Cramer's Mad Money - Obama, Take a Break (2/3/09)

Stocks discussed on the in-depth session of Jim Cramer's Mad Money TV Program, Monday February 2.

Obama, Take a Break

Cramer says Obama should take a break from his budget plans to give the market a chance to breathe, otherwise there is likely to be another 300 point Dow decline. While the recession is causing a lot of the problems, his announcement of health care reforms wrecked havoc with that sector and now the proposed tax on the rich may also hurt the markets. If Obama doesn’t take a breather, the Dow may drop to 4,000, said Cramer.

Pepsico (PEP), Coca-Cola (KO) and Dividends

Cramer gave viewers a crash course on dividend analysis and then discussed why he prefers Pepsi to Coke. Pepsi pays a 42.5 cent quarterly dividend, a 3.5 yield, and the next payout will be on March 31. The “must-own date” to still receive a dividend payout is March 3. What many investors don’t know is they could theoretically buy Pepsi on March 3, sell it by March 4, and still receive the dividend. However, Cramer would hold on to Pepsi even after its dividend increases. It is not suffering as badly as Coke is from the strong dollar, overseas sales for Pepsi are strong and commodity prices are low. Pepsi is opening new plants in China and is expected to have $7 billion in cash flows for 2009. Pepsi trades at 13 times earnings, a 20% premium to the market, but Pepsi used to trade at a 30% premium, so it is actually cheaper. While Cramer is confident Pepsi will continue to thrive in spite of the market, he would still buy it in increments.

Obama-Proof Stock: Edison International (EIX), First Solar (FSLR)

While utilities are usually safe, conservative investments in tough economic times, the sector is facing financing difficulties in the current climate. In addition, Obama’s cap-and-trade budget, which is effectively a tax on emissions, will also hit utilities hard. However, the one utility Cramer likes is Edison International which operates a utility and non-utility power production divisions. The utility division covers most of Southern California and is only 13% dependent on coal, which produces copious emissions. Edison plans to spend $880 million on developing solar energy and will team up with First Solar on several projects. In spite of its earnings beat on Monday, the stock dropped and it might fall farther if there is a downgrade on Tuesday. However, according to net asset estimations, the stock may move from $25 to $56 and has a generous 4.9% yield. Cramer would buy before the California Public Utility Commission meets on March 12 to vote on a rate increase. The one risk is the vote may be deferred yet again, but Cramer would still buy and start building a position.

Cramer’s Outrage: Geithner Again: Citigroup (C), Bank of America (BAC), Wells Fargo (WFC)

Cramer criticized Timothy Geithner for harming the preferred stock of Citigroup, a move which may have implications for Bank of America and Wells Fargo. He reiterated his theory of forebearance for banks, and suggested the government lend financials money in return for promissory notes for repayment. Cramer thinks it is a better idea to allow banks to take care of their own problems.

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Comments

[JVan:]

You're the one who should "Take a break," Cramer. At least Obama (and the Democrat Congress) were elected by a popular vote to effect major changes in a set-up that was savaging too many Americans. You? You used to rave about a set-up "of the corporations, for the corporations, and by the corporations." It's as if you cared nothing about the moral compass of what markets were about. You said often, "Buy MO and donate your profits to Greenpeace," or some such thing.

Now all of a sudden, you're not raving about how to make money, given Obama's program. Now you're bringing your economic moral compass to bear. Too little, too late. You can be entertaining, but in my humble opinion it's time for you to take a break.

Mar 03 10:41 AM

[frflyer:]

Jvan

I agree. Anyone pitching tax cuts for the rich is not on my team.
They call it raising taxes. I call it taking back gifts to the priveleged that they shouldn't have been given to begin with.

Mar 03 01:03 PM

[misiosnechacz:]

What if banks won't be able to repay it. AIG is asking for money again.
What does it mean banks promissed in now days. Banks took Uncle Sam money so now they have to dance to his music. This money wasn't given to make profit it was given to save the economy. And that create some obligations. no one forced banks to ask for goverment money. They could filled for bancruptcy.
Nothing is for free.

Mar 03 06:57 PM

[gotnochips:]

Washington, DC (AP)
President Barack Obama and the democrat controlled Congress are considering sweeping legislation that will provide new benefits for many Americans: The Americans With No Abilities Act. AWNAA is being hailed as a major legislative goal by advocates of the millions of Americans who lack any real skills or ambition.

"Roughly 50 percent of Americans do not possess the competence and drive necessary to carve out a meaningful role for themselves in society," said California Senator Barbara Boxer. "We can no longer stand by and allow People of Inability to be ridiculed and passed over. With this legislation, employers will no longer be able to grant special favors to a small group of workers, simply because they have some idea of what they are doing."

In a Capitol Hill press conference, House Majority Leader Nancy Pelosi and Senate Majority Leader Harry Reid pointed to the success of the U.S. Postal Service, which has a long-standing policy of providing opportunity without regard to performance. Approximately 74 percent of postal employees lack any job skills, making this agency the single largest U.S. employer of Persons of Inability.

Private-sector industries with good records of non-discrimination against the Inept include retail sales (72%), the airline industry (68%), and home improvement 'warehouse' stores (65%). At the state government level, the Department of Motor Vehicles also has an excellent record of hiring Persons of Inability (63%).

Under The Americans With No Abilities Act, more than 25 million "middleman" positions will be created, with important-sounding titles but little real responsibility, thus providing an illusory sense of purpose and performance.

Mandatory non-performance-based raises and promotions will be given so as to guarantee upward mobility for even the most unremarkable employees.

The legislation provides substantial tax breaks to corporations that promote a significant number of Persons of Inability into middle-management positions, and gives a tax credit to small and medium-sized businesses that agree to hire one clueless worker for every two talented hires.

Finally, the AWNAA contains tough new measures to make it more difficult to discriminate against the non-abled, banning, for example, discriminatory interview questions such as, 'Do you have any skills or experience that relate to this job?'

"As a Non-abled person, I can't be expected to keep up with people who have something going for them," said Mary Lou Gertz, who lost her position as a lug-nut twister at the GM plant in Flint, Michigan, due to her inability to remember "rightey tightey ,lefty loosey".

"This new law should be real good for people like me," Gertz added. With the passage of this bill, Gertz and millions of other untalented citizens will finally see a light at the end of the tunnel.

Said Senator Dick Durbin (D-IL): "As a Senator with no abilities, I believe the same privileges that elected officials enjoy ought to be extended to every American with no abilities. It is our duty as lawmakers to provide each and every American citizen, regardless of his or her inadequacy, with some sort of space to take up in this great nation and a good salary for doing so."

Mar 04 10:20 AM

[hwood007:]

I have noted many mistakes made by the youth of our country. Even the elderly make mistakes, though fewer.


On Mar 03 10:41 AM JVan wrote:

> You're the one who should "Take a break," Cramer. At least Obama
> (and the Democrat Congress) were elected by a popular vote to effect
> major changes in a set-up that was savaging too many Americans. You?
> You used to rave about a set-up "of the corporations, for the corporations,
> and by the corporations." It's as if you cared nothing about the
> moral compass of what markets were about. You said often, "Buy MO
> and donate your profits to Greenpeace," or some such thing.
>
> Now all of a sudden, you're not raving about how to make money, given
> Obama's program. Now you're bringing your economic moral compass
> to bear. Too little, too late. You can be entertaining, but in my
> humble opinion it's time for you to take a break.

Mar 04 02:17 PM

[hwood007:]

define rich!!!! All of us will suffer the cap and trade tax and we will need to tax the high six figure incomes at 90% to pay off the debts being made this year and you are not yet aware to a 74 trillion debut for the three services to the aged. social security, medicare, and drug care for the boomers. Viel Gluck.


On Mar 03 01:03 PM frflyer wrote:

> Jvan
>
> I agree. Anyone pitching tax cuts for the rich is not on my team.
>
> They call it raising taxes. I call it taking back gifts to the priveleged
> that they shouldn't have been given to begin with.

Mar 04 02:21 PM

[hwood007:]

this comment is one of the better ones ever....


On Mar 04 10:20 AM gotnochips wrote:

>
>
> Washington, DC (seekingalpha.com/symbo...)
> President Barack Obama and the democrat controlled Congress are considering
> sweeping legislation that will provide new benefits for many Americans:
> The Americans With No Abilities Act. AWNAA is being hailed as a major
> legislative goal by advocates of the millions of Americans who lack
> any real skills or ambition.
>
> "Roughly 50 percent of Americans do not possess the competence and
> drive necessary to carve out a meaningful role for themselves in
> society," said California Senator Barbara Boxer. "We can no longer
> stand by and allow People of Inability to be ridiculed and passed
> over. With this legislation, employers will no longer be able to
> grant special favors to a small group of workers, simply because
> they have some idea of what they are doing."
>
> In a Capitol Hill press conference, House Majority Leader Nancy Pelosi
> and Senate Majority Leader Harry Reid pointed to the success of the
> U.S. Postal Service, which has a long-standing policy of providing
> opportunity without regard to performance. Approximately 74 percent
> of postal employees lack any job skills, making this agency the single
> largest U.S. employer of Persons of Inability.
>
> Private-sector industries with good records of non-discrimination
> against the Inept include retail sales (72%), the airline industry
> (68%), and home improvement 'warehouse' stores (65%). At the state
> government level, the Department of Motor Vehicles also has an excellent
> record of hiring Persons of Inability (63%).
>
> Under The Americans With No Abilities Act, more than 25 million "middleman"
> positions will be created, with important-sounding titles but little
> real responsibility, thus providing an illusory sense of purpose
> and performance.
>
> Mandatory non-performance-based raises and promotions will be given
> so as to guarantee upward mobility for even the most unremarkable
> employees.
>
> The legislation provides substantial tax breaks to corporations that
> promote a significant number of Persons of Inability into middle-management
> positions, and gives a tax credit to small and medium-sized businesses
> that agree to hire one clueless worker for every two talented hires.
>
>
> Finally, the AWNAA contains tough new measures to make it more difficult
> to discriminate against the non-abled, banning, for example, discriminatory
> interview questions such as, 'Do you have any skills or experience
> that relate to this job?'
>
> "As a Non-abled person, I can't be expected to keep up with people
> who have something going for them," said Mary Lou Gertz, who lost
> her position as a lug-nut twister at the GM plant in Flint, Michigan,
> due to her inability to remember "rightey tightey ,lefty loosey".
>
>
> "This new law should be real good for people like me," Gertz added.
> With the passage of this bill, Gertz and millions of other untalented
> citizens will finally see a light at the end of the tunnel.
>
> Said Senator Dick Durbin (D-IL): "As a Senator with no abilities,
> I believe the same privileges that elected officials enjoy ought
> to be extended to every American with no abilities. It is our duty
> as lawmakers to provide each and every American citizen, regardless
> of his or her inadequacy, with some sort of space to take up in this
> great nation and a good salary for doing so."
>
>
>
>

Mar 04 02:25 PM

[Zeldar:]

I think Cramer is wrong on the Pepsi dividend on 3/31. The dividend is for PBG (the bottling company) NOT Pepsi. I rely on Jim for accurate info, but this time either he or his staff blew it. Sheesh. And I ran out and bought some PEP. I guess the lesson is 'Trust but verify!'

Mar 04 04:12 PM

[hwood007:]

this is a myth and in this case, is an upgraded myth to contain names of current people in washington. check it out in "snopes"


On Mar 04 10:20 AM gotnochips wrote:

>
>
> Washington, DC (seekingalpha.com/symbo...)
> President Barack Obama and the democrat controlled Congress are considering
> sweeping legislation that will provide new benefits for many Americans:
> The Americans With No Abilities Act. AWNAA is being hailed as a major
> legislative goal by advocates of the millions of Americans who lack
> any real skills or ambition.
>
> "Roughly 50 percent of Americans do not possess the competence and
> drive necessary to carve out a meaningful role for themselves in
> society," said California Senator Barbara Boxer. "We can no longer
> stand by and allow People of Inability to be ridiculed and passed
> over. With this legislation, employers will no longer be able to
> grant special favors to a small group of workers, simply because
> they have some idea of what they are doing."
>
> In a Capitol Hill press conference, House Majority Leader Nancy Pelosi
> and Senate Majority Leader Harry Reid pointed to the success of the
> U.S. Postal Service, which has a long-standing policy of providing
> opportunity without regard to performance. Approximately 74 percent
> of postal employees lack any job skills, making this agency the single
> largest U.S. employer of Persons of Inability.
>
> Private-sector industries with good records of non-discrimination
> against the Inept include retail sales (72%), the airline industry
> (68%), and home improvement 'warehouse' stores (65%). At the state
> government level, the Department of Motor Vehicles also has an excellent
> record of hiring Persons of Inability (63%).
>
> Under The Americans With No Abilities Act, more than 25 million "middleman"
> positions will be created, with important-sounding titles but little
> real responsibility, thus providing an illusory sense of purpose
> and performance.
>
> Mandatory non-performance-based raises and promotions will be given
> so as to guarantee upward mobility for even the most unremarkable
> employees.
>
> The legislation provides substantial tax breaks to corporations that
> promote a significant number of Persons of Inability into middle-management
> positions, and gives a tax credit to small and medium-sized businesses
> that agree to hire one clueless worker for every two talented hires.
>
>
> Finally, the AWNAA contains tough new measures to make it more difficult
> to discriminate against the non-abled, banning, for example, discriminatory
> interview questions such as, 'Do you have any skills or experience
> that relate to this job?'
>
> "As a Non-abled person, I can't be expected to keep up with people
> who have something going for them," said Mary Lou Gertz, who lost
> her position as a lug-nut twister at the GM plant in Flint, Michigan,
> due to her inability to remember "rightey tightey ,lefty loosey".
>
>
> "This new law should be real good for people like me," Gertz added.
> With the passage of this bill, Gertz and millions of other untalented
> citizens will finally see a light at the end of the tunnel.
>
> Said Senator Dick Durbin (D-IL): "As a Senator with no abilities,
> I believe the same privileges that elected officials enjoy ought
> to be extended to every American with no abilities. It is our duty
> as lawmakers to provide each and every American citizen, regardless
> of his or her inadequacy, with some sort of space to take up in this
> great nation and a good salary for doing so."
>
>
>
>

Mar 04 09:19 PM