Friday, February 13, 2009
(Cont'd from above)...

Jim (cont'd):   

China which is no up 27% for the year… is once again going to be the locomotive of worldwide economic growth in the US… well we are the caboose… down 10%… aside from a few select groups that are doing well… companies that don’t have a Chinese connection… at this point much better than a French connection… have you picked your toes in Beijing… most companies are simply more worse off than they were 4 months ago… in tonight’s game plan I am going to go thru sector by sector and explain why I think the market is doing worse here and why China is the one truly bright spot in this let a hundred flowers die market… in Cramerica… unlike Washington… we tell the truth… our stimulus package doesn’t even merit the name and it won’t work… our interest rates are already effectively at zero… we don’t have a lot of money to give away… so we are struggling with any real pump up… and we just lost our best chance this week… China on the other had is rich… got $2 trillion in reserves… and they can do whatever they want… and they have an attitude, a can do attitude over there… that is all about putting people to work… probably because they are really worried, not about being reelected… but about being beheaded… or shot… and hung upside down from meat hooks in the middle of Tiananmen Square… which is what happened to El Duche when the train stopped running on time… tends to concentrate the mind.

Our politicians, on the other hand, created a stimulus plan that was all about pork and pleasing their districts… of course, the only pork in China… is pork fried rice… or maybe Moo-Shoo pork… and their stimulus is about putting a couple hundred million people to work… building just about anything they want to… in English or Mandarin for that… well, that is General Tso beating Colonel Sanders any day of the week… although, I would buy Yum here, the parent of KFC precisely because it has got so much Chinese exposure… look at the facts as what is doing better than it was 4 months ago when we let the much too big to fail Lehman Brothers fail… and what is doing worse… there is much more bad than good… and the US retail is just down right awful… forget the fact that the agriculture numbers that came out this week were better in January… the truth is and we all know it… the stores are empty… no one is buying much of anything… Goldman amazingly this week took Kohl's (KSS) to a sell… heck, I mean Kohl’s is where women get there fat pants… that never goes out of style… Target (TGT) isn’t that much better… the autos… catastrophic… do you know that next week the bond bullies could actually take over GM if they want to… we could be on the verge of GM’s bankruptcy as early as next week if the bond holders demand it… Ford (F) it is $1.76... and it like hips, ain’t lying… Chrysler… anybody remember Chrysler.

Housing is awful despite the fact that fewer homes are being built… and the lack of serious housing tax credit this week in the stimulus means that they are going to stay that way… Centex, Lennar, D.R. Horton, Toll…they are all giving back their huge gains that they have… aerospace seems to have dropped off a cliff… I wouldn’t touch Boeing with a 10,000 foot pole… or a plane for that matter… I don’t want to go near a casino stock because no one seems to be going near a casino… tech is an unmitigated softness in every area except for smart phones… what we saw what happened this week with Research In Motion, when it didn’t guide higher… tech with exposure to China on the other hand like Cramer fave Qualcomm… a stock that I own for my charitable trust… is actually going to benefit… and it has been hanging in there… it has got a $40B China… $40B is what China is throwing at wireless infrastructure… Cisco (CSCO*) and Hewlett-Packard (HPQ*), both ActionAlertsPlus names, both have Chinese exposure… which is why I have been buying them… the People’s Republic… I am not talking about Cambridge… they are spending.

How about agriculture… Deere & Co. (DE)… all the articles all this week said that they have potential credit problems… Bunge (BG) has said that they mixed the quarter… Archer-Daniels-Midland (ADM) unimpressive… fertilizer seems to have stabilized cause of China… but the only one that I am recommending is Terra Nitrogen Company, L.P. (TNH)… and I told you to ring the register a little bit last week because it has been so strong… even the food and beverage companies that are supposed to be recession resistant have had mixed results… I think Coke (KO) is good… but Kraft Foods Inc. (KFT) is really bad… General Mills Inc. (GIS*) seems to be doing well… Kellogg Co. (K), not so hot… Pepsi (PEP*) I like… reported great numbers… but again that is in part because of its growing China exposure… guess what, the winners in the litany… yeah… they all have big plans for China… Pepsi announced the building of three new plants in China alone today on its fabulous conference call… memo to the Chinese… Doritos… I bet you can’t eat just one trillion.

Drug companies have been weakened by the strong dollar… everything oil except the refiners had a bad January… I can see Chinese demand coming to the assistance of this group… oil up $3 today… I think that was distinctly Chinese… the banks… awful, awful, awful… loans losses continuing to soar… no real sign the initiatives from Washington will work… and lots of anxiety about Geithner’s stress test… especially since judging from the actions in the market… almost no bank can pass it…. machinery… they got nothing from the US stimulus package… that could have made a big difference… we were looking for that… the broader industrials are all seeing weakness… and a difficult first quarter… we are doing nothing for them… I mean I can see Caterpillar Inc. (CAT), Honeywell (HON), and United Technologies (UTX) start to turn around when China begins to put in orders… they had a few minutes of strength today because China is soaring… and you can’t build a second great wall, or a third, or a fifth for that matter without Cat’s tractors.

Now, what few sectors have improved… alright, let’s get some good news here… restaurants for one… lower commodity costs… lower gasoline prices… lower labor costs… it is making it less pricy to go out… I like McDonald's (MCD) …. Panera Bread Co. (PNRA) down a couple today, down badly today… and incorrectly… so maybe I will grab a classic Caesar’s salad tonight after I hit Ruth’s…. I also like Darden Restaurants (DRI)… non-pharma health care… medical device companies we have been focused on those… you heard about St. Jude Medical Inc. (STJ) earlier in the week… that stock is on fire… after the break I will tell you about another one that is under $10... so stayed tuned… health care costs contain… Unitedhealth Group, Inc. (UNH), MedcoHealth Solutions Inc. (MHS)… they are not under pressure… they are cash rich and they are making their numbers… bio tech too… lots of mergers and acquisitions there… plus some big approvals from many of the majors.

Surprisingly, investment banking in January is doing better… Credit Suisse said things have improved… last night you heard Tommy Joyce from Knight Capital Group Inc. (NITE) telling us that things are improving… and I know Goldman Sachs (GS*), another charitable trust name, is doing better… because credit… at least bonds… are being issued once again… and trading now is higher margins because there is less competition… please don’t forget… one of the reasons why Goldman is up almost 37 straight points… is because it is the king of bank mergers… and many banks are going to be merged under Geithner’s euthanasia bank plan… and finally the minerals and the steels… they are doing better all thanks to the veracious demand of the Chinese Communists… Freeport-McMoRan (FCX*), Nucor (NUE), United States Steel Corp. (X) maybe they should name it China steel… all companies that are getting nothing from this country… but could really work if you believe that they have China on their side.

Here is the bottom line…

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The Bottom Line!:     We didn’t go anywhere despite the so-called big stimulus package… because we are worse off than we were 4 months ago… I don’t like to be a negative Nancy… I leave that to my sister, the original negative Nancy… but until we are better off we cannot expect the market to be better off… see the market has got it right… the optimists have got it wrong… and they will stay wrong until we have a sign that the balance has shifted… with the good sectors outweighing the bad… it sure would be more fun to tell you that everything is dynamite… but you look to me for truth… because you don’t want to suffer the consequences of heeding the cock-eyed optimist you hear and read about all day.

It would be great to tell you everything is peachy, but right now it’s not.





[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 wondering given our current economic crisis and instability of China, and their economy and their society, what a 24 year old can expect the global market price to kind of look like in another 10 to 15 years?

Jim:    Well, I think… no one wants to hear this… but I think China is going to be the world leader by then… they have the better balance sheet… they didn’t go crazy… they didn’t have sub-prime debt… I loved David Faber's piece, show last night… I know that it is going to be rerun… the Chinese didn’t shoot themselves in the foot… they are growing a lot… they are well educated… they are hard working.

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Q:    After listening to President Obama a couple of times on how his plans would benefit companies that involve renewable alternative energy, what is your take on similar companies in China, such as Suntech Power (STP), Triana Limited?

Jim:    No, way too risky my friend… way too risky… I like the Chinese people… I think they work real hard… they have got a real good thing going there… the Chinese government want to stimulate the economy… but I have got to tell you… those companies… the actual Chinese Communists are very good at being capitalists… but when you start picking their aggressive speculative stocks… you are going to get body slammed… I want you to stay away from them partner.

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Q:    Wondering about 6 weeks ago no way would you invest in China, a communist country, now you are so bullish for them, what changed your mind in such a short time?

Jim:    No, no, no… I don’t want to invest in the stocks… I own an ETF for my charitable trust, China Xinhua 25 Index (FXI)… it has not nearly kept up with the Chinese stock market… I am not saying that it doesn’t work… I am up on it for my trust… no, I don’t want to buy Chinese companies… I don’t like their companies… I think that their stock market is going up… but the individual stocks, the government could wake up tomorrow and put any one of them out of business… I like them as a consumer of American products and minerals… I have been bullish on China since December when I said they are the number one stock market in the world… but every time any one calls in and asks for an individual Chinese stock… I will never give it to them.. because for all I know the tomorrow the Chinese pollatarian/pollapro shuts down your stock and you hate Cramer… China is the only bright spot left in this gloomy market… we lost our big chance this week with the phony stimulus package… General Tso, Moo-Shoo pork and Cramer will be right back.

[verbatim recap]

[end of segment]

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