Monday, May 4, 2009
(Cont'd from above)...

Jim (cont'd):   

What did people see… what we saw here… stocks fell more than 50% from their highs… you have got to go back to the 30’s to see that kind of sell off… the Chinese stimulus… which was originally consumer oriented has now switched to industrial… and is pulling the whole world with it… and the doomsayers as typified by our professor, Nouriel Roubini, and a bank analyst Meredith Whitney, I have too much respect for her to make the Gilligan’s Mary Ann analogy… anyway, they have both overstayed their welcome… what a statesman I have become… just over the weekend.

What started as a trickle of money has now turned into a gusher, a flood… and it is going all over the place into every nook and cranny… from retail to housing, to oil and gas, to tech, and aerospace and every form of transport… and it is not done… why don’t I think so… because the nattering naybobs of negativism, to quote Cramer fave Spiro Agnew and William Sapphire, are still out in full force… just this weekend, and again today… almost every single story that I read… isn’t it incredible you read the papers, it is so darn negative… that is why I wear loafers over the weekend so I do not have any shoelaces… and I never wear a tie, it is strictly so that when I read these articles I do not have anything in my mind other than… well lets just say that I take suicide off of the table every weekend.

Anyway, 5 real thrusts to the ideas… 5, just 5 real ideas and not one of them was positive… in fact, they were scary as all get out… positively Steven King like… and I want to debunk this wide spread negativity just as the market did today… so I will teach you each thrust and then I will give you my parody, counter arguments that show how all of the people pouring money in on Mutual Fund Monday, where the funds put the money to work immediately… are right.

First, banks… what did we hear all weekend, that the banks will not be able to pass the stress tests and it could lead to some serious failures in the financial markets… wrong… in fact we heard from the oracle of Omaha this weekend, Warren Buffett, that if anything the stress tests will be too stressful, too hard… talk about giving cover to Tim Geithner and the Treasury Department… now Geithner does not have to shut down anybody… he has Buffett's imprimatur… no wonder Wells Fargo, a Buffett-blessed bank, and one that I own for my charitable trust, ActionAlertsPlus.com… took off $4.64 today, even though we heard that the company needs more capital and it might get hit by a ratings downgrade… normally that kind of news would have sent the stock down 4 points not up 4 points… many of the small banks that we were worried about… no doubt on the speculation that Buffett's judgment will prevail, they all rallied… the bull market dissed the ratings agency too… which put some of these banks on negative ratings watch… that was not even a glancing blow… all of this positive pin action must have driven the bears batty… as they thought that the stress test would produce home runs… nope, nothing but strike outs… amazing.

Second. what did we read about housing… oh boy, housing is still in uncertain footing, no real bottom in sight… instead at 10:00 am we saw some numbers from the National Association of Realtors that worried me… it worried me because it said that sales were up year over year, up a lot in the two hardest areas Florida and California… I felt the pang of pain when I saw these numbers… because I now know that I am going to be late with my once incredibly outrageous, outlandish and widely ridiculed, not like everything else that I do, prediction that housing will bottom on June 30th is way too late… soon you will hear that the non-performing mortgages are going to go down… yes, NPA’s as we call them, and it will shock the bears to the core… I am not kidding, nonperforming averages are going to go down, my work shows this is happening right now… beginning this quarter… no one is thinking that… but we have been ahead on the banking story every step of the way.

Third, I heard tons of fears that Obama is going to use the Chrysler method to nationalize GM, and then use that as a template for a lot more intervention… like Obama wants to take over everything, like he is Lenin my great-great-uncle… no… how about the US bid, remember we woke up to the tax code thing… oh, that was supposed to be scary, too punitive for the rich… and American companies trying to stash money overseas… in the real world no one even seemed to care about this… any of it… Chrysler is history, I wish that GM could be too… in fact, the only thing that I was shocked about GM was that there was a large number of suitors for Saturn… maybe things are better than we think… we now also understand that Obama was criticizing a small group of bankers and was not at all attacking the vast majority of banks last week… he should have been more eloquent, he should have called Cramer… Obama stands with JP Morgan and Goldman Sachs against a couple of joker banks and hedge funds who deserve a lash or two… that made us feel that Obama wasn’t doing anything nearly as anti-capital as we thought… we stand with Obama, and the hedge funds better bring their profits back on shore… I never bought into that offshore scam when I was running money… never, refused to do it… guess why… I regard it as un-American… old fashioned.

Four, there was a lot of concern about stocks, particularly the big construction related stocks that have come up too far, too fast… stocks like US Steel which is now up 6 points from where that secondary stock offering was that I flagged for you… but how can these stocks be ahead of themselves, when we saw a blistering strong construction number this morning… and we got word that the Chinese manufacturing sector is now growing about as fast as it has in years… these stocks are cheap given the news… we bumped up against this too far, too fast argument… like it was like Fast and Furious, like some triple x movie that I never go to see because I am sitting at home watching C-Span… anyway, when we played break the analyst last week… and we put one of these so-called experts in the sell block for being too negative about Watsco Inc. (WSO)… so what happened… Watsco rallied over 6 points… we are adding a few more years to that analysts stir time, bad behavior, maybe solitary, the box even… I say, hey listen go speak to Red in Shawshank, see how long it takes to get out of there.

Finally, the swine flue… which they expected to be a pandemic remember, that would affect all of the worlds growth, at least that was last week… it is actually ebbing… Mexico is lowering its alert status for the bug… there is like 340 people that have got this bug… but you know, it is supposed to lower the worlds GDP by about a percent… anybody who shorted anything off of this epidemic, including the oils, which were the hardest hit… got overrun by buyers… I do feel bad for everybody that had it, I am just saying that it, that last week today was the day that we really thought that the whole world would be shut down by it… did not seem to happen… bears, here is my advice to you, don some of those surgical masks… we do not want to be infected with ursa flu… buy the masks by Cramer fave 3M, an ActionAlertsPlus.com name, where I send you the weekend bulletins, because I think that one is going higher.

That is right, all five worries refuted in one 9 to4 session… lest you believe that the people coming in are just lambs to the slaughter… I say the worries about taxes, banks, flu, housing and autos are all over-hyped… and the notion that we are in a bear market rally, which I heard all day today… continues to be the roost that keeps you out of the markets since the S&P 500 bottomed 250 points ago, and the Dow put in its floor almost 2000 points lower than where it is today.

Here is the bottom line…

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The Bottom Line!:     You may think that the money flowing in is mindless, but is undeniably right, which is why we are now positive not just for the Nasdaq but also for the S&P 500 since the year began… and as long as all of this negativity abounds in the newspapers and the today, I think that there will be opportunities to make money thru pin action… all over the place. Today’s rally was not uninformed, I think the negativity proves we’re in a bull rally... Yes, this market is amazing… the Dow is up 214 points… I think the worries about taxes, banks, swine flu, housing, and autos… turned out to be all over-hyped… I say throw me the ball… he is bigger than ever.

[verbatim recap]

[verbatim recap]

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