Jim Cramer's Mad Money Review

The best way to sustain Friday's late rally is for the government to cut a back-room deal with the largest banks and brokerages to get them to start making loans again, Jim Cramer told viewers on his "Mad Money" TV show on Friday.
On a day when Dow closed down 128 points after another extremely volatile session, Cramer said this "secret" meeting is necessary to get the economy, credit markets and stock markets rolling again and avoid a repeat of this past week's brutal market.
Cramer said he would have the Federal Reserve take the initiative by inviting to the meeting the CEOs of large financial institutions such as Citigroup(C ), Bank of America(BAC ), Wells Fargo(WF ), JP Morgan(JPM )Morgan Stanley(MS), and Goldman Sachs(GS ), the latter three of which he owns for his Action Alerts PLUS portfolio.
Cramer said the Fed would tell the CEOs that it would not repeat the mistake it made when it allowed Lehman Bros to fail. Instead, he said, the Fed would do all that it can to get the financial institutions open for business again.
He said the Fed would guarantee all their debts as well as their brokerage, savings and corporate accounts. Furthermore it would allow them to pay off their bonds with federal money, permit them to sell their credit default swaps lower and provide them $100 billion each to lend.
In return, these financial institutions would have to live up to their end of the bargain by "opening the spigots" and make loans again. He said the loans will be targeted to corporations, small businesses and individuals - but not hedge funds.
He also said the Fed would have the financial institutions divvy up the "bad banks" among themselves, with the aim of having them assume the good deposits while selling the bad assets to the federal government's newly created Troubled Asset Recovery Program.
Cramer said that after the market's worst-ever weekly drop it's "time to change our incredibly negative bias," as stocks are no longer in endless sell mode.
For Cramer it's time to rent some stocks, with a look at owning longer term if the market again approaches the lows seen on Friday. Cramer believes the market will chase those lows since the market rarely bottoms on a Friday, and the snapback by stocks was too far, too fast.
That means a new game plan is needed for the cash that Cramer told traders to peel off last month.
Expecting a gap down on both Monday and Tuesday, Cramer advises putting 25% of that cash back in play on both days. As usual, Cramer is against buying all at once.
As for where to put it, Cramer offered a stock like Kellogg(K ) as a template, based on its rallying behavior a year after the 1987 crash.
Of course, Cramer said this isn't 1987 - times are a lot worse. Given that, Cramer suggests loooking at companies that are trading around their cash on hand, such as KBR(KBR ).
You should also look at companies that make products that you eat, such as Kraft(KFT), Heinz(HNZ ), Coca-Cola(KO ) and Altria(MO ). Cramer owns Kraft and Altria in his Action Alerts Plus portfolio.
Cramer also likes giant pharmaceutial Merck(MRK ), cyclical plays Nucor(NUE )and Freeport McMoRan(FCX ), which he also owns for his Action Alerts PLUS portfolio, but reminded viewers that you only want a small position with the last two, since they aren't self-financing.
Cramer would be careful with financials, but he likes US Bancorp(USB ), and threw in a recommendation for Duke Energy(DUK ).
The new leadership is companies that don't need money, Cramer said.
Half-Empty
Cramer likes that traders dodged a bullet on Friday, with a "spectacular" rally off the lows of the morning, but he believes it's important to lay out the worst-case scenario so investors can go forward "with their eyes open."
In the worst case, the model isn't the 1987 market crash, which saw equities bounce back only a year later, but a "1929 scenario" which brought an 89% peak-to-trough drop and a "decline that just wouldn't quit."
In that model, Cramer said, currently flailing stocks like U.S. Steel(X ) and General Motors(GM ) wouldn't be done yet.
Cramer said that unfortunately the parallels with the 1929 crash are too close for comfort. As in 1929, he explained, we have a presidential administration that's in over its head. Listening to Bush say the government taking necessary actions to solve the crisis is like President Herbert Hoover saying than that the worst is behind us.
Cramer noted the market's tanking after Bush's most recent comments about the market, as well as the similarities of a Federal Reserve too focused on inflation and a wave of bank failures.
Cramer said he believes the federal bailout plan can help, but that a second Great Depression is still on the table. "That's why you have to be careful with your buying," he said.
Published By TheStreet.com

Labels: BAC, Bank of America, C, Citigroup Inc., Goldman Sachs Inc., GS, HNZ, Jim Cramer, JP Morgan Chase and Co., JPM, K, KBR, KFT, KO, Mad Money, Merck, Morgan Stanley, MS, Wells Fargo, WFC

The bulls are making a very big stand," Jim Cramer said on CNBC's "Stop Trading!" segment on Friday. He said the bulls are making a "concentrated effort" to prop up stocks such as Citigroup(C ), NYSE(NYX ), Bank of America(BAC ) and Apple(AAPL ).
They're keying in on Apple, he said, hoping to boost it up by $8 or $9. "The bulls want to take Apple up so bad, it's funny. I mean, look at it. Should anyone really be thinking about it? No!"
Cramer recommended that if investors are thinking about buying Apple, they wait till around 3:30 p.m. "That's when the fire power tends to be exhausted by the bulls who are trying to prop the market up," he said.
GE(GE ), CNBC's parent company, reported third-quarter earnings on Friday morning. "I think it's important to recognize that the GE quarter was exactly in line," said Cramer, who owns GE both personally and in his Action Alerts PLUS charitable trust. But he's more concerned about the credit markets. "The equity market is just a thumbnail compared with the credit markets," he said.
"It's kind of like the Western world of finance is on the line here," Cramer said. "If I had the power, I would move the market up right now."
Published By TheStreet.com

Labels: BAC, Bank of America, C, Citigroup Inc., CNBC's Stop Trading, GE, General Electric Co., Jim Cramer, NYSE Euronext Inc., NYX, Stop Trading

Despite the passage of federal bailout package, Jim Cramer told viewers of his "Mad Money" TV show that he did not trust this market.
He reminded investors to sell into any moments of strength and play defensively as the details of the bailout plan begin to play out.
Cramer then shifted his attention to Wachovia (WB), saying its shareholders have good reason for hope after some nifty behind-the-scene moves by CEO Bob Steel.
Cramer praised Steel for working out a deal with Wells Fargo (WFC).
He admitted he was wrong when he placed Steel on his "Wall of Shame" list of the worst CEOs on Monday. He said he did so because he was disheartened by the federal government's decision to sell Wachovia's assets to Citigroup (C) and the fact that Steel had not come forward to defend his position.
However, after today's announcement of a deal with Wells Fargo, Cramer said he had an entirely different view of Steel.
UPFilling the empty slot in the Wall of Shame, Cramer added Sen. Harry Reid (D., Nev.) for a comment he made Wednesday that a major insurance company was preparing for bankruptcy.
Cramer said that irresponsible comment caused the stocks of Prudential (PRU), MetLife (MET) and Hartford (HIG) to suffer double-digit percentage drops.
Cramer said Reid deserved to be on the Wall of Shame for adding fear to an already fearful market.
Cramer said he's evaluating the industrial stocks by two simple measures: their dividend yield and how much cash they have on the balance sheet. Earlier in the week, he recommended KBR (KBR), a company where two-fifths of its marketcap is cash.
Tonight he recommended two other companies that he says are approaching the "value" threshold. The first on his radar screen is steelmaker Nucor (NUE), with its 3.6% dividend yield. The company was downgraded today by an analyst at Merrill Lynch. With a share price below $30, Cramer said Nucor is solid value stock.
Cramer also recommended Freeport McMoran (FCX), a stock which he owns for his charitable trust, Action Alerts PLUS, as another company close to a value moniker. With a 4.4% dividend yield, Cramer said he's beginning to buy additional shares to reinforce his position for his trust.
Admittedly, Cramer said gold and steel prices continue to fall, but in the case of Freeport, the stock has fallen from a high of $127 to $44 today. With such a decline, Cramer believes the downside has to be minimal going forward.
Published By TheStreet.com

Labels: C, Citigroup Inc., FCX, Hartford, HIG, Jim Cramer, KBR, Mad Money, Mad MOney Recap, MET, MetLife, NUE, PRU, Prudential, Wachovia, WB, Wells Fargo, WFC

NYSE head Duncan Niederauer said today that the SEC is considering reinstating the uptick rule. "That would be fabulous," Cramer said. "I hope they don't just do a penny uptick, maybe a nickel or a dime. ... It's time to get away from that silly ban and bring back the uptick rule the way it's been for years."
Cramer also said that he agrees with Sen. John McCain that SEC CEO Christopher Cox is "very unsophisticated" and "not the right man for the job."
Addressing Warren Buffet's pledge to buy $3 billion of General Electric(GE) stock, Cramer said: "I believe that everyone now realizes that, 'Wait a minute, if this deal's in the hole, this is my last chance to buy GE cheaply.'" Cramer added that he was "completely conflicted" because he works for GE and owns GE stock contractually as well as in his Action Alerts PLUS charitable trust.
As for GE's need to raise capital, Cramer said that it's not alone. "No company is strong and solid," he said. "It's every man for himself. There's not a single company, aside from maybe Warren Buffet's company, that I would trust right now with their financials." He said that any company in the country that has an opportunity to raise cash right now should do it, including Citigroup(C ).
As for IBM (IBM), it's "caught up in this whole web of the notion that you need financing," Cramer said. "IBM has been money in the bank for a long time, but nobody trusts any company that needs financing right now."
Published By TheStreet.com

Labels: C, Citigroup Inc., CNBC's Stop Trading, GE, General Electric Co., IBM, Jim Cramer, Stop Trading

Buy Ralph Lauren (RL), Jim Cramer said on CNBC's "Stop Trading!" segment Wednesday.
"I like it because of the J.C. Penney (JCP) tie-in," Cramer said. He said today's move "seems like a bit of a short squeeze," he said, but "I think it can go higher from here."
Elsewhere in apparel, Cramer said that VF Corp. (VFC) "is the analogue of Ralph Lauren. ... If Ralph Lauren's good you don't leave this stock."
Cramer went on to praise management at Eaton (ETN). He said the company is "part of my new-tech world," and predicted it would hit a 52-week high. He said he also likes Emerson (EMR). "These companies are on fire," he said.
Of Nucor (NUE), Cramer said the company's secondary offering is an entry point. He advised more caution on Cleveland-Cliffs (CLF). "Let it cool off before you buy it here," he said.
Cramer was less bullish on AIG (AIG) and Wachovia (WB). "These are serial needers of capital," he said. He said firing AIG CEO Marty Sullivan would cause the stock to go up, and chastised Wachovia for its acquisition of Golden West. "This was one of the dumbest acquisitions ever and they're paying for it," he said.
"If they knew what they owned I would be more comfortable," Cramer said of AIG and Wachovia. "They're like Citigroup (C)." He said that when the companies claim to know what they have, "they're being wishful."
Published By TheStreet.com

Labels: AIG, C, CLF, EMR, ETN, JCP, Jim Cramer, NUE, RL, Stop Trading, VFC, WB

Buy Deere (DE), Jim Cramer said on CNBC's "Stop Trading!" segment Tuesday.
Cramer pointed to the stock's continued rise as evidence that he's right. "You know why?" he said, "Because the fundamentals trump the analysts." He praised CEO Robert Lane for "making great inroads" with the company. Of sector rival Agco (AG), Cramer said, "I gotta tell you. I think Deere is coming for them. ... I like Deere and I like DuPont (DD)."
Cramer said he liked the stock market's performance today, "given the fact that consumer confidence's been bad." He said he's worried about big gains in Research In Motion (RIMM), a company he recommended on Monday's "Stop Trading!" segment.
"I still like Apple (AAPL), but I don't have a strong thesis on Apple other than I believe in the iPhone," Cramer said.
In the investment management space, Cramer was bearish on Fortress Investment Group (FIG) "I have Wes Edens in my hall of shame," Cramer said. "Everything they've touched has turned to stone. This is a castle in the sand."
Cramer also said he disapproved of Citigroup (C) CEO Vikram Pandit. "What's Pandit doing?" he asked. "Sometimes you've got to take bold action. ... The last four acquisitions that Chuckie Prince did, I would just unwind them."
Published By TheStreet.com

Labels: AAPL, AG, C, CNBC's Stop Trading, DD, DE, FIG, Jim Cramer, RIMM, Stop Trading

The Vs and the Dopeys; IndyMac, Washington Mutual (WM), Citigroup (C)
Cramer says the current optimism in the market is due to two groups, the Vs who believe in a quick and complete recovery and the Dopeys who feel that nothing is wrong in the first place. The convergence of these two groups is bringing the stocks up, said Cramer. However, Cramer does not identify with these camps; 'I need to see that all numbers are weak' since the fed is really dense and unsophisticated and will not make more cuts unless it is obvious there is a recession. The Fed is very reactive said Cramer and will use the bullish January retail sales as ammunition to do nothing. The purpose of cuts is not to bail out the economy, but to help IndyMac, Washington Mutual and Citigroup stay afloat, he added. The issue is not fundamentals, said Cramer, but credit risk and a bunch of institutions that are overextended.

Labels: C, Jim Cramer, Wall Street Confidential, WM

Citigroup (C) dropped the ball on today's earnings report, Jim Cramer said on CNBC's "Stop Trading!" segment Tuesday
I got this wrong," he said. "I expected bold action ... I didn't get bold action." Cramer was expecting CEO Vikram Pandit to take more writedowns this quarter to demonstrate that the bank was righting itself. "If you took all that capital ... I don't know why didn't you take out more of the bad."
Cramer added that saving triple-A rated bonds was a fool's errand. "Every other bit of triple-A ... is backed up by agency paper that you cannot afford. ... If you hide behind triple-A, it better be the American Automobile."
Pandit's management actions were not forceful enough either, Cramer believes. "I want to see [Japanese brokerage and Citi acquisition] Nikko Cordial out ... I want to hear a repudiation of previous management. ... It's time for [board member] Bob [Rubin] to move on."
The action by Citigroup was not decisive enough. "There was a chance the stock could've been up today. ... The stock could've been up if [Pandit] went clean clean clean," Cramer said. "I just wanted bold statements. I'm not asking for Jack Bauer."
Cramer recommended trading out of Citi common stock and buying convertible preferred shares. "I would love to be able to swap this," he said.
Cramer concluded the segment by issuing caution about a pick he'd been plugging for a long time: "Agriculture went parabolic yesterday. ... When stocks go parabolic, meaning they went up $8 like Mosaic (MOS) ... If you don't take something off the table, you're going to get hurt."
The entire agriculture sector is too hot lately, Cramer added, saying to watch out for stocks such as Archer Daniels Midland (ADM) and Deere (DE).
Published By TheStreet.com

Labels: ADM, C, DE, Jim Cramer, MOS, Stop Trading

Stay away from the financials, Jim Cramer said on CNBC's "Stop Trading""segment Thursday.
"I think it's just too dangerous to recommend a lot of financial stocks. ... Some of these don't have a bottom," Cramer said. When he was working for his hedge fund in the 1990s, another grim time for banks, "a lot of money was made shorting financials."
Regarding the Fed's creation of a term auction facility yesterday, Cramer said, "I can't stop looking at the stocks. The stocks are not lying." Cramer believes that if the Fed's plan were working, financial stocks would be rising.
People who believe the Fed plan may be sufficient aren't seeing the broader picture, Cramer believes. "The guys who are focused on Libor and three-month rates ... they're just falling for the same logic that the Fed is. ... I love them for their specificity," but Cramer believes that the Fed hasn't done enough.
Cramer also responded to worries that Citigroup (C) will have to cut the dividend, saying "the stock is reflecting a dividend cut," but the bank is not out of the woods just yet. "A year ago, we could've fixed Citigroup without cutting the dividend, but they just kept buying and buying and buying."
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Labels: C, Citigroup Inc., CNBC's Stop Trading, Jim Cramer

NCR (NCR) and Eastman Kodak (EK) are two stocks with a great deal of potential upside and a cushion to the downside. NCR, is a leading manufacturer and designer of ATMs and scanners. Because of its recent anonymity, NCR is a great play on the rise of the middle class in the former U.S.S.R. and the Third World. Cramer says NCR has a huge buyback coming. NCR is sporting 17% growth in ATM sales, with Europe having only 500 ATMs per million people and even fewer in China. A sleeper stock that deserves more attention. Eastman Kodak might not seem like a good buy being a couple points above a 52-week low. Cramer has been betting against Kodak since he started his hedge fund, but he believes the company is about to turn around. After years of losses, its balance sheet is healthy now, sporting $6 of net cash per share. With $82 million in digital income, Kodak is ready to come back alive.
CEO Wall of Shame
Cramer finally removed Citigroup (C) CEO Chuck Prince from his Wall of Shame. He replaced Prince with Kerry Killinger, CEO of Washington Mutual (WM). WaMu’s Kerry Killinger rocketed past Motorola (MOT) CEO Ed Zander and Alcatel Lucent's (ALU) Pat Russo to the top position. Cramer said Killinger has done such a poor job running Washington Mutual that the Fed will cut rates to bail the bank out. Compared to total loans, Washington Mutual’s allowance for losses is far too low.

Mad Mail
The first writer asked Cramer how he intends to play the environment during NBC Universal’s Green Week? Cramer said all week he will work on individual ideas about how to play green, focusing on companies that make power cheaper but are still profitable. The second mailer questioned Cramer’s Apache call in the mid-$70s. Cramer said that his earlier statement; that the company would not go through $80, turned out to be wrong. He said he wished he’d given the stock more leeway, but he made the wrong call. He apologized for his mistake. The third viewer mentioned that Diana Shipping (DSX) CEO Simeon Palios, whom Cramer had interviewed on the show last week, may have had trouble articulating his company’s story in proper English. The viewer wondered if Cramer had made any follow-up on the call. Cramer felt Palios indicated that the bull story wasn’t there and that he was negative.

Labels: ALU, C, EK, Jim Cramer, Mad MOney Recap, MOT, NCR, WM

Oil futures retreated from a record $89 a barrel Wednesday, ending lower after government data showing larger-than-expected gas and oil supplies outweighed worries about tension in northern Iraq.
Trading was volatile throughout the session as oil futures were buffeted by a number of headlines, including news that Turkey's parliament approved a government plan to attack Kurdish rebels in northern Iraq and word of an explosion at a small refinery in Montana.
Reports by the Energy Department, the International Energy Agency and the Organization of Petroleum Exporting Countries over the past week have all supported a view that oil supplies are falling as demand is growing.
But the Energy Department's inventory report Wednesday countered those perceptions.
"Inventories are rising, not falling," said Tim Evans, an analyst at Citigroup Inc. in New York. "Demand is falling, not rising."
Light, sweet crude for November delivery fell 21 cents to settle at $87.40 a barrel on the Nymex. It was crude's first price decline in 7 sessions.
Source: John Wilen, AP Business Writer

Labels: C, Crude Oil, Oil Futures, Oil Prices

Stocks pulled back sharply Monday as news that major U.S. banks will set up a fund to help bail out the credit markets stirred concerns about bad debt and as oil prices surged to $86 per barrel for the first time. The Dow Jones industrial average lost more than 100 points.
The stock market's pullback comes not only amid concerns about debt and rising energy costs but as investors await third-quarter reports due this week from more than 80 components of the Standard & Poor's 500 index.
The concerns about banking came after Citigroup Inc., the biggest U.S. bank, reported that third-quarter results fell 57 percent. The company said it lost more than $3 billion in mortgage-backed security losses, leveraged debt write-downs and fixed-income trading losses.
The bank -- along with JPMorgan Chase & Co. and Bank of America Corp. -- announced the creation of a fund used to help revive the asset-backed commercial paper market. The fund will buy assets from structured investment vehicles, also known as SIVs, which buy corporate bonds and subprime mortgage debt. The bailout was orchestrated by the Treasury Department to avoid a fire sale in the market.
"It's a reminder that this problem never was entirely put to bed. There may be financial institutions out there than are in more trouble than we thought they were," said Aaron Gurwitz, co-head of portfolio strategy at Lehman Brothers Investment Management, referring to concerns about bad debt. He also noted that Monday's session wasn't unusual given the back-and-forth moves in the major indexes in recent sessions.
The Dow fell 108.28, or 0.77 percent, to 13,984.80.
Broader stock indicators also declined. The S&P 500 index fell 13.09, or 0.84 percent, to 1,548.71, and the Nasdaq composite index fell 25.63, or 0.91 percent, to 2,780.05.
Source: Tim Paradis, AP Business Writer

Labels: BAC, BIIB, C, JPM, MDT

Baidu (BIDU): Cramer says the downgrade on Thursday that caused a 10% drop in Baidu “means nothing” and he predicts BIDU will reach $500 from $318.
BEA Systems (BEAS) and Oracle (ORCL): Cramer predicts BEAS will get at least $20 a share if Oracle buys it and says Carl Icahn, who owns a significant stake in BEAS, is “money.”
Annaly Capital (NLY), Citigroup (C): Cramer said NLY will be the top financial stock until January and suggested some replacements for Citigroup’s fallen CEO Chuck Prince, including former Wells Fargo CEO Dick Kovacevich or Treasury Under Secretary for Domestic Finance Bob Steel, formerly of Goldman Sachs.
Published by SeekingAlpha

Labels: BEAS, BIDU, C, Jim Cramer, NLY, ORCL, Stop Trading

Technology
Stocks like Apple (AAPL) and Research In Motion (RIMM) are hitting new highs daily but the semiconductor stocks are not. Carter Worth, chief market technician at Oppenheimer found an incredible divergence with the semis declining by 30% against the S&P 500 tech stocks. Macke agrees and would play this divergence by going long Intel (INTC). Worth also noted that investment banks like Goldman Sachs (GS) were flying, but money central banks like Citigroup (C) were doing nothing.
Super Market
Firms like Coke (KO), Pepsi (PEP), Proctor & Gamble (PG) and Colgate (CL) will get to show investors how good business is. Macke thinks PG is doing the best and also favors Molson Coors (TAP) and Pepsi (PEP). Macke isn't positive on Clorox (CX).
Oil Trade
Oil rebounded back to over $80 on Tuesday and the Oil Services HOLDRs (OIH) followed the commodity to the upside. Seymour: play it by buying oil service companies with exposure to regions like Russia and the Caspian Sea, such as Halliburton (HAL) and Baker-Hughes (BHI). Najarian would avoid the Oil Services HOLDRs because it is over weighted with Schlumberger (SLB).
Word on the StreetMosaic (MOS) reported monster earnings on Tuesday and the stock soared. Najarian points out that there are buyers of the October $90 calls on Monsanto (MON) which operates in the same space as Mosaic.
SABMiller and Molson Coors (TAP) announced plans to combine U.S. operations in a new firm to be named MillerCoors. Macke suggests they combined so they can go after Anheuser-Busch (BUD), which the hidden winner is Altria (MO), which has a 28% stake in SABMiller. Seymour favors international beverage plays Companhia de Bebidas (ABV) and Fomento (FMX).
Alcoa (AA) falls short of Wall Street's estimates.
Macke warns investors to expect a lot of misses like the one on Tuesday from Childrens Place (PLCE).
Worth recommends shorting Nordstrom (JWN), Tiffany (TIF) and Coach (COH).
Pops & Drops
Pops- Yum! Brands (YUM) traded up 5%
ValueClick (VCLK) traded up 10%
Miramar Mining (MNG) popped 24% after Newmont Mining (NEM) bought the firm for $1.5 billion.
Altair Nanotechnologies (ALTI) exploded higher by 31% after the firm demonstrated its battery pack in an electric car.
California Pizza Kitchen (CPKI) traded up 5%.
Drops- Coach (COH) fell 3% off a bearish Bloomberg report.
Face2Face
Nokia (VCLK): Writer asked does it still have upside potential or should I cut my losses? Najarian: wait till the takeover of NAVTEQ (NVT) is digested, and then it will move higher.
Next writer made a good profit in XM Radio (XMSR), buying in at $8 and $9. Should they sell some XM and then buy some Sirius (SIRI)? Make says yes.
Final Trade
Macke recommends Johnson & Johnson (JNJ).
Worth: short Black & Decker (BDK).
Najarian: Cypress (CY).
Seymour: play international oil services with Integra Group.
Ned Riley, the CEO of Riley Asset Management says stay long PowerShares QQQ Trust (QQQQ).

Labels: AAPL, C, CL, CNBC, CX, Fast Money, Fast Money Recap, KO, PEP, PG, RIMM, TAP

Company
Market Cap (billions)
Yield

General Electric (NYSE: GE)
$424
2.7%
AT&T (NYSE: T)
$258
3.4%
Citigroup (NYSE: C)
$232
4.6%
Bank of America (NYSE: BAC)
$223
5.0%
Vodafone (NYSE: VOD)
$193
3.9%
Pfizer (NYSE: PFE)
$169
4.8%
Home Depot (NYSE: HD)
$55
2.8%

Source: Fool.com

Labels: BAC, C, Dividends, GE, HD, Hot Stocks, pfe, T, VOD

Stocks pared most of their early losses Wednesday as investors juggled uncertainty about the health of the economy with a renewed sense that Wall Street has skirted the worst of a widespread credit squeeze.
A reading on the nation's service economy, whose industries range from banking to retail and travel and account for 80 percent of U.S. economic activity, came in as expected and gave investors little reason to rally on hopes of an interest rate cut. But it also appeared to quiet some concerns about a sharp economic slowdown.
The Institute for Supply Management report showed the service sector expanded at a slower pace in September than in August. The trade group's non-manufacturing index fell to 54.8 from 55.8 in August as expected; the index is now at its lowest point since March. A reading above 50 indicates economic expansion, while a figure below 50 signals contraction.
Comments from former Federal Reserve Chairman Alan Greenspan that the "worst is over" in the credit turmoil that swept global markets in recent months appeared to give a lift to investor sentiment. His comments followed a similar assesment from Citigroup Inc. on Monday.
Wall Street appears to be taking many economic readings in stride, perhaps expecting some slowdown before the Fed's rate cut is reflected in economic data. Often, such cuts can take more than a year to fully work themselves into the economy.
Source: Tim Paradis, AP Business Writer

Labels: Alan Greenspan, C, DB, Federal Reserve, UBS

Astoria (AF),New York Community Bancorp (NYB) and Capital One (COF), Citigroup (C), JP Morgan (JPM)
Cramer calls TDBank’s acquisition of Commerce Bancorp a “natural fit” only the beginning of what he believes will be a larger trend of Canadian banks buying American banks such as Astoria, New York Community Bankcorp and Capital One. The matches are made in heaven, since the Canadian monetary and stock currency is strong, but they need deposits, and the U.S. is "riddled with deposits by companies that can't grow their business." While Canada avoided the U.S in the past because of the perception the U.S banks were overvalued and the Canadian loonie was undervalued, the loonie’s recent strength changes the landscape. While TD’s acquisition was wise, Cramer was critical of Citigroup’s taking over a bank in Tokyo which is "the worst market in the world. It's more mature than the U.S., which is hard to find and is led by a cast of people that don't favor great growth. That's what Citigroup does." Cramer notes even JPM isn’t making many acquisitions these days, which leaves plenty of room for the Canadians. While taking out Commerce Bancorp at nearly triple its value was “historically high,” Cramer commented, “ I believe that at three times, it does establish a new benchmark, if you can find banks that are equally as customer friendly." Cramer adds the Canadians are looking at banks mainly in the Northeast to get a hold on the New York area, “the only area in the country where real estate is going higher.”
Published by SeekingAlpha

Labels: AF, C, COF, Jim Cramer, JPM, NYB, Wall Street Confidential

Wall Street traded mixed Tuesday, selling off large companies' stocks but buying up those of smaller companies, as investors cashed in gains from Monday's big rally and poked around for new bargains.
Investors were only slightly fazed by the National Association of Realtors' report Tuesday that its seasonally adjusted index of pending sales for existing homes fell 6.5 percent in August from July and 21.5 percent from a year ago. The data suggest sales of existing homes will probably keep declining in the coming months -- bad news for the economy, but good news for those hoping for another interest rate cut.
After the Federal Reserve lowered rates on Sept. 18, the stock market is hoping for a similar move again at the Fed's Oct. 30-31 meeting. That optimism drove the Dow Jones industrial average up nearly 192 points Monday to close at 14,087.55 -- a new high and its first foray above the 14,000 level since mid-July, right before a credit market squeeze triggered a stock selloff.
On Tuesday, the Dow fell as investors sold some of their large-cap stocks, such as Honeywell International Inc., ExxonMobil Corp. and United Technologies Corp., which have recently performed well. Also, with commodities prices retreating and the dollar rebounding, big oil and mining companies -- such as Exxon Mobil -- may see smaller profit margins.
"The economy is soft, you have this big run-up, and the fact is people are just taking some profit," said Scott Fullman, director of investment strategy for I. A. Englander & Co. "There's not a ton of news to trade on, and investors are also looking ahead to the unemployment report on Friday."
Meanwhile, small-cap stocks rose as investors returned to companies that were unattractive during the summer's tight credit environment and now appear cheap.
"Larger-cap companies don't need to do borrowing. After the rate cut, those who believe there will be another rate cut would want own smaller-cap stocks," said Matt Kelmon, portfolio manager of the Kelmoore Strategy Funds.
In late afternoon trading, the Dow fell 56.01, or 0.40 percent, to 14,031.54.
Broader stock indicators were mixed. The Standard & Poor's 500 index fell 2.52, or 0.16 percent, to 1,544.52, while the Nasdaq composite index rose 0.94, or 0.03 percent, to 2,741.93.
Source: Madlen Read, AP Business Writer

Labels: ABX, C, CBH, GM, HON, NEM, TD, UTX, XOM

An index that forecasts near-term home sales fell in August to a record low as would-be homebuyers had difficulty getting mortgages. Economists said the housing market's woes show no sign of improving soon.
The National Association of Realtors said Tuesday its seasonally adjusted index of pending sales for existing homes fell 6.5 percent from July and 21.5 percent from a year ago.
The pending home sales index has done a farily good job of predicting sales levels over the following two months said Joshua Shapiro, chief U.S. economist with MFR Inc. in New York.
Shapiro and other analysts expect prices to fall further before home sales rebound. Developers are already making big price cuts to move unsold new homes, but existing homeowners are more reluctant to do so. "We haven't reached bottom yet," Shapiro said.
August's reading of 85.5 was below analysts' expectations and the lowest ever for the index, which started in January 2001. An index reading of 100 is equal to the average level of sales activity in 2001.
With defaults rising among borrowers with weak credit, lenders in August backed off from all but the safest mortgages.
Source: Alan Zibel, AP Business Writer

Labels: BAC, C, CFC, FMT, FNM, FRE, Home Sales, Housing Stocks, IMB, LEND, UBS, WFC, WM

U.S. stock futures fluctuated Monday, paring earlier gains after Citigroup Inc. forecast a steep decline in third-quarter profit.
Citigroup estimated earnings will decline 60 percent from a year ago due to turmoil in the mortgage-backed securities and credit markets. In a statement, Chairman and Chief Executive Charles Prince called the expected results "a clear disappointment."
Investors also awaited key data on the health of the manufacturing sector. The Institute for Supply Management is expected to report that manufacturing activity grew at roughly the same rate in September as in August, according to economists surveyed by Thomson Financial. Later in the week, investors will watch for readings on the health of the service sector and employment.
Dow Jones industrial average futures for December rose 6, or 0.04 percent, to 14,000. Standard & Poor's 500 futures rose 1.20, or 0.08 percent, to 1,539.30. Nasdaq 100 index futures were unchanged at 2,114.00.
European stock markets were narrowly mixed after Citigroup's profit warning compounded bad news from UBS AG. The largest Swiss bank said Monday it expects a pretax loss of up to $690 million in the third quarter, due mainly to writedowns related to deteriorating conditions in the U.S. subprime mortgage market. UBS said the loss will result in the elimination of 1,500 jobs from the bank's work force of 80,000 by year end.
Credit Suisse Group followed the UBS statement with its own, saying that it expects to report a third-quarter profit of about $860 million despite the quarter's stormy conditions.
In other corporate news, drug store chain Walgreen Co. reported fiscal fourth-quarter profit fell 4 percent on lower reimbursements for some generic drugs and higher store and labor costs.
Meanwhile, the U.S. dollar was mixed against major currencies but hovered near its low against the euro, which bought a record $1.4283 in trading overnight. Oil prices slipped in electronic pre-opening trading on the New York Mercantile Exchange, while gold prices rose. A barrel of light, sweet crude fell 29 cents to $81.37. An ounce of gold added 90 cents to $750.90.
Source: Lauren Villagran, AP Business Writer

Labels: C, CS, Dow Jones, Nasdaq, UBS, WAG

Bullish:

Excel Maritime (EXM): bullish on all dry bulk shipping companies.
Companhia Vale do Rio Doce (RIO): Cramer thinks this stock should go higher
Range Resources (RRC): Cramer likes this stock along with the other cheap oil companies
Quicksilver Resources (KWK)
Rosetta Resources (ROSE)
XTO Energy (XTO): his favorite in the sector
Celgene (CELG): one of the best picks he has ever made.

Bearish: