Mad Money Recap

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Sunday, September 07, 2008

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Friday, September 05, 2008: "We need to get America moving again," Jim Cramer told Mad Money viewers Friday. He had a simple message for the Federal Reserve - "We need another rate cut." Cramer said the country is in the grips of some of the worst deflation he's ever seen, and it's imperative that the Fed cuts rates to save it. Deflation is all around us. Oil and natural gas continues to plummet, along with just about every commodity out there. The retail sector is also horrible. Worst of all, the housing market continues to sink, with homes still losing value by the minute.

Cramer said that while no one is talking about a Fed rate cut yet, they will be by next week. He said the Fed needs to step up and answer the call, and unlike last year, take swift and decisive action to stop the deflation. Cramer also again called for an immediate end to the mortgage crisis, and urged the Treasury to bail out Fannie Mae (FNM) and Freddie Mac (FRE). The markets need this mess to finally be over, he said. "Save our homes."

Cramer told investors that their gameplan for next week should be to buy more of his recommended banks and brokers before the rest of the market wakes up to the possibility of a rate cut and before the mortgage crisis get solved.

Thursday, September 04, 2008: After a brutal day in the market, Jim Cramer said behind all of the losses and ugliness in the market, there is something positive. While a bull market may seem like a needle in the haystack, it's out there, he said. Cramer reiterated his belief that the markets will not fall below the lows set on July 15 and that a bottom is forming thanks to lower oil and natural gas prices. He listed six reasons why he feels investors should see the light at the end of the tunnel.

A bottom is forming in the housing stocks, signaling a bottom in the housing market that he says is coming in 300 days.
The Federal Deposit Insurance Corp. has announced a plan to fix ailing banks, allowing stronger entities to buy good assets while the government assumes the bad loans.
Both presidential candidates are likely to lower individual tax rates, which will help spark consumer spending.
Commodity prices have crashed across the board, helping to lower the raw costs for every company that uses commodities.
The price of gasoline is coming down even lower than Cramer first expected. "This is almost a tax cut in and of itself," he said.
The stock of Wal-mart (WMT), a place where millions of Americans shop, is showing some strength.

Given these six reasons, Cramer asked investors to begin looking for bargains amid the chaos in the markets.

Sell Block: In this segment, Cramer sent home builder Hovnanian Enterprises (HOV) straight to prison, without a trial, after the company's abysmal earnings report. He compared the company to rival Toll Brothers (TOL ), whose stock was up fractionally despite the horrible market action. Cramer said Hovnanian's run is over. He said he heard nothing positive on the company's conference call, including a $2.67 a share loss for the quarter, unit orders down 38% year over year, and a 33% cancellation rate on home orders. He predicted $9.60-per-share loss for the year. Cramer said the rising tide is not lifting all home-building boats. Hovnanian issued 14 million new shares of stock in May, which further diluted the struggling shares. Noting the company's $600-million bond sale, which now costs the company an interest rate of 11.5%, Cramer said "Hovnanian is a lot more expensive than it looks. He predicted the company will languish in ever increasing debts and market problems.

Wednesday, September 03, 2008: "The failure of Integrity Bank over the weekend is not just another bank failure," Jim Cramer told Mad Money viewers Wednesday. He said the breakup of Integrity a monumental shift in strategy which illustrates how the Federal Deposit Insurance Commission (FDIC) will handle bank failures from now on. Cramer commended the FDIC for adopting a plan which he has been advocating for months, one that splits failed entities into "good" and "bad" parts. The Integrity deal calls for Regions Financial (RF) to acquire Integrity's "good" parts, mainly $900 million worth of deposits, while the FDIC assumes the "bad" parts, including all of the bank's failed and failing loans.

"This is the plan we've been waiting for," said Cramer, and replayed an appearance on NBC's Today Show back in July where he advocated the plan. He called the FDIC's shift in strategy terrific news for stronger banks which are now poised to pick up great assets from failing entities. Cramer recommended BB&T (BBT), a strong, yet conservative, Southern bank with a 6.36% yield. He said the bank is ready to reap the rewards of the FDIC's new strategy.

Cramer said BB&T tightened its underwriting policies back in 2005, ahead of the subprime crisis. Only 1.36% of its loans are currently listed as non-performing and the bank has only a .63% charge off rate. The bank is also still growing, with loans up 9% last month. He called BB&T the logical choice to acquire assets from future failed banks.

Tuesday, September 02, 2008: Reasons To Be Bullish: On Tuesday Jim Cramer said the rally this morning was the real deal. Market expectations have turned too negative and when companies report their earnings they should blow away those estimates. Cramer said he was buying into today's afternoon selloff for his charitable trust Action Alerts PLUS and said now is the time to start building positions. He asked viewers not to pay any attention to the Dow Jones Industrial Average, which traded as high as 230 points before closing down 26.63 points today. Instead concentrate on the KBW Bank Index and Philadelphia Housing Sector Index, which he says are the real indicators of where the market is headed.

Cramer said the markets will not see a meaningful rally with the Philadelphia Housing Sector Index in free fall. The markets need home prices to stabilize. He reiterated his views that the markets will not re-test the lows of July 15, noting his prediction of a bottom in the housing market is now just 302 days away. He said a market rally will likely precede that bottom.

Cramer cited several reasons why he feels a market rally is on the horizon. First, there will be an uptick in consumer spending when gasoline hits just $3 a gallon. Second, the Federal Reserve won't raise interest rates as long as commodity prices continue to fall. Finally, any companies who raised prices due to higher commodity costs will now reap the rewards as those commodities begin to recede in price. Cramer told viewers not to wait until next year to start buyer, as a recent Wall Street Journal article suggested, but rather to start buying now ahead of the positive news that's on its way.

Monday, September 01, 2008: Mad Money was not aired on Labor Day.

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