Cramer's Mad Money - Obama's Revenge (3/5/09)

Stocks discussed on the in-depth session of Jim Cramer's Mad Money TV Program, Thursday March 5.

Eli Lilly (LLY), Aetna (AET), Wellpoint (WLP), Medtronic (MDT), Citigroup (C), Bank of America (BAC), Fifth Third (FIIB), Marshall & Isley (IM), Haliburton (HAL)

Obama’s wrath is burning against the fat cats who run corporations, and he seems eager to punish those who may have been instrumental in getting us into this mess. The problem is that the draconian measures might hinder the very same fat cats who can help get us out of it, according to Cramer. Those targeted by these “reforms” may find it more difficult to create jobs and generate wealth. Obama’s vengeful gaze is focused on Eli Lilly, Aetna, Wellpoint, Medtronic, Halliburton, and no one is quite sure which sector will be next. Of course, there are many crooks in the financial sector, but not every bank is a Citigroup, Bank of America and Wells Fargo; there are some nice respectable Fifth Thirds and Marshall&Isleys out there. The problem with punitive measures is they tend to take down the whole sector, said Cramer.

This Time, the Chart Doesn’t Lie: ManTech (MANT)

While Cramer is usually a fundamentalist, in the case of ManTech, he is revising his usual sermon and confesses the chart indicated the decline of this stock more clearly than the fundamentals could have. The stock dropped 16% in four days and its decline was a shock to those who felt this was a perfect Obama stock. How did the chart predict this decline? There was a high-volume breakout in the last week of January 2008 that reversed and brought ManTech to the bottom of its weekly range. The buyers were outnumbered by sellers dumping their shares. Cramer said this was a sign that investors were looking for a way out. There were low-volume rallies for two weeks (low volume demonstrates a lack of commitment), but the selling that followed brought the stock through he 10 and 40 week moving averages. Usually when these lines are broken though, there is a rally back up, but no rally happened, indicating that investors weren’t willing to buy the stock, even when it was cheap. The news of the Chief Operating Officer’s departure and the downgrades came too late for investors to act in time; following the chart would have enabled shareholders to cut their losses. Even though the technicals are right in this case, Cramer found two problems with the fundamentals: first, the company is not integrating its acquisitions well and second, Cramer doesn’t like its two-tiered share structure which gives the CEO an 88% stake.

CEO Interview: Peter Swinburn Molson Coors (TAP), with AB InBev (BUD)

While conventional wisdom indicates that beer is recession-proof, both Molson Coors and AB InBev are down, but Molson has the advantage that 50% of its sales are in Canada, which is outside of Obama’s reach. Revenue growth per barrel is healthy and the company is introducing a cost savings program that will save $100 million per year. Cramer is concerned about the company’s 2.3% yield, which is lower than that of its peers. Peter Swinburn said a dividend increase is a move he is considering in the future. Cramer says Molson is a buy if it raises its yield.

Mad Mail: Kinder Morgan (KMP), Petsmart (PETM)

Cramer said he is worried that Wal-Mart may give Petsmart a run for its money, and thinks Wal-Mart will win. Cramer explained why a Master Limited Partnership like Kinder Morgan functions differently than a regular stock regarding its dividend: “We shouldn’t be as concerned about typically what I like to see, which is a lot of earnings covering a dividend. This is a lot cash flow covering a dividend. And they’re going to do a good job for that.” Cramer defended the FDIC under the leadership of Sheila Bair, and says the fact that banks are in pain right now is not the fault of the successful program. Cramer doesn’t think the U.K’s mortgage program will work in the U.S. because it is too hard on the banks. He reiterated his proposal of issuing mortgages for the next 18 months with a 4% rate for everyone.

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Comments

[Donald Johnson:]

Cramer's fat cat skit was a classic, and everyone should watch it and recommend it.

The White House took on Cramer, and he extended his comments on the Obama Bear Market big time. Good for him.

Mar 06 12:08 PM

[ChuckB:]

Kramer is an idiot and anyone that's been following his advice since last September has been hammered. The new administration is not dictating the DJIA. WAKE UP folks... our economy is in tatters. The repair is going to be long and painful.

Mar 06 04:31 PM

[MWJ:]

Fast forward 4 months, Jim Cramer's call for selling was based on market conditions and a rapidly deteriorating economy. He is entirely correct, the DOW has plummeted from 10,000 to 6500 in four months, financial armageddon to any investors. This is not Obama's fault, but the stockmarket will pass judgment on his administration's policies and agenda going forward....and the market is the ultimate decider!

Score is: Jim Cramer 100, ChuckB BIG FAT ZERO


MWJ


On Mar 06 04:31 PM ChuckB wrote:

> Kramer is an idiot and anyone that's been following his advice since
> last September has been hammered. The new administration is not
> dictating the DJIA. WAKE UP folks... our economy is in tatters.
> The repair is going to be long and painful.

Mar 07 08:20 AM

[pokernut:]

Jim Cramer is a liar, a coward, and may I dare say, a fraud. Why is this scoundrel on tv every night?

Mar 07 10:01 AM

[M-P:]

Cramer is like anyone who talks a lot (forecasts, asserts, etc.) - he will be right some of the time and wrong on others. The hit rate and materiality are important. My big issue w/ the administration is that they are trying to do too much at the same time ... health care, taxes, capital injections, etc. When the world is unpredictable and in a state of change, capital sits on the sidelines. In this environment, predictability is often more important that the perfect policy, which doesn't exist anyway. Today's problems were yesterday's solutions.

Mar 07 11:46 AM

[chinooking:]

cramer should be in jail ,he should get on his knee's and thank chris cox for not prosecuting him in November when he admitted to market manipulation on air

Mar 07 12:44 PM

[searcher:]

Perfection is the nemesis of success. Didn't vote for Obama and not likely to but wish success for him to the extent the economy can be revived. However, fear Pelosi et al view this emergency as an opportunity to cram 'progressive', as in irrelevant if not counter-productive, policies down our throats.

Mar 07 12:47 PM

[Phil Trupp:]

The market is outdated. Or perverted. Or utterly convoluted. Take your pick. When you can no longer trade on fundamentals or technicals, when "proactive" shorting instruments are encouraged (double and triple short ETFs) you have destroyed the concept of an efficient market and turned it into a host-parasite paradigm. A market can't grow under such conditions. All value suffers. Talk of Obama policy and socialism, etc., is mostly empty nonsense when operating on law of the jungle principles. As for Cramer, he's flailing, not that it matters. First and foremost he's an entertainer. I have no beef with him, but suggest we view his speculations for what they are: purely subjective and based for the most part on archaic market philosophy. As for the shorts, they behave like sharks in a feeding frenzy. A wounded shark will eat its own entrails. The old punk rock group Devo asked, "Are We Men?" I wonder, "Are We Sharks?"

Mar 07 01:37 PM

[Lsente:]

nicely said, bump.


On Mar 07 01:37 PM Phil Trupp wrote:

> The market is outdated. Or perverted. Or utterly convoluted. Take
> your pick. When you can no longer trade on fundamentals or technicals,
> when "proactive" shorting instruments are encouraged (double and
> triple short ETFs) you have destroyed the concept of an efficient
> market and turned it into a host-parasite paradigm. A market can't
> grow under such conditions. All value suffers. Talk of Obama policy
> and socialism, etc., is mostly empty nonsense when operating on law
> of the jungle principles. As for Cramer, he's flailing, not that
> it matters. First and foremost he's an entertainer. I have no beef
> with him, but suggest we view his speculations for what they are:
> purely subjective and based for the most part on archaic market philosophy.
> As for the shorts, they behave like sharks in a feeding frenzy. A
> wounded shark will eat its own entrails. The old punk rock group
> Devo asked, "Are We Men?" I wonder, "Are We Sharks?"

Mar 08 03:43 AM