Tuesday, February 3, 2009
(Cont'd from above)...

Jim (cont'd):    Here is the first one… the first one is The First National Bank of Schering-Plough (SGP)… it reported a huge quarter this morning… this good bank is so lucrative it has money to burn… I don’t know how it can stay independent… someone some will Sutton company will by Schering Plough because it is where the money is… Sutton would never go after a real bank these days… SGP delivered a monster gain more then $1.5 on a $17 basis…

Or, how about the results from Merck (MRK) Savings?… just a gigantic quarter from this drug bank… Merck Savings is flush with cash that it can use to buy other companies or buy back stocks… no wonder it zoomed more than 2 points…

We heard from The First National Bank of MedcoHealth Solutions Inc. (MHS) last night… a health care money saver… and it charged ahead $2.… federal money for Medco… are you kidding… it wants to make you money… not cost you money…

Then there is the Exxon Mobil (XOM) Trust Corp… another superb financial that announced a gusher of a quarter on Friday… and the stock has gotten some bounce given then it has got even more cash then it can put to work… plus oil is done going down… Exxon Trust pushed more than a buck higher and took the whole group with it… including important Dow stock, Chevron Corp. (CVX*) Bank Shares… black gold...

Who else fits our definition of good… why Verizon (VZ) Bank Corp… people are finally recognizing that Verizon can do whatever the heck it wants with its money… including raising its already notoriously B.I.G. juicy dividend that currently yields 5.8%… or we could go old school and talk about Sir Mixalot's first corollary … I like big yields and I cannot lie… Wall Street Journal, of course, attacking Verizon for the gazaillionth time tonight… please… now by the way if we want to know if between Sir Mixalot and some of the others… I always thought Biggie was the better investor only rivaled by Two Pack… neither was much of a bank though… more of a bank job…

Or, take a look at the incredible action today in Salesforce.com (CRM) State Bank…. CRM for all you home gamers… this good bank is a growth stock throwing off so much money that it can’t even deploy it… this company has more money than it knows what to do with it… do you think any bank has that…. CRM is finally getting the recognition it deserves as a high grower… but beware it has no dividend… it is growing so fast it doesn’t need one… no wonder it rallied 10% today.

Even Microsoft Savings Corp was up today… Microsoft is swimming in cash.. frankly I think it will be drowning in it…

Take a look at this one… you might have missed this bank stock… this financial… General Mills Inc. (GIS*) Bank & Trust… that stock is roaring… it issued $1.5B in notes, those are terms for bonds… they were snapped up like Eggo‘s… whoops that is the Kellogg Co. (K) National Trust… the only buyer of real bank debt is the government… not to the food banks… people are begging them to issue bonds so they can have some serial fueled interest…

How about the royal bank of McDonald's (MCD)?… After spending a couple of days in financial purgatory following a Big Mac of a quarter… the stock has finally got its groove back… paying big dividends… oh by the way the dividend certainly exceeds the Royal Bank of Scotland… which is an insult to the Royals…

And then there is the Bristol-Myers Squibb Co. (BMY*) Building & Loan… Bristol-Myers Building & Loan is a throw back to the days when we called them Building & Loans… it lasted ramp huge today thanks to a old fashioned lip smacking great queue… the Journal had abdicated that by saying that it wasn’t a great quarter… really send people off into what I call a misdirection play… it was kind of like play action… it has got a zoftic dividend and real growth… in fact all of pharma banks did well today… now that Tom Daschle is out… he was like a tough bank regulator… this is Daschle rally in the drug banks… because he is public pharma enemy #1... like Obama he believes that now is not the time for profits… except he meant drug companies, not the banks… like the banks had any profits to begin with.

Drugs were the leader today… the market banked big on them… and they had pin action throughout the soft good sectors… Tom Daschle was the catalyst… because he did not let the door hit him on his way out.. what do all these good banks have in common… they have the money to raise their dividends, buy back stock, grow… we don’t need the FDIC to guaranteed our deposits when we bank with these guys…. in oil, and drugs and sulfur we trust… these companies wouldn’t know what to do with Federal money except to give it back.

Alright then there are the bad banks…
The bad banks they are all down about 5% on average on up a 1.5% day… who fits into the bad bank group category… how about every publicly traded bank… Citigroup (C) which had bought the naming rights to the Met’s new stadium Citi Field… is now trying to get out of the deal… now we wanted to be the house that Citi built… if only just for the rain out joke… when we get the federal TARP roll out…

PNC Financial Services Group Inc. (PNC) doesn’t that stand Poor National Corp… it was down huge today on horrendous earnings and commentary… about how things have only gotten worse in 2009... just reading that release made me sick…

And then there is Cloudy Mistrust formally known SunTrust Banks Inc. (STI)… crushed in sympathy with Poor National… misery loves losses… found myself thinking I wonder if Obama would say I am showing sympathy for the Devil… by not seeking SunTrust confiscation… probably… although I have to tell you that SunTrust isn’t a bank of wealth and taste.

Don’t forget Brass Slacks… formerly known as Goldman Slacks, aka Goldman Sachs (GS*)… even though this one doesn’t need money… I just had some huge insider buying from my old boss Steve Friedman… two buys for a million bucks… still going down… what do all these banks have in common… with the exception of Golden Slacks… all these banks need money… they are more prone to cutting their dividends instead of raising them… and they can’t buy back a share because they just don’t have any money… can’t even name a stadium… keep it jet… do you know who is charge of these banks… Uncle Billy is in charge… it’s not a wonderful life for these companies… banks that need money… drug and oil and food and phone and software companies that have too much money… that is the dichotomy that defines this market… it was only after the rally gained so much strength that it even lifted some of the bad banks... I am not tempted… I am a good bank kind of guy.

Here is the bottom line..

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The Bottom Line!:     If you don’t need money, you are a good bank and your stock goes higher… if you do need money, you are a bad bank and you are not going anywhere but down.

In separating the good from the bad, consider how much money a company needs...    It is a battle of the good banks vs. the bad banks… it is a dichotomy that defines this market… and I am banking with cereal… you can bank with banks.

[verbatim recap]

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Jim went on after this segment to take questions from callers, and responded with his comments...

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Q:    I was looking at Jim’s rule #6 One for Fun, and what I see is CIT Group, Inc. (CIT), now I know it is a bank, and they got a little bit of tarp money. But they have $8B in cash, and they have a really good long term plan to go forward. What do you think?

Jim:    Okay, I am not going to say that CIT doesn’t have enough money… because whenever you do that they complain… I am not going to say that CIT doesn’t have enough money… because whenever you do that they complain… am I getting that point across… I am trying to be subtle.

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Q:    I am wondering when will it be safe to get back into the banks, specifically Citi or Bank of America?

Jim:    Okay, I think we are going to have to see what exactly is in the proposal by Cramer pal Tim Geithner before we leap that far… it is possible that if he does any of the things that we have been talking about… showing forbearance, giving the banks a certificate of net worth, like they did in 1989... then we are going to signal all clear and have you buy them… but you know what.. right now they haven’t really earned a lot of Cramer faith… let’s see what they do before we pull the trigger in Citigroup (C) or Bank of America (BAC).

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[verbatim recap]

[end of segment]

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