Jim Cramer's Mad Money Review

It was a brutal day on Wall Street. The fall of Lehman Brothers, Merrill Lynch and American International Group demonstrated once again the need for market transparency and the height of CEO arrogance and denial. Cramer singled out Richard Fuld, Lehman's CEO, who, he said, passed up opportunity after opportunity to save his company. He said Fuld hurt his company by being so self-absorbed, self-interested and so sure of his company's future. For his failings, Cramer removed Fuld from his Wall of Shame, noting the CEO wasn't being removed because he was ousted but because he drove his company to bankruptcy. By contrast, Cramer had kinder words for John Thain, Merrill Lynch's CEO. He said Thain did the most he could for his company, which has agreed to be purchased by Bank of America. Cramer said he had urged AIG to take action but said his advice fell on deaf ears. He said Robert Willumstad, the company's CEO, made the mistake of keeping silent on AIG's mortgage exposure and shunned the opportunity to sell when he had the chance. Cramer said the Securities and Exchange Commission complicated matters by not pushing for greater transparency as it did when it dealt with E-Trade's problems. Cramer called today's historic market collapse a disgraceful period in laissez-faire capitalism that was marked by poor government oversight.
Source: SeekingAlpha

Labels: AIG, American International Group, Jim Cramer, LEH, Lehman Brothers, Mad Money, MER, Merrill Lynch

Jim Cramer said Monday on CNBC's Stop Trading that it would be a tragedy if the government lets troubled AIG(AIG ) fail.
I would radically have to change my view of where the market goes if it fails, Cramer told Erin Burnett. This one needs to be stopped. I don't know how to stop it.
AIG will be allowed to use $20 billion in assets held by subsidiaries to help stay in business, New York Gov. David Paterson said in a news conference Monday. The insurer, which has already raised $20 billion in fresh capital in 2008, on Sunday turned down an offer from private equity firm J.C. Flowers & Co. that would have allowed the investor to acquire AIG for $8 billion under certain circumstances, The Wall Street Journal reported.
This is not Bear, or Lehman(LEH) where all they have is Neuberger.
The other, riskier group includes AIG, MBIA(MBI ), PMI(PMI ) and Ambac(ABK ).
AIG is so opaque; they never disclosed what they own, Cramer said.
If you could just call a timeout, AIG would be able to sell a lot of different things, Cramer said. If it's in free fall and beaten down by the shorts, and we don't change the uptick rule, AIG must not fail.
Published By TheStreet.com

Labels: ABK, AIG, American International Group, J.C. Flowers, Jim Cramer, LEH, Lehman Brothers, MBIA, PMI, Stop Trading

Wells Fargo's(WFC) a winner here, said Jim Cramer on the Stop Trading segment on CNBC Thursday.
He urged people to look back at the early 1990s, when what was to become Bank of America(BAC) bought Security Pacific. It was completely unbelievable, impractical, he said. No one believed it, and yet that's when Bank of America became a great bank.
Now Wells Fargo is in a position to acquire Lehman Brothers (LEH)or Washington Mutual(WM) should either be seized by the government - something that needs to happen to avoid a great depression, he said. The bank system's falling apart. Let's save it before it goes to zero.
He distinguished the dysfunctional banking system from the economy at large and said he expects a huge holiday season. I'm paying $2.50 at the pump, he said. Mortgage rates are the lowest they've been. He recommended buying Sears (SHLD) He also saw bullish signs in falling oil prices. Oil going down through $100 is really, really bullish, obviously, for a lot of the market, not for the oil stocks, he said, though some of those are going up, too, due to the hurricane.
Published By TheStreet.com

Labels: CNBC's Stop Trading, Jim Cramer, LEH, Lehman Brothers, Sears Holding, SHLD, Stop Trading, Washington Mutual, Wells Fargo, WFC, WM

Lehman Brothers' shares sank further on Friday as top executives raced to put a sale of the beleaguered investment bank in place.
Confidence has waned that Lehman Brothers Holdings Inc. will emerge from the financial crisis as an independent franchise, and the No. 4 U.S. investment bank is scouring Wall Street for a financial lifeline. Executives worked feverishly in the past 24 hours to find someone willing to buy all or part of the company, bankers and industry executives close to the situation said.
In morning trading, Lehman shares fell 40 cents, or 9.5 percent, to $3.82.

Labels: LEH, Lehman Brothers

Lehman (NYSE:LEH) has been calling major financial institutions to propose some type of purchase of the beleagured investment bank, people with knowledge of the firm's activities say.
A Lehman spokesman had no comment.
It's unclear just how interested these institutions are in a complete purchase of Lehman, however. It's also unclear what price Lehman could fetch.
What is clear is that the markets are saying that Lehman has to act fast given the sharp drop in the firm's share price after the recapitalization plan was announced.
Details of Lehman's Turnaround Plans:
-Employees Worry About Jobs
-Lehman's Credibility in Question: Bove
-Bailouts May Push US Into Depression
-Farrell: We Need Write-Off Stability
Investment bankers with knowledge of Lehman's activities say the firm cannot sell to a private equity house because of government regulation, and that only a well capitalized bank, one that can withstand stock market gyrations, can purchase the firm because of the uncertainty surrounding its balance sheet.

Labels: LEH, Lehman Brothers

Lehman Brothers released its critical Q3 earnings and strategic plan: a huge writedown and lots of options. The real news is that, after seven months of crisis management, Lehman is still evaluating half a dozen options...and consummating none of them.
The release does say that Lehman is now considering "all" strategic alternatives, which presumably means it is considering selling itself (which is new). Aside from that, there's little in the release that we didn't know already:
-The firm plans to spin off $25-$30 billion of its crappy real-estate assets into a "bad bank." This begs the question where the equity financing will come from. The release doesn't answer this question.
-The firm plans to sell a majority stake in its investment management business.
Bottom Line: Get out of this stock. They have no idea what's going to happen.

Labels: LEH, Lehman Brothers

In response to recent news that Yahoo! is no longer in talks with News Corp.(NWS) and is open to a deal with Microsoft(MSFT), Cramer felt that Yahoo! "management has its hands full and that Carl Icahn would win here" but then had to wonder "what is he really winning?" Additionally, Cramer doesn't think Yahoo! "will get a huge price anymore."
Turning to financials, specifically the Lehman(LEH) article today on Fannie Mae(FNM) and Freddie Mac(FRE), Cramer said "these financials are all in the same shape" and that they "need the government to stop looking and for everyone to stop saying we'll get through it."
Cramer said he felt that if that didn't happen, "we'll have a big bailout," which wouldn't help anything. He ended the segment by stressing to "absolutely sell Fanny and Freddie."
Published By TheStreet.com

Labels: CNBC's Stop Trading, FNM, FRE, Jim Cramer, LEH, MSFT, NWS, Stop Trading

Coach (COH): Cramer admitted he was wrong to recommend buying Coach at $40; " I know retail has gotten weaker … we've always felt that the high end was immune, so maybe you're right... It's not as high-end as it used to be."
PMI (PMI) and MGIC (MTG): Cramer would sell PMI and MTG off of the sector downgrade by Lehman Brothers. Both stocks were down 11% in heavy trading on Tuesday. "They sliced through book value," Cramer said.
Published by SeekingAlpha

Labels: COH, Jim Cramer, LEH, MTG, PMI, Stop Trading

Memory chip maker Micron Technology Inc. was among the biggest decliners Wednesday on what was a mostly down day for semiconductor stocks, due mainly to worries over a tough pricing environment.
After posting slightly better-than-expected results for its fiscal fourth quarter, Micron issued what one analyst called "subdued" guidance on a challenging pricing environment.
Lehman Brothers analyst Tim Luke kept an "Equal Weight" rating on Micron.
With "memory pricing likely to trend lower over the near term, as spot pricing is still significantly below contract price levels, our low-end estimates are unchanged," Luke wrote in a client note.
Shares fell $1.03, or 8.7 percent, to $10.76 in early afternoon trading. The stock, which is down about 3 percent month-to-date, has traded in the 52-week range of $10.30 to $18.17.
Shares of industry leader Intel Corp. fell 53 cents, or 2 percent, to $25.85. The stock has traded between 18.75 and $27.71 in the past year.
Morgan Stanley analyst Mark Lipacis started coverage of Intel with an "Underweight" rating.
"We recommend that investors reduce positions in Intel ahead of what we expect will be an inventory correction and increasingly aggressive price environment," Lipacis wrote. The analyst also recommended that investors lower their positions in Advanced Micro Devices Inc. for the same reasons.
AMD's shares fell 29 cents, or 2.2 percent, to $12.91.
Qualcomm Inc., which is being investigated by European Union antitrust regulators for possible abusive business practices, was among the handful of stocks heading higher. The company makes mobile phone chips. Its shares rose 34 cents to $42.32.
The Philadelphia Semiconductor Sector index fell 9.75 points, or 1.93 percent, to 496.22.
Published by AP

Labels: AMD, INTC, LEH, MS, MU, QCOM, Semiconductors

The Fed's 50 point cut on Tuesday sparked the stock market, and CNBC's "Fast Money" discussed why the bulls are running, and what it means for financial stocks:Najarian: Tuesday's actions all about the financials. Financial Select Sector SPDR, ton of volume in call options.Macke: Can't be short financials now.Adami: continues to like financials; Lehman Brothers(LEH), Goldman Sachs (GS) and Morgan Stanley (MS)All Clear on Wall Street? CNBC's Charlie Gasparino discussed whether brokers are a buy now. Gasparino feels confident about most of the brokers except Bear Stearns (BSC)--lease diversed and tied to credit markets.OIL: Crude oil hit another record touching $81.51 and gold traded to $735, its highest level in 27 years. Author Dennis Gartman: Shocked by feds decision. Thinks stock market will continue to climb.Housing Market: Adami: housing stocks are back for a trade. He likes Hovanian, (HOV), Toll Brothers (TOL) and Pulte Homes (PHM)Finerman: Still likes Home Depot(HD), which she owns for its cheap valuation.Word on the Street: Cummings (CMI) and Caterpillar (CAT) exploded higher on the Fed cut. Najarian: Thinks CAT has much more upside to come.Global: China and Brazil's markets soared on the rate cuts. Tim Seymour, Principal at Red Star Asset Management, joined the crew to discuss the emerging markets. Seymour likes gold and Brazil ETF (EWZ)Face 2 Face:Viewer writes: "What happened to the recommendation to get out of gold if the Fed dropped its rates?" Adami reiterated his bearish stance on gold.Viewer writes: "Should I sell my October $195 call options on Goldman Sachs (GS) now or is there still more upside?" Najarian- feels strong about GS, but you should take half the position off before earnings.Viewer writes: "What is your outlook for Tiffany's (TIF) as the holiday season approaches?" Macke is positive about Tiffany's and Blue Nile (NILE)Pops & Drops:Pops: Macke-Caterpillar (CAT), Finerman-Target (TGT), Adami-Alcoa (AA)-could be bought out by Najarian's pick-Billiton (BHP), and Finerman-Wendy's (WEN)Drops: Najarian-E*Trade (ETFC), Macke-Hovnanian(DOG), Adami-Boeing(BA)Final Trade:Macke- Macy's (M)Finerman- Altria (MO)Adami- Nucor (NUE)Najarian- Companhia Vale do Rio Doce (RIO)

Labels: BHP, BSC, CAT, CMI, CNBC, ETFC, EWZ, Fast Money, GS, HD, HOV, LEH, MS, NILE, PHM, SPDR, TGT, TIF, TOL, WEN

Shares of investment banks rallied in afternoon trading Tuesday after the Federal Reserve cut its target for interest rates, offering Wall Street cheaper borrowing and the prospect of more stable credit markets.
The Fed cut the federal funds rate to 4.75 percent from 5.25 percent.
Many investors have clamored for a rate cut, believing it would lure buyers back into certain distressed markets. The instability in markets like mortgage-backed securities, junk bonds and corporate takeover finance has siphoned untold value out of the investment banks' portfolios this quarter.
Investment banking stocks have all fallen since July amid the market turmoil.
Shares of Goldman Sachs Group Inc. rose $9.37 to $197.
Shares of Bear Stearns Cos. rose $3.22 to $118.60.
Shares of Morgan Stanley rose $4.33 to $69.24.
Shares of Merrill Lynch & Co. rose $2.90 to $75.75.
Shares of Lehman Brothers Holdings Inc. rose $4.24 to $62.86.
Published by AP

Labels: BSC, Federal Reserve, GS, Investment Banks, LEH, MER, MS

Here are 7 stocks for traders for Tuesday from TradingMarkets.com:
Adobe Systems (NasdaqGS:ADBE - News) beat earnings on Tuesday afternoon, announcing $0.45 EPS over an expected $0.41 EPS. ADBE's PowerRating (for Traders) is 6.
The European Union announced it had denied Microsoft's (NasdaqGS:MSFT - News) appeal to a negative anti-trust suit, forcing MSFT to pay a $497 million euro fine. MSFT's PowerRating (for Traders) is 4.
AutoZone (NYSE:AZO - News) reports earnings on Tuesday morning, with analysts looking for $3.25 EPS. AZO's PowerRating (for Traders) is 4.
Best Buy (NYSE:BBY - News) should announce $0.44 EPS when the company reports earnings on Tuesday before the bell. BBY's PowerRating (for Traders) is 4.
Kroger (NYSE:KR - News) is looking to report $0.34 EPS on Tuesday morning. KR's PowerRating (for Traders) is 5.
Analysts are watching for Lehman Brothers (NYSE:LEH - News) to announce $1.52 EPS Tuesday before the market opens. LEH's PowerRating (for Traders) is 3.
Watch for Darden Restaurants (NYSE:DRI - News) to report $0.70 EPS on Tuesday morning. DRI's PowerRating (for Traders) is 5.
PowerRatings (for Traders) are courtesy of TradingMarkets.com

Labels: ADBE, AZO, BBY, DRI, Hot Stocks, KR, LEH, MSFT

Buy Lehman Brothers (LEH), Jim Cramer said Wednesday on CNBC's Stop Trading! segment.
Cramer said the firing of 1,200 workers at the broker's BNC mortgage unit is good because they weren't making the company any money anyway.
Cramer said additional firings will be good at other struggling mortgage players like Countrywide (CFC), which he said will also benefit from reduced competition from marginal players going bust.
Published by thestreet.com

Labels: CFC, Jim Cramer, LEH, Stop Trading

Thornburg Mortgage (NYSE: TMA - News), Washington Mutual (NYSE: WM - News), Lehman Brothers (NYSE: LEH - News), KB Home (NYSE: KBH - News), Beazer Homes USA (NYSE: BZH - News), Procter & Gamble (NYSE: PG - News), Coca-Cola (NYSE: KO - News), and Colgate (NYSE: CL - News)
Cramer predicts around 7 million "teaser" mortgages are likely to be defaulted and recommends "staying defensive," by avoiding real estate and bank stocks such as TMA, WM, LEH, KBH and BZH and investing in soft goods such as PG, KO and CL. While the Fed thinks mortgage woes will pass, Cramer still believes the Fed should cut rates.
Schering-Plough (NYSE: SGP - News)
Cramer thinks SGP is an excellent stock for the current environment and notes sales are up 13% since last year. He adds the company is not leveged to mortgaes and he believes in Fred Hassan, who was one of Cramer's transformational CEOs. He would wait until buying SGP, and while the current economic climate is not good, "we have no control on what the Fed will do," Cramer said.
Vodafone (NYSE: VOD - News),Verizon Wireless (NYSE: VZ - News)
VOD is a good international play and the world's best wireless carrier. Cramer thinks VOD will raise more revenues than the competition, owns a "serious chunk" of VZ, is successful in emerging economies and has a strong dividend.
CEO Interview: Jack Cumming, Hologic (NasdaqGS: HOLX - News) with Cytyc (NasdaqGS: CYTC - News)
Jack Cumming talked about the upcoming merger with CYTC, which will mean $400 million to $50o million in EBITDA and nine top women's health products. Cumming added the company can afford the acquisition and there is no financial risk.

Published by SeekingAlpha

Labels: BZH, CL, CYTC, HOLX, Jim Cramer, KBH, KO, LEH, Mad Money, PG, SGP, TMA, VOD, VZ, WM

Lehman (NYSE: LEH - News), JP Morgan (NYSE: JPM - News) and Bear Stearns (NYSE: BSC - News): After Thursday's carnage, Cramer has put financials on probation, and outlined necessary factors that would allow these stocks to perform again. First, Wall Street should cut its estimates, second, there should be layoffs in mortgage and corporate bonds departments. Third, the companies have to keep better track of what they have been losing to sub-prime debt and hung bridge loans. Cramer would stay away from JPM because of its connection with corporate debt and would not touch any housing stocks.
Pepsi (NYSE: PEP - News), Kellog (NYSE: K - News), Bunge (NYSE: BG - News), Celgene (NasdaqGS: CELG - News), Schlumberger (NYSE: SLB - News): Cramer would go "bottom fishing" in soft goods, such as Pepsi, which is down and Kellogg, whose quarter was "thing of beauty." He also likes agriculture and healthcare, especially BG and Celgene. Since Exxon is not drilling enough oil, Cramer predicts SLB will be called upon to come to the rescue. He also reiterated his praise for the tech sector which is "hot" in late summer.
Published by SeekingAlpha

Labels: BG, BSC, CELG, Jim Cramer, JPM, K, LEH, PEP, SLB, Stop Trading

Wall Street eked out a modest gain Tuesday as investors, wary about the upcoming release of the Federal Reserve minutes, bought cautiously amid a series of new takeover deals and upbeat consumer confidence figures.
Stocks drew support from news that a consortium of banks led by Royal Bank of Scotland PLC said it will bid 71.1 billion euros, or $95.5 billion, for the Netherlands' ABN Amro, besting an offer from Barclays PLC. Other takeover news included an announcement that Tishman Speyer Properties and Lehman Brothers Holdings Inc. are buying Archstone-Smith Trust for at least $13.5 billion.
But trading was erratic with the minutes from the Federal Reserve's last meeting scheduled to be released Wednesday. The minutes could provide some insight into future interest rate moves. Wall Street also digested strong consumer confidence data, and a report on housing prices. According to preliminary calculations, the Dow Jones industrial average rose 14.06, or 0.10 percent, to 13,521.34.
The Standard & Poor's 500 index rose 2.38, or 0.16 percent, to 1,518.11, while the Nasdaq composite index gained 14.87, or 0.58 percent, to 2,572.06.

Labels: ASN, BCS, LEH, URS, VOD, XOM

Wall Street backtracked Tuesday to trade mixed, after excitement waned over new takeover deals and resilient consumer confidence and investors decided to play it safe ahead of upcoming data.
A sharp decline in oil prices also dampened energy company stocks and weighed on the Dow Jones industrial average, which had risen more than 50 points early in the day and later turned lower.
Initially, stocks rose after a consortium of banks led by Royal Bank of Scotland PLC said it will bid 71.1 billion euros, or $95.5 billion, for the Netherlands' ABN Amro, besting an offer from Barclays PLC. Other takeover news included an announcement that Tishman Speyer Properties and Lehman Brothers Holdings Inc. are buying Archstone-Smith Trust for at least $13.5 billion.
But with the minutes from the Federal Reserve's last meeting scheduled to be released Wednesday, a report that could provide some insight into future interest rate moves, investors pulled back. Wall Street also digested strong consumer confidence data, and a report on housing prices. By midafternoon trading, the Dow slipped 18.37, or 0.14 percent, to 13,488.91. The blue-chip index has fallen for the fifth time in six sessions.
Broader stock indicators were mixed. The Standard & Poor's 500 index fell 0.76, or 0.05 percent, to 1,514.97, while the Nasdaq composite index added 7.32, or 0.29 percent, to 2,564.51.
Bonds fell after the consumer confidence data, with the yield on the benchmark 10-year Treasury note rising to 4.88 percent from 4.86 percent late Friday. Yields have remained higher in recent sessions as fixed-income investors bet the Fed won't lower rates in the near future. On Tuesday, the consumer appeared strong; the Conference Board said its Consumer Confidence Index rose to 108.0 in May, up from a revised 106.3 in April and above the average analyst estimate. Also, the Dallas and Chicago Federal Reserves both reported expansions in regional manufacturing activity.
But the housing sector looked weak after the Standard & Poor's housing index indicated that U.S. home prices declined 1.4 percent in the first quarter compared to a year ago, the first time since 1991 that prices posted a quarterly drop. U.S. retail gasoline prices have eased slightly from their record high of $3.227 a gallon, on average, but remained high Tuesday at $3.201, according to AAA. Crude oil futures plunged $2.05 to $63.15 a barrel on the New York Mercantile Exchange.
In response, Exxon Mobil Corp., one of the 30 Dow components, fell $1.33, or 1.6 percent, to $82.18.
After it was reported that Archstone was being bought, the stock rose $5.60, or 10 percent, to $60.83.
In other takeover news, The Wall Street Journal said technology retailer CDW Corp. and telecommunications equipment company Avaya Inc. are private equity takeover targets. Avaya rose $1.99, or 14.5 percent, to $15.66, and CDW rose $7.17, or 9.5 percent, to $82.73.
And late Monday, engineering and construction company URS Corp. said it will buy competitor Washington Group International for $2.6 billion. Washington Group rose $11.93, or 17 percent, to $81.90, and URS rose $2.41, or 5.1 percent, to $49.30.
The technology sector, which has been weaker than the rest of the stock market in recent months, got a boost Tuesday after Vodafone Group PLC said it narrowed its full-year loss. U.S. shares of the world's biggest mobile phone company rose $1.10, or 3.7 percent, to $31.66.
Bookseller Borders Group Inc. is scheduled to release first-quarter results Tuesday after the markets close. Borders fell 15 cents to $23.26.
Advancing issues outnumbered decliners by about 3 to 2 on the New York Stock Exchange, where volume came to 1.11 billion shares.
The Russell 2000 index of smaller companies was up 5.30, or 0.64 percent, at 835.23.
The dollar slipped against other major currencies, and gold prices climbed.
Overseas, Japan's Nikkei stock average rose 0.48 percent. Britain's FTSE 100 was up 0.55 percent, Germany's DAX index was up 0.54 percent, and France's CAC-40 was down 0.25 percent.

Source: AP

Labels: ASN, AV, BCS, CDWC, LEH, URS, VOD, XOM

CEO Wall of Shame: Terry Semel of Yahoo! (NasdaqGS: YHOO)
Cramer added Yahoo CEO Terry Semel, the "master of the art of overpromise and underdeliver," to his CEO Wall of Shame after the company failed to meet expectations yet again on Tuesday. "You can't raise the bar really high and then implode," Cramer says. "And you certainly shouldn't be allowed to do it repeatedly." He thinks Terry Semel is even worse than IBM's Sam Palmisano and Citigroup's Chuck Prince.

Money in the Banks: Downey Financial (NYSE: DSL - News), Wachovia (NYSE: WB - News), Lehman Brothers (NYSE: LEH - News), Bear Stearns (NYSE: BSC - News), Goldman Sachs (NYSE: GS - News), Impac Mortgage (NYSE: IMH - News)
Downey may be the next Golden West, a savings and loan which was recently bought by WB in a controversial yet beneficial move, according to Cramer. He thinks DSL is one of the best risk/reward stocks around, and believes it will double if it is acquired, may benefit if the Fed raises interest rates, or if it busts the shorts, which hold 40% of DSL's float. Cramer would buy LEH, BSC, GS, commenting "what was negative four weeks ago is now positive for banks," and he thinks IMH could double on any good news.
Green Day Part 3: BorgWarner (NYSE: BWA - News), Halliburton (NYSE: HAL - News), Transocean (NYSE: RIG - News)
Continuing his Green Day series, Cramer discussed BWA an auto-supplier which is sought-after because of its fuel efficient turbochargers, for which there is high demand across the industry. Since many of its clients are overseas, he doesn't think BWA will be affected by problems with domestic car sales. When a caller asked if traditional energy is "peaking" in the wake of "Green Day," Cramer replied that oil is "still in a multi-year expansion" but prefers oil service stocks such as Halliburton and Transocean.
Mad Mail: Superior Offshore, Burger King (NYSE: BKC - News), Southern Copper (NYSE: PCU - News), FuelCell Energy (NasdaqGM: FCEL)Cramer told a viewer he doesn't think IPO Superior Offshore's strategy of paying a special cash dividend before going public is a bad idea, and noted companies like BKC have been successfully doing the same thing. When asked if PCU will "drop like a rock" again in late April and early May, Cramer said he would still buy PCU, and the pattern is linked with China. Finally, he agreed FCEL will rise because of the "Green Day" decision.
Published By SeekingAlpha

Labels: BKC, BSC, BWA, DSL, GS, HAL, IMH, Jim Cramer, LEH, Mad Money, PCU, RIG, WB

Goldman Sachs (NYSE: GS - News), Bear Stearns (NYSE: BSC - News), Lehman Brothers (NYSE: LEH - News), Bear Stearns (NYSE: BSC - News), Merrill Lynch (NYSE: MER - News), Accredited Home Lenders (NasdaqGS: LEND), and IndyMac (NYSE: NDE - News)
Cramer comments that companies are jumping onto the defaulted loan bandwagon, as Bear Stearns and other brokers “are moving mortgages to distressed debt, marking them up really big and giving you a better coupon ... having sold paper on the fly of defaulted, bankrupt and criminal savings and loans, I can tell you that's a lot better than selling paper that's involving people who own homes." When Gregg Greenberg asked Cramer to rate the top brokers in light of the subprime worries, he said Goldman Sachs is #1, and added people have yet to see the good in mortgages. GS is profiting from LEH and BSC reports, and Cramer predicts the stock will go back to $250 from $200. BSC earns the #2 position because it is "much more proactive than Lehman in terms of turning the mortgage morass into something really positive." For people who want a short play, Cramer suggests MER because it is just getting into mortgages and is not proactive. Cramer says the rally in LEND and NDE was short-covering. Concerning his dirty dozen list yesterday, Cramer emphasized that he is not saying that every company deserves to be on the list. In fact, Cramer says he is more likely to be long than short some of the listed stocks.

Labels: BSC, GS, Jim Cramer, LEH, MER, NDE, Wall Street Confidential

Wall Street fluctuated Wednesday, seeking a direction a day after concerns about faltering subprime mortgage lenders sparked a broad selloff in stocks.
The market showed its continuing nervousness about soured loans among subprime lenders. H&R Block Inc. added to unease by announcing after the closing bell Tuesday that it would increase its losses for the third quarter because of a $29 million writedown at its mortgage arm.
The anxiety over mortgage lenders, particularly the subprime lenders that make loans to people with poor credit, pushed the Dow down by more than 240 points Tuesday, its second-biggest drop in nearly four years. The pullback resembled a 416-point drop in the Dow seen two weeks ago that began in part after a nearly 9 percent drop in stocks in Shanghai and amid concerns about subprime mortgages.
In morning trading, the Dow Jones industrial average fell 7.93, or 0.07 percent, to 12,068.03.
Broader stock indicators were little changed. The Standard & Poor's 500 index rose 0.82, or 0.06 percent, to 1,378.77, and the Nasdaq composite index fell 0.24, or 0.01 percent, to 2,350.33.
U.S. stocks were more stable in the early going than overseas markets were Wednesday. Japan's Nikkei stock average closed down 2.92 percent, while Hong Kong's Hang Sang index fell 2.57 percent and the sometimes volatile Shanghai Composite Index fell 1.97 percent. In afternoon trading, Britain's FTSE 100 fell 1.57 percent, Germany's DAX index fell 2.03 percent, and France's CAC-40 fell 1.85 percent.
Bonds were little changed; the yield on the benchmark 10-year Treasury note remained flat at 4.50 percent from late Tuesday, while gold prices fell.
The dollar, which was mixed against other major currencies, rose against the yen. Some observers have fingered the ascendent yen with contributing to the volatility seen in recent weeks on Wall Street. A rise in the yen against the dollar stirred concern of a reduction in the so-called yen carry trade, which occurs when investors use the yen to acquire higher-yielding assets elsewhere.
Light sweet crude was unchanged at $57.93 per barrel on the New York Mercantile Exchange.
Following Tuesday's sobering declines in stocks, some investors might have found reassurance about the well-being of the economy in General Motors Corp. report that it turned a profit for the fourth quarter, its first since the first quarter of 2006. GM, which rose 40 cents to $30.91, benefited from a big gain from the sale of about half its stake in its General Motors Acceptance Corp. financing arm.
But trouble at GMAC's Residential Capital LLC real-estate financing business added to investor concern Tuesday after ResCap said it has struggled with a slower pace of loan originations and a further erosion in its subprime business.
H&R Block, the nation's largest tax preparer, said it would delay filing its annual report and said the reduced value of its mortgage business pushed its quarterly loss higher. The stock fell $1.05, or 5.2 percent, to $19.
In economic news, the deficit in the broadest measure of foreign trade narrowed by 14.6 percent in the final quarter of 2006 to $195.8 billion, the smallest quarterly imbalance since the summer of 2005, helped by a lower foreign oil bill. For 2006, the Commerce Department said the current account deficit, which reflects not only trade in goods and services but also investment flows between countries, set a record for the fifth consecutive year.
The Labor Department said the prices of imported goods rose 0.2 percent in February when excluding oil prices. In January, import prices fell 0.9 percent.
Weighing in again with mortgage data, the Mortgage Bankers Association said Wednesday its weekly mortgage index, which measures mortgage loan application volume, rose 2.8 percent on a seasonally adjusted basis from the prior week. On Tuesday, the group's report that new foreclosures jumped to their highest-ever level in the fourth quarter of 2006 helped touch off the day's cavalcade of sell orders.
In other corporate news, Citigroup Inc. rose 10 cents to $48.85 after announcing plans to begin a tender offer for Nikko Cordial Corp. on Thursday after raising its offer for Japan's third-largest brokerage to quell shareholder opposition.
Lehman Brothers Holdings Inc., the fourth-largest U.S. investment house, credited robust trading and an expansion overseas with driving first-quarter profits. Lehman fell $3.52, or 4.9 percent, to $68.48 as it began a conference call with analysts.
The recent volatility in the U.S. markets, while perhaps normal, still drew concern from some investors who had grown accustomed to the calm conditions since U.S. stocks began their steep climb in July. Even before Wall Street's recent unease, volatility might have been expected to increase as the week neared the expiration of contracts for stock index futures, stock index options and stock options on Friday. The confluence of events, which Wall Street has dubbed triple witching, can bring volatility as investors try to square their options and futures orders.
Declining issues outnumbered advancers by about 5 to 4 on the New York Stock Exchange, where volume came to 247.9 million shares.
The Russell 2000 index of smaller companies fell 1.65, or 0.21 percent, to 767.47.
Published by Tim Paradis, AP Business Writer

Labels: C, GM, HRB, LEH

Goldman Sachs Group Inc., the largest Wall Street investment house, on Tuesday said its first-quarter profit rose 29 percent to a company record on robust trading gains and investment banking fees. Its shares rose 2 percent.
New York-based Goldman reported earnings applicable to common shareholders rose to $3.15 billion, or $6.67 per share, for the quarter ended Feb. 23, compared to $2.45 billion, or $5.08 per share, in the year-ago period.
Revenue rose 22 percent to $12.73 billion from $10.43 billion in the year-ago period.
Results surpassed Wall Street projections for earnings of $4.97 per share on $10.69 billion in revenue, according to analysts polled by Thomson Financial.
"While market conditions will regularly shift, we are confident that our client-driven strategy will continue to produce the strongest results for the firm," said Chairman and Chief Executive Lloyd Blankfein in a statement.
Goldman is the first of the Wall Street investment banks to report first-quarter results, with Lehman Brothers Holdings Inc., Bear Stearns Cos., and Morgan Stanley Inc. on tap in the coming days.
There has been increased uncertainty about the outlook for financial markets after the global stock swoon on Feb. 27, and growing concern about the effect a meltdown in the subprime mortgage industry will have on Wall Street. Goldman is among the lenders to New Century Financial Corp., the second-biggest mortgage lender to people with shaky credit histories.
Irvine, Calif.-based New Century announced Monday it lost support from its financial backers. This has fanned concern that investment banks may be swept into the fray because of declining home loans and mortgage-backed securities.
David Viniar, Goldman's chief financial officer, said Goldman's exposure to the market is "modest" when compared to the investment bank's overall business. He said Goldman began to reduce its exposure to subprime loans about two months ago after noticing instability.
"Loans were made that should have not been made by companies making them that shouldn't have been making them," he said in a conference call with reporters. "There will be a shakeout in the mortgage business. And, there will be a subprime market when it's all done, but smaller than it has been in the past."
Viniar could not quantify exactly how much exposure Goldman has to subprime loans, and said troubles "have been contained in the subprime market." He pointed out there were revenue gains from mortgage and credit products during the quarter.
Goldman's fiscal first quarter ended four days before the Dow Jones industrials plunged 416 points, so there would have been no impact on the reported results. The quarter is typically the strongest for investment banks as companies start the year with new stock offerings, acquisitions and borrowing.
Trading continued to be Goldman's biggest business, representing 74 percent of its total revenue. The strong stock market rally last year helped trading revenue rise 35 percent to $9.42 billion.
Revenue from trading fixed-income, currencies and commodities, Goldman's biggest business, rose 20 percent to $4.6 billion. Equities trading revenue climbed 26 percent to $3.1 billion.
Goldman, the world's No. 1 adviser on acquisitions for the past five years, reported investment banking revenue rose 17 percent to $1.72 billion. Goldman's asset-management and securities-services division, which includes lending and other services to hedge funds, reported a 19 percent drop in revenue to $1.6 billion due to lower incentive fees.
Goldman's shares rose $4.40, or 2.2 percent, to $207 in morning trading on the New York Stock Exchange.
Published by Joe Bel Bruno, AP Business Writer

Labels: BSC, GS, LEH, NEW

Bear Stearns (NYSE: BSC - News), Lehman Brothers (NYSE: LEH - News), Goldman Sachs (NYSE: GS - News) and J. Crew (NYSE: JCG - News)
Cramer counsels patience until next Friday when BSC, LEH and GS should be "painfully low" when the bears attack after earnings reports on Tuesday, Wednesday