Thursday, February 19, 2009
(Cont'd from above)...

Jim (cont'd):   


First let’s look at the worst group that I have ever seen… it is called the financials… no bank trades like it can make it all… I mean check out the declines in stocks like Citigroup and Bank of America… hey, there was this woman on at the end of the day, you might have missed her, her name is Meredith Whitney… and she was talking about shorting Citigroup down here… wow, there is not a lot of action between here and zero… how about the US Bancorps… how about the Wells Fargos… not to mention the BBT’s… the Fifth Thirds, which now trades at like 1/3.… how about the life insurers… do they act like that… Death Life, The Hartford, Lincoln, Genworth, Principal Financial Group, Pru, Met… how about that Cit… wow, get out the microscope… they all trade like they might not make it… no survivors on this island… except perhaps Goldman Sachs and Morgan Stanley… because they are in the brokerage business… maybe Travelers among the insurers… because they are pure property and casualty… the market says that Warren Buffett fave American Express should be sold… and the proceeds plowed into Visa and Mastercard… which are survivors, because they have no credit exposure… they are just a play on checks going to plastic…. good for survivor Wall Street… the mortgage insurers like MBA… they have been zombies… all of these trade as if they will never make it off of the island, or out of the jungle… the serpent and the rainbow… or whatever meager setting CBS is featuring today.

It doesn’t look like any media company will make the cut either, including the aforementioned CBS… with its impenetrable financials… that is exhibit A… it is a micro cause on what is wrong with the whole group… you can’t even really tell if prime time is making money… radio… ug… nothing there, no different from any of the stand alone radio companies that are in the single digit mode or disappearing… outdoor ads are slowing… so is the internet… how about Time Warner… how about News Corp… I mean holy cow, they don’t seem to have any upside let alone pulse… the declines in this group now extend to the cable companies as Comcast’s numbers showed us yesterday… that number was a pure disappointment… Comcast is a really well run company…. the newspaper stocks… they know nothing… they are disappearing fast… The New York Times, $3, what a disaster… I think the paper costs $3... I don’t know I get it on line for free… I don’t know how they can pay that loan shark 14%, that Carlos Soprano, I mean Slim, advanced them… my guess, Slim just wants to own the darn thing… and you know, sold to him… Gannett, very profitable enterprise if you fire everyone… if you take out the cost that is… Maclatchey, can’t find it.

Everything autos and auto related has been totally triaged by this market… these stocks are shrinking violets if not vanishing violets… not just the majors but the parts market too… most of which look like they are headed into auto heaven.

Housing…. a tragedy… I mean think about this… Lennar, Pulte, D.R. Horton, Standard Pacific, KB Homes, Centex… they all look like they are being liquidated… as to the companies that make up the insides of a house… Masco, for cabinets and faucets… Whirlpool, for, hey I got one of those whirlpool machines, they are pretty good, the stock goes down $2 every day though, my works, I don’t know maybe yours is broken… Fortune Brands… the stocks of real estate investment trusts based on apartments, commercial real estate and malls… disillusioned… I was looking at the debt schedules of some of these because I am an interesting guy… and a lot of you guys are out and you are drinking your darn full head off, I am looking at debt schedules of Simon Properties… and let me tell you, I don’t like it… even though it is a premier mall retailer… I mean it has got so much debt to roll over I don’t know what will happen… could it go the way of General Growth and Developers Diversified… I am worried about Kimco too… only Vornado makes me feel even remotely warm and fuzzy and I am a real strange guy.

Simon Properties is also signaling a survivor match of epic proportions in retail… with possibly only one real winner… we know that Wal-Mart, which I own for MCTAAP has the balance sheet to survive no matter what… but Macy’s, where I got these great duds… just kidding… is really struggling under a huge amount of debt… JC Penney, which is no longer just for Venetian blinds… Nordstrom’s, they trade horribly… Limited, a big mall presence, suddenly I am supposed to be worried about the debt… I like Costco and Amazon as survivors…. Survivor Amazon, did they do that one yet… but they are still richly valued.

The casinos… big trouble… big trouble, little Vegas… what stays in Vegas dies in Vegas… I mean boy, Las Vegas Sands, MGM, do they have the wherewithal to bridge this downturn… Harris is on the ropes, courtesy of a huge amount of debt… I say send it to the canvas… I see Wynn as the lone survivor.

So what sectors don’t look like appegan night mares… who is paying tribute to Gloria Gainer and singing “I Will Survive”… alright, right now there are no battles to the deaths in the foods, the drugs, or the techs… with the latter sector full of companies with fabulous balance sheets that I know can get thru this tough period… I am talking about Mr. Softie, IBM, Intel, Cisco, and Google… Heinz and Colgate, they will get off the island… even in a garden variety depression we are still not using that Chinese ketchup… Pepsi and Coke… cool… last one boosted the dividend nicely… I like every major pharmaceutical and bio-tech… as well as the healthcare cost containment stocks from Humana… a great conference call, would you own it… and CVS.

I think almost every integrated oil is in great shape… including the now hated Exxon… I am a little worried about the drillers, but most should be fine… I am concerned about some of the overextended natural gas companies, they will have to merge… because I do not think natural gas holds $4... machinery, steel… winners and losers… to quote… who survives… to quote Cramer fave Joel and Leigh about the French Revolution, “to early to tell”… the big industrial conglomerates like 3M and United Technologies have a lot of flexibility as to the rails and even aerospace… but I would not want to take a shot on an airline or a trucker surviving… aside from UPS, or Fed Ex… can you believe the charts of some of these, how bad they are… Nucor should make it, it just declared its dividend… love it… hey about Dan Dimicco on 60 Minutes, he is better when he is on Cramer… I worry about most of the shippers… except for Nordic American Tanker, which has a good balance sheet.

Agricultural… the group can triumph… it can survive… because of world wide food inventories, which are low… but I do not think that it will ever regain its ethanol luster anytime soon, even with our ethanol president… Monsanto and Potash, too expensive… you like that group, Terra Nitrogen(TNH)… dividend… in this environment even the classic utilities are being challenged… how about the telcos… AT&T and Verizon behaved awfully, I am not abandoning ship though… the gold miners, survivors all… Agnico-Eagle, I would buy it right here.

Bottom line…

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The Bottom Line!:     "Survivor Wall Street" is a rough game… if much more interesting than the endless CBS series… but you can come out ahead now that you know which sectors look like they are in trouble… and which ones are going to be left on Wall Street island.

Survivor, Wall Street isn’t easy, but going sector-by-sector could help you play the game...    Alright, what do we got here… we got a game of survivor… Wall Street Survivor… where indeed, only the strong survive.

[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've got two words... stress test... I am trying to understand in the banking industry what we are to expect out of this stress test. Looking at the banks with $100 million in assets, is that going to be the catalyst to get thse banks moving again? Or what is this stress test going to do?

Jim:    First I have a prediction… Stanford Intl will not need the stress test… I think that the stress test is going to produce a series of winners that no one is thinking will happen… now what does the stress test mean… my friend, buddy pal Tim Geithner in Treasury, who always calls me and gives me the scoop… not… is saying that there are certain banks that will meet the standards… now right now, every bank in America is insolvent… I sound like that guy from NYU, Robini… and if I had tenure, people would be listening to me left and right… now here is the deal though… I think they have to have winners… they are going to forebear, they are going to look the other way and give the winners capital.. .they are going to let others fall by the wayside and send them to the actual bad bank… which I call the FDIC… the stress test will at least make it so that we give money only to the winners… and no longer just to everybody… because as Frederick the Great said, he who defends everything defends nothing.

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[verbatim recap]

[end of segment]

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