Posted Oct 3rd 2008 9:00AM by Jim Cramer
Filed under: Market matters, Citigroup Inc. (C), JPMorgan Chase (JPM), Bank of America (BAC), Wells Fargo (WFC), Cramer on BloggingStocks, U.S. Bancorp (USB), Financial Crisis
TheStreet.com's Jim Cramer says too much time has passed, too many institutions are out of cash. When we say "too big to fail," what we mean is an entity that has so many tentacles in so many parts of the economic superstructure that if it failed, the consequences would be too grave for the system itself.
With the demise of Lehman, we at last see what it is like to have something too big to fail, fail. That's why you can see every insurer go down in the beat of an eyelash, or every broker roll over with lightning speed. It is how you could see commercial paper lines frozen and how you could expect money funds to crater and break the buck.
Lehman was twice as big as Bear and much more far-reaching. It was the other side of the trade, we are discovering, for myriad financial players. Its paper pervaded the system and was seemingly owned like U.S. government paper was. It was levered against and it was priceless collateral that is, well, priceless collateral. It did things with your margin account to gain you a return that reduced your cash to unsecured status.
In short, Lehman may bring down the Western financial world. That's right, it might. Almost everything you are seeing since Lehman's demise can be traced directly or indirectly to Lehman.
Continue reading Cramer on BloggingStocks: Bailout's passage no longer matters
Posted Oct 2nd 2008 9:35AM by Jim Cramer
Filed under: Market matters, SLM Corp (SLM), Cramer on BloggingStocks, Financial Crisis
TheStreet.com's Jim Cramer says he doesn't want to make a move until he sees the action. We aren't oversold enough anymore, and we are up too much. Meanwhile, the next run is on the insurers, as we can tell from the erratic nature of the way that group is trading.
Oh, and what's the deal with
Sallie Mae (NYSE:
SLM) (
Cramer's Take)?
There's not a lot of respite here in part, again, because of Lehman and the default of so much Washington Mutual paper.
We just aren't ready for what is happening yet, and we keep getting surprised about where the paper is. The rescue bill will help, but the pork attachments are so horrible that I believe, ex-FDIC, they have made it tougher to pass, not easier.
Continue reading Cramer on BloggingStocks: The next run is on the insurers
Posted Oct 1st 2008 9:00AM by Jim Cramer
Filed under: Ford Motor (F), General Motors (GM), Short stories, Market matters, Citigroup Inc. (C), JPMorgan Chase (JPM), Bank of America (BAC), Federal Natl Mtge (FNM), Goldman Sachs Group (GS), Morgan Stanley (MS), Amer Intl Group (AIG), Wachovia Corp (WB), Wells Fargo (WFC), Cramer on BloggingStocks, U.S. Bancorp (USB)
TheStreet.com's Jim Cramer says if you're short, you don't want the bill passed. Let's look at that perspective. First, let's make an important point: Nothing from Congress is going to make this market go up. We need the market go up because it is cheap and it attracts buyers, and because there are companies out there that are worth more than they are trading at -- perhaps as private companies, perhaps as investments right now, if anyone had cash and confidence.
Right now it seems there is neither. All we have are the futures, on stocks and on oil, and they bounce around and we do what they tell us at the start. Then the hedge funds come in and start selling because of their broken models and their redemptions. Then the short-sellers come in and figure out ways to knock down things. Then the rumors start about another bank failure and then we go down.
I want to break that spiral because I own stocks. If I am short stocks, I love the spiral.
Now, the bill in Congress does not break the spiral by any means. What breaks the spiral is a sense that the system is not falling apart, which it most certainly is.
Anything that could help break that spiral is encouraging. Consider that we had the equivalent of Pearl Harbor -- the collapse of so many banks -- and now we need an effective response, which must be massive and persuasive.
Continue reading Cramer on BloggingStocks: Short-seller's paradise
Posted Sep 30th 2008 9:15AM by Jim Cramer
Filed under: Market matters, Citigroup Inc. (C), Bank of America (BAC), Federal Natl Mtge (FNM), Amer Intl Group (AIG), Wachovia Corp (WB), Cramer on BloggingStocks, Financial Crisis
TheStreet.com's Jim Cramer says the rejected bill was about rescuing credit markets, not rescuing Wall Street. So what if the plan would have benefited some fat cats? Everything's always going to benefit fat cats. That's how things work, unless you want a Leninist or Maoist society.
What people needed to care about were the 90 million families who own stocks and the millions of people who are about to get kicked out of their homes who had a hope to be able to refinance with someone from the government rather than a collection agency.
You want bailout?
Fannie (NYSE:
FNM) (
Cramer's Take) and
Freddie (NYSE:
FRE) (
Cramer's Take) were bailed out.
AIG (NYSE:
AIG) (
Cramer's Take) was bailed out. Those directly helped some of the wealthiest people and nations in the world. The AIG bailout could cause the U.S. government hundreds of billions of dollars, because of credit default swaps. Those were bailouts.
This package was about stopping home price depreciation before it hit 40%, 50%, 60%. It was about the private sector being able to buy failed banks, not the public sector, which is what will now have to happen.
Continue reading Cramer on BloggingStocks: This defeat hurts us all
Posted Sep 29th 2008 8:45AM by Jim Cramer
Filed under: Earnings reports, Apple Inc (AAPL), Market matters, Wachovia Corp (WB), Washington Mutual (WM), Cramer on BloggingStocks
TheStreet.com's Jim Cramer says Apple is showing us that there's very little safety in this tumultuous market. Too little too late? For some, yes. For
Washington Mutual (NYSE:
WM) (
Cramer's Take), yes. For
Wachovia (NYSE:
WB) (
Cramer's Take)? Maybe.
For
Apple (NASDAQ:
AAPL) (
Cramer's Take)?
Oops, that's the problem: The earnings are no good. We sit here and fret about European property banks that were just these blips on our early-morning screens -- Fortis? Hypo? B&B -- what the heck, I didn't even know they were important. We follow their bailouts and we wonder how in heck did we do this to them? Did we? Did they have Lehman trouble? Who didn't have Lehman trouble?
And then Morgan Stanley downgrades Apple and we get a bunch of retail downgrades and then we realize that we are in uncharted earnings and assets waters.
Continue reading Cramer on BloggingStocks: Earnings still matter
Posted Sep 26th 2008 9:30AM by Jim Cramer
Filed under: Microsoft (MSFT), Hewlett-Packard (HPQ), General Electric (GE), Pfizer (PFE), Wal-Mart (WMT), Coca-Cola (KO), Intel (INTC), General Motors (GM), Home Depot (HD), Exxon Mobil (XOM), Market matters, McDonald's (MCD), Walt Disney (DIS), International Business Machines (IBM), AT and T (T), 3M Corporation (MMM), Caterpillar (CAT), Citigroup Inc. (C), Johnson and Johnson (JNJ), JPMorgan Chase (JPM), Alcoa Inc (AA), American Express (AXP), Bank of America (BAC), Boeing Co (BA), Chevron Corp (CVX), MasterCard Inc'A' (MA), Procter and Gamble (PG), Amer Intl Group (AIG), Verizon Communications (VZ), duPont(E.I.)deNemours (DD), Merck and Co (MRK), United Technologies (UTX), Kraft Foods'A' (KFT), Qwest Communications Intl (Q), DJIA, Cramer on BloggingStocks, Financial Crisis
TheStreet.com's Jim Cramer says without the Paulson plan, every component is in trouble. Let's take a look. Without the Paulson plan, or if the plan is so watered down and delayed, I have been saying all bets are off and we could be in for a huge swoon. How huge?
I like to sit down and noodle on the actual components of the Dow Jones Industrial Average to give you a real sense of what can go wrong. And there is so much going wrong. The credit markets are vanishing, the earnings are vanishing and the only hope is a plan that ignites credit markets, forces money off the sidelines and gets this economy and the worldwide economy moving again.
Not long ago, I postulated that this market is literally repealing all of the moves since the Brazil-Russia-India-China emergence that gave us better markets to sell into than just the U.S. With the collapse of Chinese growth -- they have simply ceased to be importers since the summer -- the inflation in India, the war in Russia and a U.S.-led slowdown in Brazil (although that remains a robust market) BRIC is more like having a brick around your neck than a wind at your back.
Meanwhile, the peak in energy and the collapse of the financial system have left both of those groups in disarray with valuations simply too difficult to pin down, so you retreat to worst-case scenarios where you can at least find some terra firma -- mainly where stocks were last time things were this bad.
Continue reading Cramer on BloggingStocks: Worst-case scenario: Dow under 8400
Posted Sep 25th 2008 8:37AM by Jim Cramer
Filed under: Earnings reports, Deals, Citigroup Inc. (C), Bank of America (BAC), Merrill Lynch (MER), NIKE, Inc'B' (NKE), Wachovia Corp (WB), Washington Mutual (WM), Cramer on BloggingStocks, Financial Crisis
TheStreet.com's Jim Cramer says the bank will be ready if the bailout plan is approved. If not, only BofA makes sense. So what happens if we get the deal? What occurs? Will we see immediate deals? I think it depends on the accounting.
If an acquiring bank were to buy
Washington Mutual (NYSE:
WM) (
Cramer's Take), say, without any assurances that those mortgages can be written down to where they can be flipped, the acquirer would be committing suicide.
That makes Washington Mutual just a so-so bet, although its $300 billion in deposits make it a terrific target. Put it this way, the FDIC will own WaMu in a week without the plan, and that will be mighty ugly for the FDIC. But it could happen anyway, given how bad the WaMu loan process was.
Instead, I think the focus will be on
Wachovia (NYSE:
WB) (
Cramer's Take) because I believe Bob Steel has the best handle on what the process will look like. I think he is ready to dump his bad bank on the government in return for a stake by the government in it and then his good bank can thrive. I think that Wachovia goes from a dicey situation to one of the best ones.
Continue reading Cramer on BloggingStocks: Wachovia will be the focus
Posted Sep 24th 2008 8:45AM by Jim Cramer
Filed under: Deals, Market matters, Goldman Sachs Group (GS), Wells Fargo (WFC), Cramer on BloggingStocks
TheStreet.com's Jim Cramer says he at least recognizes value when he sees it. Warren Buffett is not an idiot. He has kept his powder dry through all of this madness and suddenly, within one week, he has opened his coffers and picked up not one, but two multi-billion-dollar steals,
Constellation Energy (NYSE:
CEG) (
Cramer's Take) and
Goldman Sachs (NYSE:
GS) (
Cramer's Take).
These investments are the first sign that someone, some grown-up, is coming in from the sidelines, not because he has been talked into something that he doesn't want to do or understand -- which has been the case in all of the other bank financings -- but because he sees a delicious rate of return that will be hard to take away now that he has put his balance sheet to work, one of the last with any firepower to make a difference.
First, Constellation. Here's a perfectly good utility that, because of its business model, needs capital to work. It made several miscues that brought it to its knees -- a business that is a regular, good generator of income gone bad because of financing. I have no idea how low it would have gone, but as long as it was intact, it was worth a lot more than it was selling for to someone who has financing, and that's what Buffett has in spades. He stole the company.
Continue reading Cramer on BloggingStocks: Buffett knows the score on Goldman
Posted Sep 23rd 2008 8:58AM by Jim Cramer
Filed under: Market matters, Columns, Citigroup Inc. (C), JPMorgan Chase (JPM), Goldman Sachs Group (GS), Morgan Stanley (MS), Washington Mutual (WM), Cramer on BloggingStocks
TheStreet.com's Jim Cramer says there are some events out there -- WaMu being the biggest -- that make the plan worth adopting. The vote from Monday's market was pretty resounding: The plan won't help. Or if it does, it will be too costly and there are too many details that can't be worked out.
So should it just be let go?
I am a big believer in the plan because there are some events out there that would make the plan worth adopting no matter what. And the biggest event is
Washington Mutual (NYSE:
WM) (
Cramer's Take). Here's a firm that just had its debt downgraded again last night, and if you read the ratings downgrades you can't see how the feds can avoid seizing it.
But what happens when they seize it? The thing is so mammoth that it would overwhelm the FDIC. Although with this administration's magic-wand philosophy, maybe we can just get some stopgap funding. Or maybe we just say, "As long as there are no lines outside WM, we are fine." But at a certain point, no investors are going to want to buy any of this company's debt and the losses could be too great.
Continue reading Cramer on BloggingStocks: The beauty of the plan
Posted Sep 22nd 2008 8:44AM by Jim Cramer
Filed under: Market matters, Goldman Sachs Group (GS), Morgan Stanley (MS), Wells Fargo (WFC), Cramer on BloggingStocks, U.S. Bancorp (USB)
TheStreet.com's Jim Cramer says everyone is worried that Goldman and Morgan will be safer but valued less and make less money. It's hilarious that suddenly everyone is worried that
Goldman Sachs (NYSE:
GS) (
Cramer's Take) and
Morgan Stanley (NYSE:
MS) (
Cramer's Take) will be safer but will be valued less and make less money. It's almost as if they were to be valued as banks!
Wait a second, who pumps this stuff out? I am sure the stocks will go down simply because stocks go down on good news or bad news right now. But the kind of stuff I see written immediately is so typical of the misdirection of this period: The banks have twice the multiple of Goldman Sachs, for heaven's sake!
Why can't people see what is going on? Is it because things are moving so fast? Don't people see what is happening here? The market is saying that no investment bank can be trusted as a place to keep money because Lehman didn't refund the prime brokerage money that hedge fund managers had there!
That meant if you had prime brokerage money at Goldman Sachs, you needed it out. Goldman doesn't keep that kind of money on hand. No way. And the other firms had no desire to lend to Goldman. Why should they?
Continue reading Cramer on BloggingStocks: What a world
Posted Sep 19th 2008 9:30AM by Jim Cramer
Filed under: Market matters, Citigroup Inc. (C), Federal Natl Mtge (FNM), Goldman Sachs Group (GS), Morgan Stanley (MS), Amer Intl Group (AIG), Cramer on BloggingStocks
TheStreet.com's Jim Cramer says the new rules on short-selling could move us higher on this expiration day. Today will be a huge test of the new short-selling rules because we are starting from a higher plateau.
The brokers now know that it may not pay to short financials that have no mortgage exposure because they might rid themselves of it, and because they might not be able to get unlimited puts because the brokers won't provide them in fear that they will be caught without a borrow because major institutions are taking their stock out of the stock loan vault.
The specter of a total ban on shorting would make being short totally unpalatable. Make no mistake about it, a total ban on shorting, even a temporary ban on shorting would be horrible and destroy the markets outright. That's right -- destroy them.
I can expect that from this commissioner because he is that bad. (Did McCain just get my vote?) But anyone with any sophistication knows that if you can't short or hedge with shorting, you can't trust a market. It will break both ways, up and down. That has to be taken off the table. Almost all of the unintended consequences wreck whatever "good" it could accomplish.
Continue reading Cramer on BloggingStocks: What to watch for in today's trading
Posted Sep 18th 2008 9:57AM by Jim Cramer
Filed under: Market matters, Lehman Br Holdings (LEH), Cramer on BloggingStocks
TheStreet.com's Jim Cramer says all that can really help us now is time. Yeah, I trust it. Sure.
That's what everyone is saying today. They see the futures and they are now conditioned to "fade" it, to go against it and just be glad to get minuscule higher prices than you could get yesterday.
I am no different. Last year when the Fed started injecting funds like crazy with the rest of the world, we had a real lift.
But there is so little confidence now that we can't possibly be comforted this time around.
The fright of yesterday, where people trusted only T-bills because anyone who had money with
Lehman (NYSE:
LEH) (
Cramer's Take) international or owned their debt was just killed -- thanks to Dick Fuld for not taking that Korean bid -- won't go away in one day.
The notion of opportunity, of actually buying something and watching it go up, seemed to vanish. I don't think the SEC's decision to enforce an old law will cut it, and I am now repulsed by the chorus calling for the uptick rule -- even though that's my position -- because they all sound like sore losers.
Continue reading Cramer on BloggingStocks: I'm waiting for the other shoes to drop
Posted Sep 17th 2008 8:45AM by Jim Cramer
Filed under: Market matters, Federal Natl Mtge (FNM), Amer Intl Group (AIG), Lloyds TSB Group plc ADS (LYG), Cramer on BloggingStocks
TheStreet.com's Jim Cramer says the intervention will help all financials worldwide. How about this? We are better off than we were yesterday.
You have to understand that we simply wouldn't be able to open most financials if
AIG (NYSE:
AIG) (
Cramer's Take) had failed. Our new sovereign wealth fund, the Federal Reserve, came up with an elegant plan to take over AIG and make good on what would have been broken guarantees that would have caused worldwide capital calls and bank closings that honestly would have made the Great Depression seem like the Little Depression, World War I to our new World War II. That's worth avoiding.
It's hard to rally on this. People are still reeling from the enormity of it and the fragility that we didn't know about. I am actually pleasantly surprised that the Fed recognized that we had a problem this size on our hands.
You have to look at this only one way: Without this nationalization, we might not have had banks paying off other banks. We would have a seize-up and a destruction of capital that we simply couldn't handle.
Now we are going to rebuild on a firmer basis.
Continue reading Cramer on BloggingStocks: The AIG save puts us on better footing
Posted Sep 16th 2008 9:28AM by Jim Cramer
Filed under: Scandals, Citigroup Inc. (C), Amer Intl Group (AIG), Lehman Br Holdings (LEH), Cramer on BloggingStocks
TheStreet.com's Jim Cramer says they had no idea how catastrophic pulling the naked-shorting rules would be. Christopher Cox and his crowd of academics and theoreticians did more to destroy the confidence of this market with their adherence to free-market destruction of stocks than any of the managements of the companies themselves.
I know that is a strong statement, but you have to understand that the rules against naked shorting and shorting without upticks were about having firebreaks in the system. Consider these rules a swath of chopped-down trees meant to slow a fire so firefighters have a real chance to put out a monster conflagration.
Let's take
AIG (NYSE:
AIG) (
Cramer's Take). Here's a company that has lots of liabilities but also lots of assets. While its liabilities are liquid -- meaning it has to pay them off quickly if there is an event that triggers payment -- its assets, such as its great life insurance and aircraft leasing businesses, are illiquid. AIG couldn't just turn around and sell them.
Still, new management came in at AIG and decided to work on a plan, meant to be revealed at the end of September, that would detail asset disposals that could make the company a more solid credit with an ability to make good on their policies on financial instruments. It would also be able to access capital in the markets once those illiquid assets were disposed of.
Continue reading Cramer on BloggingStocks: SEC played a big role in creating this chaos
Posted Sep 15th 2008 9:40AM by Jim Cramer
Filed under: Wal-Mart (WMT), Starbucks (SBUX), Market matters, Charles Schwab Corp (SCHW), Merrill Lynch (MER), Colgate-Palmolive (CL), General Mills (GIS), Procter and Gamble (PG), Amer Intl Group (AIG), Lowe's Cos (LOW), Amgen Inc (AMGN), Symantec Corp (SYMC), Gilead Sciences (GILD), Wells Fargo (WFC), Lehman Br Holdings (LEH), Stocks to Buy, Stocks to Sell, Cramer on BloggingStocks
TheStreet.com's Jim Cramer says false correlations can lead you to despair -- you need to see through them. At moments like this, you have to figure out what will be affected and what won't be, and you need to recognize that the interrelation of all stocks to these events is a false one.
There is no doubt that anything mortgage is troubled. So even though I like
Wells Fargo (NYSE:
WFC) (
Cramer's Take) a great deal, it is unlikely that WFC can stay anywhere near up here now that
Lehman (NYSE:
LEH) (
Cramer's Take) collapsed. I don't want to hazard a guess, because it would be a guess, about where that stock can trade. Obviously it is a buy at some price, but that's a difficult issue.
Stocks like
Schwab (NASDAQ:
SCHW) (
Cramer's Take) and
Capital One (NYSE:
COF) (
Cramer's Take) are difficult to figure out, too. Schwab has nothing to do with this mess, but maybe trading will slow. People might look at the numbers Capital One put out about defaults, and while they seem pretty darned good, does anyone care? That stock had been on a rampage; probably stops today.
But how about the stocks on the Nasdaq? The Nazz futures are indicating down huge. Does that make sense? Just because it is happening, does that make sense?
Symantec (NASDAQ:
SYMC) (
Cramer's Take), positive article this weekend -- a buy? If the futures take it down, yes.
Amgen (NASDAQ:
AMGN) (
Cramer's Take) with new data coming up? Yes.
Celgene (NASDAQ:
CELG) (
Cramer's Take), which wouldn't come down last week? Yes.
Continue reading Cramer on BloggingStocks: Opportunity in chaos
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