Cramer's Mad Money - Brazil vs. China (1/14/09)

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 |  Includes: AAPL, BBRY, C, CL, CLX, ETP, EWZ, FXI, HIG, KMP, KO, LNC, MS, PFE, PFG, PRU
by: Miriam Metzinger

Stocks discussed in the in-depth session of Jim Cramer’s Mad Money TV program, Wednesday January 14.

Technicals vs. Fundamentals: iShares MSCI Brazil Index (NYSEARCA:EWZ), Xinhua China 25 Index (NYSEARCA:FXI)

Cramer continued his series comparing the technical and fundamental approaches to stockpicking by looking at iShares MSCI Brazil Index. The index’s selling climax was in mid-October, and since then, EWX has bottomed in the $30s, more due to a lack of buying than selling. The chart shows buyers are gradually coming back and the lows aren’t going lower. A reduced volume means sellers are tired. The chart indicates the stock is a buy, but looking at the fundamentals, Cramer says the world commodities market is down and low demand for iron ore will hurt Brazil. Agricultural stocks are falling and Brazil’s trade surplus could become a budget deficit. Cramer would recommend Xinhua China 25 Index instead, since China has been up 5% so far this year, the Chinese government is finding ways to fix its economy and the Baltic Freight Index is rising.


Mad Mail: Research in Motion (RIMM), Apple (NASDAQ:AAPL), Energy Transfer Partners (NYSE:ETP), Kinder Morgan Partners (NYSE:KMP)

When asked about Research in Motion’s accounting irregularities, Cramer says the company’s problems are behind it, and given CEO Steve Job’s health, Apple, RIMM’s chief competitor, cannot be bought. Cramer told another viewer that he likes Kinder Morgan and Energy Transfer Partners in that order; “They are a function of volume, not a function of gas price, which is going down big.”

Cramer’s Outrage: Geithner Again

While Cramer says it is a bit suspicious that Tim Geithner decided to pay back $34,000 of missed social security taxes only after he was nominated as Secretary of the Treasury and was negligent enough to forget to check the immigration status of his housekeeper, the fact that Geithner is “idolized by everybody,” will mean he will probably get away with it. However, buried under all this talk of green cards and taxes is Geithner’s real crime and outrage; Geithner and Henry Paulson intentionally let Lehman Brother’s fall, an event which has crippled the global economy and will have repercussions for the long-term.


TARP Regulations Hit Financials: Citigroup (NYSE:C), Morgan Stanley (NYSE:MS), Hartford Financial (NYSE:HIG), Principal Financial (NYSE:PFG), Lincoln National (NYSE:LNC), Prudential (NYSE:PRU), Pfizer (NYSE:PFE), Colgate Palmolive (NYSE:CL), Clorox (NYSE:CLX), Coca-Cola (NYSE:KO)

With Larry Summers’ announcement that financial companies receiving TARP funds will be restricted from increasing dividends, making acquisitions and buying back shares, financials and insurance companies are a no-go area. This includes Citigroup, Morgan Stanley, Lincoln National and Prudential. Cramer says this supports his thesis that companies like Pfizer, Colgate Palmolive, Clorox and Coca-Cola, recession-resistant companies not dependant on government funds, are the best buys.

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