Posted at 3:57 p.m. EST on Thursday, Feb. 4, 2016
The banks -- always the banks. We got a bounce today, but is it for real? The headwinds keep building: bad oil and gas loans, less of a chance of a rate hike, foreign banks in trouble, very little investment banking.
People want to ascribe a crisis to everything. Is there one? I know I am sitting down with John Stumpf from Wells Fargo, which is part of the Action Alerts PLUS portfolio, to ask about these issues. But the big problem I have is that shorting these stocks has become almost too easy. You can't have all of these issues hanging over the group and expect them to advance.
At the same time, though, they are going to make an immense amount of money. They just can't demonstrate it and no one seems to trust their earnings power.
It's almost as if we are back to the old days-bad loans in oil and gas, which seem like bad loans in housing but with less collateral, and at the same time dividends that aren't high enough to forestall bets against the group.
Now, I know that, for example, if Action Alerts PLUS holding Bank of America (BAC - Get Report) would be able to buy back stock, it could truly help its earnings per share. If it were allowed to boost the dividend -- meaning the Fed would relent -- it would help, too.
Because I have never seen a solvent bank trade at this level of a discount to true book value.
Here's the problem, though: You get this discount, why can't there be a bigger discount?
That's the real question.
At the time of publication, Action Alerts PLUS, which Cramer co-manages as a charitable trust, was long WFC and BAC.
Posted at 3:07 p.m. EST on Wednesday, Feb. 3, 2016
I see the long knives out for Chipotle (CMG - Get Report) . Who wants to own a stock where the same-store sales declines actually hit 40% for a given week? You want to be involved with the shares of a company that's being investigated by the Justice Department? Who knows when the customers will come back when there's been such incredibly bad publicity because of the E. coli and norovirus outbreaks?
I know the answer: the company itself. It has bought back hundreds of millions of dollars' worth of stock during this period and it is not stopping, sopping up the shares of all who choose not to believe this company can't come roaring back as soon as this year.
I think the company is right and the sellers are wrong, even as they could be right for 20 or 30 points at a given time because the stock is so volatile.
Why be bullish about a company that told you its raw costs are going up, its safety solutions are expensive to implement?
Short memories. Does anyone remember the four children who died from E. coli caught at Jack-in-the-Box (JACK - Get Report) more than 23 years ago? Didn't think so. (Jack-in-the-Box is part of TheStreet's Action Alerts PLUS portfolio.)
If people can get past that, you think they can't get past this?
Maybe more recent events will jog your memory? How about the E. coli incident at Taco Bell: 71 people sick in five states a decade ago. Go to a long-term chart of Yum Brands (YUM - Get Report) . You can't even see the decline!
Now think about the love for Chipotle before this. Love because people think they will live longer by going there. They've just been waiting for the all-clear.
They have gotten it.
I think you may have gotten it yesterday, too.
At the time of publication, Action Alerts PLUS, which Cramer co-manages as a charitable trust, was long JACK.