Fuld to Wall of Shame - Cramer's Mad Money (9/9/08)

Stocks discussed in the in-depth session of Jim Cramer's Mad Money TV program, Monday September 9.

Lehman Folds - Lehman (LEH)

"In the bottom of the ninth inning, Richard Fuld, the CEO of Lehman, kept the bat on his shoulder and was called out on strikes," Jim Cramer told viewers of his "Mad Money" TV show Tuesday. Cramer said he's been withholding criticism on Lehman out of respect for Fuld, whom he assumed would do the right thing and save his failing company. However after the stock's collapse today, Cramer said it was time to speak out about Fuld's inaction.  He criticized Fuld for missing multiple opportunities to either sell the company, monetize its many great assets or at least recapitalize itself while its share price was high. Cramer urged Fuld to take action and sell the company as late as last Friday on CNBC. Fuld, however, took none of these steps and the window has now closed for this great company, he said. Cramer reluctantly added Fuld to the second spot on his "Wall of Shame" list of the worst CEOs in America.

What Killed Commodities? CitiGroup(C), American International Group (AIG), Companhia Vale (RIO), US Steel(X)

Commodities have been crushed and it doesn’t look like the decline will stop any time soon."What's killing the commodities and when will it stop?" Cramer asked his viewers. China the once great consumer of commodities has virtually disappeared. Cramer said it's the lack of Chinese demand for steel, coal and fertilizer that's largely to blame for the severe decline in commodity prices. He also said a global slowdown is imminent as the European and Asian central banks strangle the economies in their respective areas of the world with high interest rates. Cramer said oil and natural gas are also being held down by what he called the John McCain factor. As the Republican candidate pulls ahead in the polls, investors worry that more drilling with lead to greater supply and even lower prices. Cramer said oil could hit $80 a barrel or $3 a gallon at the pump if McCain is elected. Cramer also blamed the inexperience of "young gun" hedge funds managers for the rapid decline in commodity prices.  He also warned two other CEOs, Vikram Pandit of Citigroup and Robert Willumstad of American International Group, may also face similar fates if they too don't take swift action to save themselves. In the worst case scenario, he predicted there could be a repeal of the run-up commodity prices as they retreat to their April 2005 levels. This would result in a 68% decline in stocks like Companhia Vale, a 50% decline in US Steel and a 30% decline for many oil and natural gas producers. Cramer said the only way to stop this "worst case" scenario would be for the world's central banks to cut interest rates aggressively. "If China recovers, we can avoid the losses," he said. If China doesn’t come back, Cramer said, “the commodity collapse has the potential to bring down the whole market.”

Early-Cycle Stocks - Whirlpool (WHR), Toll Brothers (TOL), Sears Holdings (SHLD)

On a horrible market day, Cramer turned his attention to Whirlpool a stock that is up 44% despite a whirlwind of negative news on the company and the current economic slowdown.  Cramer said investors may wonder why Whirlpool has jumped from $55.22 on July 15 to as much as $83.99 today during a period when analysts are cutting numbers and have serious worries about shipments going forward. He said it may seem especially absurd after a recent Wall Street Journal article theorized that the company only met last quarters numbers because of favorable Brazilian tax credits. Cramer, for his part, said Whirlpool's rise in stock price to the work of large mutual funds, who are buying the stock based on the long-term business cycle. He said the company is a perfect "early-cycle" play, the kind of stock one would buy in anticipation of a recovery.  Cramer postulated that while the recovery may have been delayed by oil prices and the housing crisis, the recovery is coming, and mutual funds are buying ahead of it. He cited the earnings of retailer Sears Holdings and the strength of home builder Toll Brothers as two other examples of this trend of buying in anticipation of a recovery.  Cramer said he's not ready to recommend Whirlpool given the unpredictable market conditions, but he did want investors to keep an eye out for this trend to continue as the recovery draws near.

Cutting Drug Development Cost - Covance (CVD)

Cramer talked with Joe Herring, chairman and CEO of Covance, about his company's ability to lower costs for big pharma. Herring said many big pharmaceutical companies don't even know their true drug development costs. But he said every one of them wants to lower those costs.  Herring said that Covance saves drug companies as much as 20% by helping them to effectively manage their clinical trials to accelerate the FDA approval process. He said this clinical trial work --- Covance's core competency --- is valuable because it allows the drug companies to focus in other areas.  Cramer said that with all that's wrong in the markets, there's money to be made in Covance.

Seeking Alpha publishes a summary of Jim Cramer's stock picks every day including: Mad Money Recap, Lightning Round and Stop Trading!

Get Cramer's Picks by e-mail -- it's free and takes only a few seconds to sign up.

Seeking Alpha is not affiliated with Jim Cramer, CNBC or TheStreet.com

Comments

[Britishsteel:]

Cramer you are full of it , the decline in commodities is due to the lack of liquidity . Lehman has been cut off from credit so they had to unwind positions that helped create the bubble that rose from investment banks being allowed to borrow from the discount window. They were granted this privilige so they could unwind their bad bets in the subprime market , along with other investment banks. Instead they used the money to hedge their losses by driving up commodities. and once they were givien a margin call when oil went against them every other hedge fund that joined that crowded trade had to unwind too. And soon they will start that trade up again and oil, gold and silver and coal will reach new highs. China still needs certain commodities although steel is not needed now due to global slowdown. Stop lying to everyone will ya?

2008 Sep 09 10:47 PM

[omooc:]

Well said, Britishsteel. It seems that China is now blamed for everything -- she is to blame for doing something (e.g, carbon emission), and she is to blame for not doing something (not buying more of this and that). I no longer listen to Cramer on account of his China-bashing.

2008 Sep 09 10:54 PM

[sr9web:]

Britishsteel - your viewpoint seems very plausable. How did you come to this conclusion? What data sources are you ingesting on this topic?

2008 Sep 10 01:28 AM

[Britishsteel:]

# 1 always remember and never forget they are lying to you!!!!!!!!!! All of them , Cramer , kudlow, cnbc . fast money ect.. they are all media tools and the media is run by big business. The government lies about the numbers they release , market rises and then falls on revisison . This was engineered and planned out way ahead of time. read alan greenspans Book .What a piece of hubris that was BUT , it will give you insight if you read between the lines of what he wrote. Basically under his guidance and at the behest of the INVISIBLE HANDS OF GLOBALISM, [ His words not mine ] . The Unitied States went from an industrial, manufacturing economy to credit based creation society. We no longer take raw materials and produce a finished product .We ship our raw materials overseas and now buy back the finished product from them. Greenspan helped and aided and abetted the financial engineering of this credit bubble. Also google Ben bernakes speech to the conomists club in 2000 and read it a few times. Like an investigative reporter would and then compare what he wwas talking about to what is going on now.To me it was a heads up to smart money what the plan was and how it was going to unfold and it has perfectly unfolded. Thats why soros and buffet went short the dollar.
Also read " Conquer the coming crash" by robert prechter evrything he discusses in that book has unfolded . By the way he said buy gold in 2000 when no one wanted it and silver . It was a long wait but a great hedge and a very profitable one so far.
We as country and a people are being manipulated to help the rich get ever richer and you are witnessing the 2nd greatest transfer of wealth in the history of the united states. Our stock market and country have become socialized , and we are facing dark times.
IT IS UP TO YOU PEOPLE TO STAND UP AND MAKE YOUR VOICES HEARD!!!!!!!! DEMOCRATS AND REPUBLICANS ARE JOINED AT THE HIP. THEY are bought and paid for by big money. VOTE 3rd party do not give your votes to either party like OBAMA said its time for a change , real change our else we will become a communist country or worse THINK FOR YOURSELF JOESIXPACK
Yoiu have been hypnotized by the media , they sell it and you live the role. Form your own opinion not the editorial you read in the wall stree journal or any other paper remember ITS BIASED
got to FEDUPUSA.ORG AND www.tickerforum.org/cg... to be more informed. THIS is the real Deal not the crap you are being spoonfed while you watch sex and violence on tv.

2008 Sep 10 07:54 AM

[Nugle:]

BritishSteel - are you Palin in disguise? Valid points, but you are a NUTTER.

2008 Sep 10 10:05 AM

[Britishsteel:]

yea I know all my friends said that last year when I went to cash at 13,500
and now I am up on my portfolio of cash and they are crying saying what can we do ? How about You? I am also up avg of 8% per month since then daytrading long and short , How about you?

2008 Sep 10 11:15 AM

[Britishsteel:]

by the way try and find niteline from A B C , fridays nite show that was about how RNC and DNC was corporately sponsored wake up joe 6 pack wake up and then they showed both Mcain and obama speaking about how they are not bought. lol

2008 Sep 10 11:19 AM