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NEW YORK ( TheStreet) -- Don't fight the Federal Reserve. That was Jim Cramer's lesson for his "Mad Money" TV show viewers Monday. He told investors that sometimes the macroeconomic picture matters more than the results of individual stocks. Cramer said today's market's rally was a classic lesson in the tug-of-war between the microeconomic "realists," who analyze the results of individual companies, versus the macroeconomic "impressionists," who look at the world in a more abstract manner. Sometimes the realists are in charge, noted Cramer, but other times, like today, the abstract data such as industrial gains in China or a positive manufacturing number here at home are all that's needed for a healthy rally. That's why Cramer said he learned a long time ago to never fight the Fed. If the central bank is working hard to spur manufacturing or strengthen the banks, eventually it will succeed, and the last place an investor wants to be is on the wrong side of that trade. The banks, oils, copper, aluminum and materials stocks are all on the Fed's radar, said Cramer, and those are the stocks that were lifted most by Monday's macro news. There is no right or wrong when it comes to whether the micro or macro picture matters more over the long term, Cramer concluded, but at least for today the abstract macro picture was the one to which the markets paid more attention.
New Quarter, New IdeasIn football, quarterbacks are known to flow through a process known as the "check down," where they scan all of their receivers looking for the best opportunities to pass the ball. Now that the third quarter is behind us, Cramer said he's doing his own check down to see where the best investing opportunities are. Starting off in the Dow, Cramer said Home Depot ( HD), a stock he owns for his charitable trust,
In the losing column, there's Intel ( INTC), down 15% in the third quarter, but there's no bull case to be made with that stock or with Hewlett-Packard ( HPQ), another Dow laggard. Over on the S&P 500, Cramer said there are lots of hot stocks including Sprint Nextel ( S) and Tesoro ( TSO), but those stocks also need big pullbacks to be investable. Monster Beverage ( MNST) is intriguing, he said, but energy drinks are a tricky category. That's why Cramer chose next to look for sectors that have been left behind, particularly the transports. He immediately said no to the airlines and the trucking companies after FedEx ( FDX) gave such poor guidance, which left him with the rails, a sector that doesn't compete with itself, doesn't have European exposure and was been hit hard by falling coal demand. Cramer said he chose Union Pacific ( UNP) as his favorite rail, as it transports the cheaper coal that does well as natural gas prices rise. He said utilities need to restock their coal, which is good news for Union Pacific, and most of the west agricultural demand is already priced into the stock. Cramer said that investors don't always have the pass the ball, they can choose to keep it in cash instead, but hopefully this "check down" sheds some light on how to find some new ideas for the new quarter.
A Bouncing Reborn Yahoo!Cramer offered a heartfelt congratulations to Yahoo! ( YHOO) CEO Marissa Mayer on the birth of her baby boy this week and also on the rebirth of her other baby, Yahoo!. He said this ailing Internet giant is now finally worth buying again. After years of a flatlined stock price and a revolving door in the CEO suite, Cramer said Mayer may finally be the one to unlock the tremendous value that's hidden inside the company. He said Mayer's choice for CFO, Ken Goldman of Fortinet ( FTNT) proves that Mayer is serious about returning value to shareholders. So what's the real value hidden inside Yahoo!? Cramer said the company's remaining stake in the Chinese Alibaba is worth at least $5.8 billion, while its Yahoo Japan assets can add on another $4.77 billion. Add that total to the $5.84 per share of cash the company has on hand and Yahoo! is already valued at $14.84 a share, leaving its core U.S. businesses, including mail, sports, finance, Flickr and more, valued at just $1 per share.
Cramer said that Yahoo!'s core business is worth at least $7.17 a share, taking the total value up to $22 a share. He said with Mayer at the helm, it's easy to think the stock will begin to move once the company reports on Oct. 22 and outlines more of its plans. Companies cannot execute a turnaround plan, or any plan, without a solid CEO, Cramer concluded, and Yahoo! finally has one.