Cramer's Lightning Round - How Hudson City Is Like a Cereal Stock (8/24/09)

Stocks discussed on the lightning round session of Jim Cramer's Mad Money TV Program, Monday August 24.

Bullish Calls

Banco Santander (STD), Banco Bilbao (BBV): "Banco Santander is good… but I like Banco Bilbao Argentaria even better. Santander is good; they have a great position in America, but they are just not as great a lender as BBV. Let’s buy BBV. They are the ones that have got a guaranteed bank, and I think that they are best in show."

Suntech Power (STP), Yingli Green Energy (YGE), First Solar (FSLR): "These stocks are out of fashion right now...they should all be moving. If oil goes to $80 you are going to say "Why didn't I pull the trigger?"

Bearish Calls

Hudson City Bank (HCBK): "Well, Hudson City is one of those that is playing it too safe for this market… this market likes aggression. This is like owning a cereal stock in the midst of a great industrial rally. It is going to come back, but it is out of favor now."

Sony (SNY): "No, no, it has made a move. I am not a buyer of Sony. I am a seller of Sony."

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Comments

[Cramer #1:]

A "Correction" is imminent....

Double-Dippers: Predicting a W-Shaped Recovery
By Catherine Rampell
Apture™ by megan soh
Once upon a time the biggest apparent risk in our economic recovery was that it would amount to an “L-shaped” or a “U-shaped” rather than a “V-shaped” recovery: That is, after the downturn ends, the economy would flatline rather than quickly surge back to its prerecession levels.

But now the economic forecasting alphabet has expanded.

In recent weeks, a small but vocal minority of experts have predicted a “W-shaped” recovery. Also known as a “double-dip” or a “second leg,” this refers to the risk of another free fall in economic activity after a very short period of recovery or stabilization.

This can describe the early 1980s, with the twin recessions of 1980 and 1981-1982. It can also describe the Great Depression, which the National Bureau of Economic Research’s official business cycle dating committee technically categorizes as two separate downturns (one from 1929 to 1933, and the other from 1937 to 1938),

Among the “double-dip” forecasters of late is Martin Feldstein, former head of the National Bureau of Economic Research and President Reagan’s chief economic adviser. Last month he told Bloomberg News that he feared the economy could “flatten out” or “even be positive” in the third quarter but would then contract in the fourth quarter as some types of stimulus spending ran out and businesses finished restocking their inventories.

Edward Harrison, a banking and finance specialist at the economic consultancy Global Macro Advisors, has expressed similar concerns on his blog, as did Juerg Zingg, managing partner at Q Investments, on CNBC and the Johns Hopkins University professor Steve Hanke in USA Today and Newsweek.

Paul Krugman, the Princeton economist and New York Times op-ed columnist, also warned in a Business Times interview that a W-shaped recession was “a real possibility” because “some of the support measures, especially fiscal stimulus, will reach their peak later this year, and then recede.” (Similar comments here.)

Nouriel Roubini, the New York University economist nicknamed Dr. Doom, also wrote in Monday’s Financial Times that “there is a big risk of a double-dip recession.”

He provides two reasons to doubt the optimism of those declaring the imminence of recovery. One is the sensitivity of unwinding the country’s large monetary and fiscal stimuli:

[P]olicy makers are damned if they do and damned if they don’t. If they take large fiscal deficits seriously and raise taxes, cut spending and mop up excess liquidity soon, they would undermine recovery and tip the economy back into stag-deflation (recession and deflation).

But if they maintain large budget deficits, bond market vigilantes will punish policy makers. Then, inflationary expectations will increase, long-term government bond yields would rise and borrowing rates will go up sharply, leading to stagflation.

Professor Roubini’s second concern relates to rising commodity prices:

Another reason to fear a double-dip recession is that oil, energy and food prices are now rising faster than economic fundamentals warrant, and could be driven higher by excessive liquidity chasing assets and by speculative demand. Last year, oil at $145 a barrel was a tipping point for the global economy, as it created negative terms of trade and a disposable income shock for oil importing economies. The global economy could not withstand another contractionary shock if similar speculation drives oil rapidly towards $100 a barrel.

All in all, 16 percent of private economists polled in the recent Blue Chip Economic Indicators survey predicted a “W-shaped recovery,” the same percentage that forecast a more robust “V-shape.” The majority surveyed, 65 percent, predicted a long, slow “U-shaped” recovery instead.

Aug 25 09:13 AM

[Cramer #1:]

If China start a correction with all the cash they have.....Imagine
the rest of the world and US with its "MASSIVE" multi Trillions
debt???

China Premier Rejects 'Blindly Optimistic' View of Economy
By LIU LI
BEIJING -- China's Premier Wen Jiabao expressed caution about the
country's economic recovery, saying the effects of some short-term
policies may fade while longer-term policies will take time to have
an
impact.


Ending a three-day visit to the eastern province of Zhejiang, Mr. Wen
warned against being "blindly optimistic," according to a statement
by
the State Council.


Wen Jiabao
.His comments suggest that Beijing feels it is too early to consider
exiting the four trillion yuan ($585.6 billion) fiscal stimulus and
other steps that have buoyed the world's third-biggest economy.
(Global issuers of corporate debt are being forced to renegotiate
terms in China because of capital problems.)


Mr. Wen's remarks also highlight growing tension in China's policy
debate as the government calls for staying the course while some
lawmakers have started to argue for sharply curbing loan growth in
the
second half.


The premier reiterated that China must maintain stable macroeconomic
policies, namely its "moderately loose" monetary policy and "active"
fiscal policy. He didn't raise concerns about inflation, but said
China should "ensure market liquidity is reasonably ample." He called
for "strengthening the balance and sustainability of credit in
supporting economic and social development."


While reinforcing Beijing's official stance, Mr. Wen's comments
didn't
rule out policy tweaks. The People's Bank of China said this month it
will fine-tune its policies based on the economic situation and
changes in prices.


Expectations that Beijing might rein in loan growth caused sharp
falls
in Chinese stock prices for much of this month, reverberating through
markets around the world.


Last week, lawmakers, including former central bank Vice Governor Wu
Xiaoling, voiced concern about the potential risks of the enormous
stimulus efforts. Lawmaker Yin Zhongqing said that new yuan loans,
which surged to nearly eight trillion yuan in the first seven months,
should be limited to 10 trillion yuan for the full year.


Mr. Wen appeared to try to damp public debate, saying policy makers
must "unify our thoughts toward the judgment of the central
government
in the economic situation, and unify our actions toward carrying out
the decisions of the central government" regarding the raft of
measures to combat the global financial crisis.


Beijing's stimulus program helped to lift China's economic growth to
7.9% year-to-year in the second quarter, from 6.1% in the first
quarter.

Aug 25 09:16 AM

[rsquare:]

The recovery will not occur when expected due to the lack of consumer purchasing power. The consumer is being squeezed and cut from the market. The banks and retail stores are raising the card rates, cutting credit lines and terminating accounts, while raising fees. This activity will result in any consumers that may have had buying power to shut down causing further contraction. When the stimulus projects terminate, that also will eliminate what was left of potential economic activity!

Aug 25 10:03 AM

[Gosh-137:]

Cramer said: - Suntech Power (STP), Yingli Green Energy (YGE), First Solar (FSLR): "These stocks are out of fashion right now...they should all be moving. If oil goes to $80 you are going to say "Why didn't I pull the trigger?"

Does anyone know Mr. Cramer's e-mail address. He doesn't seem to realize solar power is used to create power for street lights, buildings - stationary objects. Oil is used to create power for cars, trucks, trains and planes. So the solar power companies will not "be moving" until the price of natural gas, coal, and nuclear power goes way up. The companies he mentioned are not connected to the price of oil.

Aug 25 10:57 AM