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:
- oil's decline,
- the misleading inflation headlines, and
- Fannie and Freddie as martyrs.
Amateur Hour Drags On Originally published on Tuesday, Aug. 19, at 8:58 a.m. EDT Who leaked? Who told Barron's that there is a plan to take over Fannie ( FNM) and Freddie ( FRE), and then who leaked yesterday and denied such a plan? Who tolerates this nonsense at Treasury, and who speaks for Treasury? Did the SEC not know that the short-selling suspension coupled with a "bad article" about Fannie and Freddie could undo months of "they are well-capitalized" rhetoric from the regulators and the administration? Could the administration be so stupid as to spend thousands of man-hours investigating leaks about Iraq and let this nonsense go on, thus destroying billions upon billions in capital? Does anyone really know what they are doing here? The Treasury-SEC amateur hour is a wondrous thing to behold. I am not excusing Fannie and Freddie: They are worthless. That's clear from the bad loans they made. However, they could be a superior dumping ground, a genuine Resolution Mortgage Trust, if the administration would just think this through and realize that there has to be a place for the FDIC to dump bad mortgages when they seize a bank. Otherwise, they will be running dozens of regional banks and using up capital at a reckless clip.
Look Beyond the Headline on the Inflation Number Originally published on Wednesday, Aug. 20, at 9:48 a.m. EDT The headline's scary as all get-out: "Jump in Wholesale Prices Shows That Inflation Remains High." No way that interest rates would be going down on that. No way we should be thinking of anything but a tightening by the Fed. But neither is the case. Rates are going down. The Fed's not going to do anything, it is scared of its own shadow and is -- as usual -- paralyzed about the big issue of the day, house price depreciation. Which brings me to the index itself, the one that "soared" the worst in 27 years. I am never a top-down guy, I am a bottom-up guy, and if you break down the components that screamed higher, you will understand why inflation has not only peaked but is coming down hard.
Fannie and Freddie Could Be the Martyrs Originally published on Thursday, Aug. 21, at 7:45 a.m. EDT The most important positive that must occur in this economy is for housing to stop going down. It is even more important than oil going down, because it cuts to the core of consumer confidence and credit. House prices are coming down, but that's not enough. We also need lower mortgage rates, and the spread between the mortgage rates and Treasuries is so high that it's hard to make case that you are getting any sort of bargain at all on the money you are trying to borrow. It should be a great time to buy a house -- no demand, plenty of supply -- but mortgage rates are just too high.