Mad Money Recap - Inconsistent on the Economy...Moi? (12/15/08)

Stocks discussed in the in-depth session of Jim Cramer’s Mad Money TV program, Monday December 15.

Depression or Recession?

Cramer critics are saying the Booyah Master is being inconsistent by declaring the U.S. is headed for a 1930’s style Depression one moment, and criticizing the bears another moment. Cramer defended himself by citing the trillions of aid which are being dedicated to bailing out banks, ailing failing auto companies and even propping up problematic loans. The bill of this bailout is going to be heavier than all similar government measures since World War I combined, but the spending will prevent another Great Depression, said Cramer. Quoting John Maynard Keynes; “When the facts change, I change my mind. What do you do, sir?”

Shorts Scandal: Citigroup (C), Wachovia (WB), Bank of America (BAC), Goldman Sachs (GS), Wells Fargo (WFC), Morgan Stanley (MS)

While the media is preoccupied with discussing the Madoff scandal, the true disgrace, according to Cramer, is the way in which the short sellers have been allowed to savage financials. Since the banking industry is built on trust and confidence, financials are especially vulnerable to bear raids and the value of stocks in the sector has been decimated by unregulated short-selling. Citigroup, Wachovia, Bank of America, Goldman Sachs, Wells Fargo and Morgan Stanley dropped between 27% and 69% in November, thanks to the shorts. Shorts were responsible for at least 50% to 70% of trading volume in Citigroup on four days in November. Cramer reiterated his demand for the reinstatement of the uptick rule, which requires short-sellers wait for an uptick in a stock before shorting. He thinks this is a scandal worthy of a Congressional investigation; “this is a true scandal, and it came close to wrecking our financial system.”

CEO Interview: Bruce Carbonari Fortune Brands (FO)

While Cramer has discussed cabinet and faucet producer Fortune Brands as a comeback housing play, it is also a good investment for its liquor business. The producer of Jim Beam, Canadian Club and Courvoisier is the “paradigm of accidental high-yielders” with a dividend of 4.6%. Carbonari says the liquor business has been “very stable,” and while people are going out to bars less, they are buying more liquor in the supermarkets. Its housing business is doing well thanks to cost cutting measures and a strong cash flow. When asked if he might use cash for acquisitions, Carbonari said he would be very selective and will consider that the best revenues are generated internally. While some countries have made a “little noise of activity” about raising taxes on liquor, Fortune’s CEO does not see any dramatic increases. He called liquor an “affordable luxury” that withstands hard economic times. Cramer is bullish on Fortune.

Mad Mail: Toll Brothers (TOL), CGM Focus (CGMFX), Diana Shipping (DSX), Nordic American (NAT)

Cramer told one viewer that Toll Brothers has really come down, and while Toll at $20 doesn’t intrigue him, Toll at $18 does. He told another viewer that he the current economic environment has not changed his view of CGM Focus fund manager Ken Heebner, whose performance has been good over the long term. When another viewer discussed Diana Shipping, Cramer says he prefers Nordic American which has a clean balance sheet and doesn’t have to borrow to pay out its dividend.

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Comments

[James Wilson:]

Kramer needs to stop using my ideas without paying me.

2008 Dec 16 06:39 AM

[tginomorebush:]

goldman and barrons ......... short the stock and then crucify it in the media
.......don't always agree with cramer ......... but right on with this!

2008 Dec 16 09:50 AM