Cramer's Mad Money - Secretary Cramer (11/5/08)

Stocks discussed in the in-depth session of Jim Cramer’s Mad Money TV program, Wednesday November 5.

Secretary Cramer: AIG (AIG), Ford (F), General Motors (GM), Chrysler (DCX), Valero (VLO), Marathon (MRO), United Health (UNH), Wellpoint (WLP)

While Obama has promised to mend the economy, an interest rate cut in Europe and China is the fastest way to get the U.S. economy going again, said Cramer.  However, there are some steps President-elect Obama can make if he wants to turn the economy around.

1. 1. Obama must make Cramer Securities and Exchange Commission chairman, Federal Reserve chairman and Treasury secretary. Cramer said he could do all three jobs better than the “current crowd of jokers who are partially responsible for the mess we are in.”
2. 2. Rescue the auto industry according to the AIG bailout model. Cramer suggested the government buy up billions of dollars worth of common and preferred GM, Ford and Chrysler stock This would allow the companies  to raise capital  and to turn their bonds in to high-grade paper. He would also encourage a merger between GM and Cerberus.
3. 3. Create energy independence and jobs by taking full advantage of natural gas resources by making natural gas cars part of the auto bailout deal and to withhold tax credits from oil companies unless they open natural gas fueling stations.
4. 4. Stop deportation of immigrants. While this may be a controversial move, Cramer noted default rates are almost zero among both legal and illegal immigrants who take on multiple jobs to ensure their mortgages are paid. Cramer suggests buying up 1.3 million homes in the most beleaguered areas

After outlining his 100 day plan, Cramer took a couple of calls. He told one caller that Obama’s alternative fuel plans including clean coal and nuclear will not have legs and the country will have to rely on conventional energy for a while.  He would switch from Valero to Marathon, which will split itself up into two separate businesses in January and offers a high dividend. He told another caller to switch from United Health to Wellpoint which is “the cheapest and the best.”

CEO Interview: David Novak, Yum Brands (YUM)

While Yum beat its quarter by 4 cents in October and was up 4% both domestically and abroad, the company trades at a mere 14 times its earnings, a decline from its historical average of more than 17 times earnings. Sales in China have decreased a bit because of higher prices on chicken, but David Novak said this is a temporary rather than a permanent problem. He said the company’s “global portfolio of leading brands” will see it through the current headwinds. While margins have fallen in China, the company plans to build 500 new stores by the end of the year, bringing up the total t. 3,000. There is much more room for expansion, given the country’s huge population. Concerning Russia, Novak said there is political risk but significant potential. While Cramer still likes Yum, he would wait for the dividend to reach 3% before buying.

CEO Interview: Jim Rogers, Duke Energy (DUK)

Cramer was disappointed with Duke’s earnings which sent the energy company’s stock price down $1.30 to $15.62 from $16.90. However, the reasons for the decline were temporary: higher costs from Hurricane Ike, a mark-to-market impact of its hedges and an accelerated write-down from a real-estate joint venture. However, there are opportunities for an upside with a new $11 billion contract with the State of Ohio, falling coal prices and its new investments in wind and solar. Seventy-percent of Duke’s operations are regulated and rising costs are passed on to customers. Rogers is confident that the company can help bring the cost of solar down and says coal is here to stay and the development of clean coal is a top priority. He also discussed the company’s “Save a Watt” proposal that would reimburse utilities for encouraging consumers to save energy. Cramer says he likes the dividend and thinks Duke is a “smart company and a good play.”

 

 

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Comments

[xander:]

item 3 is brilliant.

2008 Nov 06 07:56 AM

[PeteK:]

Concerning #2, you can't compare AIG with GM. AIG may have cash problem but it has no union or labor problems. You still don't understand what is ruining GM or pretend not to ? AIG can let go any employee at any time it wants, and its assets are worth billions and can be sold in minutes. That's the difference.

2008 Nov 06 08:27 AM

[working at ...:]

Yet another union bashing idiot. Please move to china I hear the pay is great and the rice is yummy. Just don't drink the milk or play with the lead painted toys. The real reason why jobs are leaving the USA is because of the EPA and other common sense laws that prevent these geed driven corps from polluting The air and water and milk we consume. Less than ^6% of the cost of a car or truck is related to labor. Marketing and admin cost eat up twice as much as anything else. By the way if these great companies go away it will leave a big hole in the economy. Just think of everyone who you may know who now has a good paying job. Union or not. If there is not bar to meet with regards to work place safety, Pay and bennys the rest of the union and non-union corps will not have to compete with like or better compensations. Toyota, Honda, and subaru have all chosen to build plants in north America. Some are union and some are not but they all pay comp wages and bennys (approx$25-30per hr) so they can keep a solid a work force and put out a great product. Please stop blaming the unions for all of your own problems. With out them all American's will all be force to live at a lower standard. Mr "Smarty Pants" supports the free market ideas. I for one are glad humans move out of the anarchy ages two thousand years ago.

2008 Nov 06 09:10 AM

[Huge Cramer...:]

I think Cramer is a Genius ...but here and now I've got to say what a BAD thought/comment he's made ... I disagree with him on #4. Does he not realize that the ONLY reason the (ok mostly) >>ILLEGAL<<... immigrants do not default on their mortgages ... is because they would bring attention TO themselves. They NEED to keep low profiles, so yes, they WILL do what they need to do. They pay their bills..work hard, and do what they must to be able to stay here in our GREAT Country!

.......Don't you think bringing attention to themselves COULD (would) undoubtedly get DEPORTED !! They know they're illegal and KNOW how to work our system. Sad but true !!

......Trust me ... I know ! I've seen it firsthand.

----------"4. Stop deportation of immigrants. While this may be a controversial move, Cramer noted default rates are almost zero among both legal and illegal immigrants who take on multiple jobs to ensure their mortgages are paid. Cramer suggests buying up 1.3 million homes in the most beleaguered areas"----------

2008 Nov 06 03:36 PM

[PeteK:]

Drive nothing but GM all my life.
How can people not get mad when GM was # 1 in the world and suddenly becomes the biggest BEGGAR on Earth ? Some CEO's are to blame but they alone could not have torn down such a big company. Share holders lose billions. NO BAILOUT unless GM moves to the South and start as a Brand New Company.

2008 Nov 06 05:08 PM