets on His Back
Posted at 11:05 a.m. EDT, March 16, 2009
We're seeing some really strange and positive market behavior this morning. We have a confluence of bullishness.
I find the rally in the transports and the simultaneous rally in the soft goods like
(the last one benefits from an upgrade) to be something so bullish that it makes me lean more closely to
Doug's camp. The rails rally truly on the prospect of economic strength, because I have to tell you they have none right now. The food stocks rally on the lack of inflation. The bank stocks rally, too, except
. Of course, traders are telling me that they aren't rallying because traders got the call Friday that
was going to write about them positively, but I am sure
did its best not to have that happen ... although it is hard not to have it happen.
What's the common theme of all of these? Ben Bernanke's two-part interview on
. If you parse it, here is what you get: He specifically said we are going to have growth without inflation, a turn in the economy perhaps before year-end, and a saving of the bank system without the need to nationalize.
Growth without inflation is
, General Mills, Abbott and
. Turnaround is
. Banking? Obviously
Bank of America
, the two banks that
be ring-fenced if we are going to get out of this.
Bernanke cannot save the industrials right now because of near-term earnings risk, hence
Illinois Tool Works
. He also can't turn defense and farming, although those are happening. Oil is, as always, a wild card.
But the tone is good, the shrug-off of the profit-taking encouraging, and the "action" strong.
At the time of publication, Cramer was long Pepsi, Union Pacific, Unilever, General Mills, Abbott Labs, Wells Fargo, Morgan Stanley and Goldman Sachs.
The Way of the Typewriter
Posted at 2:16 p.m. EDT, March 17, 2009
When I first got in the business, one of the hottest stocks was
, a company that younger people reading this have never heard of. The company had a bunch of divisions: It was a conglomerate with spices and chemicals. But at its core it was a typewriter business.
At the time, we all used typewriters. Some used Smith Corona, others used
Selectrics. I swore by my Smith Corona and was particularly enamored with its erasing feature. It had a nifty reverse feature that enabled you to take back what you have written in seconds.
Then, one day, word processors just took off. Suddenly the typewriter disappeared. The word processor was just a better delivery system. Smith Corona was sold and its typewriter division simply vanished.
When I read about the newspaper situation -- and it is everywhere because of the closing of the print division of the
article "When Papers Fold" -- I think of Smith Corona. Isn't the current form of
Smith Corona? How about the
New York Times
These are just various Smith Coronas, where a better distribution system has come forward -- the word processor, the digital division. A superior way to get the job done.
Unfortunately, no one could really make any money with word processors. They were commodities and were later incorporated into regular computers as pretty much of an afterthought. There were profit margins to it, as the powerful desktop ended the business as a stand-alone.
Now I look at newspapers and it's just not possible to make money with them. There is a superior way to deliver the news and it is the Web, but the Web does not allow profit margins to cover the cost of the product. Worse, the big computer -- in this case,
-- makes the word processor -- in this case, the newspaper -- a second-rate way to deliver the product.
The parallel is frightening. You can't make money in digital newspapers in part because the cost of producing news is too high and the ad revenue is too low, and in part because the big computer has usurped what you want out of the word processor. Who needs print or digital news when you can get it from Google?
Now, here's the tough part: Newspapers are a public trust. They are like colleges. We need a free press. We cannot get one as the current setup is the word processor. The way to make it work is to either cut its cost to next to nothing -- which is what will happen to the Post-Intelligencer -- or to gate it and try to reclaim the value of the product.
I see no way out of this dilemma other than big-pocketed players, like Murdoch and
,coming in to take papers over because they want to control opinion. There's enough wealth in the U.S. and the world to run papers as break-even charities, but that means they can't be stocks.
is private; we will not know how much they are losing on the new digital Post-Intelligencer. But I do know that if I want to see something on the Post-Intelligencer, I am going to the computer -- Google.
So the Post-Intelligencer will have to be a public trust, like all other papers, or be part of bigger organizations like News Corp., which can afford to lose money to influence public opinion.
It is a shame, because the fact that they can't make money and they serve society -- unlike the word processor, let alone the typewriter -- makes them universities.
I love universities. I give to them.
But I would never invest in them.
At the time of publication, Cramer had no positions in the stocks mentioned.
The Mighty Trio Will Lead Us Higher
Posted at 10:44 a.m. EDT, March 19, 2009
The unholy troika's back -- oil, tech and banks -- and I think it contains the losses here to levels that the bears will simply not be able to tolerate and will force them to change species. That's what happens when you have leadership. You can stabilize, you can regroup, you can gain adherents. Generals beget foot soldiers. And when you have three leaders, you have lots of followers, and these three leaders -- oil, tech, banks -- are the most powerful forces in the market right now. They are the virtuous circle we need to go higher.
Think about what these umbrellas allow you to have run. When oil takes off, not only do you have the integrateds like
taking off, but you get the service group --
-- and then you get the solar plays, which have been crushed since the oil decline ... great for
Strength in oil means strength in commodities, which gives everything from
a lift. Infrastructure rallies, too, because of the leverage to higher oil prices.
Tech's running because of excellent earnings from
and great guidance by glass maker
, the latter a complete misjudgment by the company of the strength of its own markets, in part because a collapse of the competition. We've also caught an upgrade of
, showing that cell phone demand could be improving. All of these changes are incredibly important: You can buy everything from
off of the great Oracle news, plus the Oracle dividend is a terrific sign of responsibility when it comes to shareholders. Even
Corning's hugely important because their products go into both fiber for telco and in computer and television screens. You can extrapolate strength in
as well as
. If fiber's doing well, then networking might be doing well, so
make sense. If gadgets are doing well, then
make sense. Nokia? You can buy everything that goes into a cell phone with this one:
and my favorite,
. Don't forget the spillover to
Research In Motion
( RIMM). What a monster group of soldiers following the generals.
The best, of course, is financials. This group needs to continue to power higher. It can't stop here because that would indicate that there is no recovery in the cards, as this is the most cyclical group of all, more cyclical than the industrials, which are just awful.
When the financials go higher it means the oil's returning to the machine. When
Bank of America
go higher, they can begin to take hits against the lighter mark-to-market without wrecking their common equity. Remember, these companies have fine Tier 1 capital, it was only the switcheroonie to common equity -- which is controlled by the shorts -- that has really caused the endless declines, not the fundamentals, which are all about one thing: the spread vs. the losses. If you get a big spread in interests rates -- what they borrow at and what they lend at -- it can make up for a ton of losses, particularly if you are not forced to put more of your reserves toward paying loans, as mark-to-market is forcing you to do.
The rally in financials deters shorts until we bring back the uptick rule and get enforcement on naked shorts -- how bad was the Cox SEC -- and it gives us breathing room.
You can see the short squeezes that occur every day:
( FNM) and
( FRE), they are all short squeezes. Doesn't matter, they are breathing room and they are a warning to the shorts -- it is no longer a one-way game. Plus, as the market goes up, the hedge funds need to change their balance and go long. It is happening right now.
Now, let's not forget what's been left out: the industrials, which are just in total chaos; retail, which is dependent on unemployment and is a big issue; and anything else that involves consumer spending.
The industrials are going to be spurred by the weaker dollar, the delicious corollary to the
. The consumer spend plays, that's all about unemployment, and we have little good news there other than the unemployment claims not breaching the December level.
We have enough going for us now that we cannot go back to 6400 on the
Today we are being held back by options expiration, as I see a lot of stocks already being trapped by strikes, except for the oils.
But, the troika protects us. It makes it so there's plenty of stocks that will follow the leaders and that means better breadth, better technicals, and a better opportunity to end the tyranny of the bears, and a pause in the worst bear market since the Great Depression.
Weakness will be bought. Strength will not be sold. Money comes in. Ultimately the market goes higher, not lower.
At the time of publication, Cramer was long Wells Fargo, Qualcomm, Cisco, Hewlett-Packard, Caterpillar, BHP Billiton, Chevron and BP.
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