Stocks discussed in the in-depth session of Cramer's Mad Money TV Program, Tuesday January 20.
- Expect 2009 to Mirror 1933. Even in the midst of a financial crisis, the Dow rallied 67% in 1933 after falling consistently in 1931 and 1932 thanks to a new President taking the helm.
- Listen to Sheila. FDIC Chair Sheila Bair wants to set up a trust to acquire bad loans from stumbling banks and refinance them through principal reductions and other strategies. This should cause a housing recovery, said Cramer, and there will be a system of four or five banks that will be able to lend.
- Fix Housing and Banks with Tax Credit. Cramer recommends a one-time $25,000 tax credit for homebuyers and a plan to have the government buy up foreclosed mortgages. However, Cramer warned Obama not to give the homebuilders aid, since they will only build toxic inventory; it would be better to burn homes.
- Encourage China. Cramer says China is the engine driving the rest of the world, and has a lot of cash.
- State Governments Should Raise Taxes. This strategy will help improve budgets and create jobs. This will work as long as gas prices stay low.
- Put the Infrastructure Stimulus in Place. This will mean job-creating building projects and increased orders for companies like Caterpillar.
- Buy an Auto Company. Cramer would let Chrysler go to the French-German coalition and Ford and GM should merge and union benefits should be suspended.
- Get Rid of Derivatives that Hurt Strong Banks. Cramer reiterated his complaint about Ultrashort ETFs.
- Make Natural Gas a Bridge Fuel while exploring alternative energy resources. There are tons of reserves of natural gas available.
- Listen to Cramer, who knows should be hired, fired and put on trial, said the Mad Money host.
In spite of the optimism in the first weeks of 2009, the Dow plunged on Tuesday, a sign that The Street doesn’t think Obama can fix the mess that is the economy. The main sectors hit included banks, oils, gold and tobacco. State Street led the financial fall and even strong banks like PNC felt the pain; it lost $16. Oil also dropped and gold, a classic safety play, felt the pain. Altria rallied, but given Altria is an anti-Obama play, the uptick was another indication of the market’s lack of confidence in the strength of the Obama Administration. The S&P also fell, as if to give the message “No, We Can’t.”
Marathon, with its 43% fall is way behind in the race behind Exxon and Chevron, which have fallen 7.2% and 15.9% respectively. However, Cramer thinks Marathon is a “twice-blessed” stock, whose chart has been showing gradual gains since its big sell-off in November, and continues to do well while crude oil declines. This fall allows refiners to make more money because of rising margins, and Marathon has a hand in both refining and producing. News of a split for Marathon could also send the stock upward.
Cramer says Wells Fargo is the best bank; “If Wells Fargo’s in big trouble, then every other bank is in huge trouble.” Cramer told another viewer he is not waiting for pullbacks on favorite stocks, but is looking at dividend yields.
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