Thursday, May 21, 2009
(Cont'd from above)...

Jim (cont'd):   

Beyond the ordinary economically sensitive stocks that you sell when it looks like the recession will last longer… there are 5 industries that the President has me especially worried about… the credit card companies… the coal industry… the steel makers… the utilities… and worst of all, the drug companies… I think that all of them are threatened and endangered species… what do they have in common… these are the industries on President Obama’s corporate enemies list… the ones that the most powerful man on earth are most certainly gunning for… and unlike the last President with an enemies list, Cramer fave Richard Millhouse Nixon, I think Obama will actually be effective in taking these targets down… because the list makes sense to the American people… and to a Congress, led by Nancy “No Friends of Profits” Pelosi… we elected Obama with a mandate to go after these companies… so shocker, do not be surprised when he turns around and actually follows thru with his campaign promises.

You need to be very careful of every company that might earn Obama’s entity… because the government can do more to hurt business than any competitor could… do not get me wrong… I actually do not oppose any of this stuff ideology… I am torn because on a personal level I think that a lot of the stuff that Obama wants to do is pretty right… do not like the timing…. but it is not my job to come out here and bloviate about politics… there are whole networks devoted to that concept… when I come out here and stand here on my cheap linoleum floor, I represent your 401K, your IRA, and your 529 plan… I am a lobbyist for your investments… and from that perspective we are getting crushed by Washington.

Look, I am not even telling you to fight it… I am just warning you about which stocks I think are now not good buys, because they bear the Presidential seal of disapproval… most of the time when a President says something nasty about an industry it is totally cosmetic… it is a symbolic gesture that means nothing… because he can’t really get anything done anyway… the lobbyist step in, they have Congressional mind share… to say nothing of the politicians who are self-centered… so the legislation gets watered down until it is nothing more than saber rattling… but Obama has a mandate to go after these companies… and we have already seen him in action… and if you own the wrong stocks, guess what… the pin action is real bad… and you had better be worried.

Let’s take a look… let’s take a close look at the enemies list.

Public Enemy #1 is the credit card industry… I have got to tell you, I am fearful of this whole part of my wallet… politicians love to go after these companies… but usually it is just posturing… which is what I thought about when he first came up with this credit card bill that Congress just passed… I mean at least until I took a closer look at it… now I am worried about one of my favorite companies, Capital One, which has figured out how much it has to charge its troubled, more critical people (we call them deadbeat) customers in order to still be profitable while offering terms to its good customers that are decent… with this law they may not be able to charge these rates… making the stock, indeed, yes you heard it, and this kills me…. sell, sell, sell… my take is that this credit card crackdown legislation hurts the big banks that issues the cards the most.

Public Enemy #2 - anything carbon, anything… if it emits carbon, if it has carbon… ultimately I even found these, carbon pencils… alright well maybe not pencils… okay, but look, definitely the coal and steel industries along with the utilities… it is a triple earnings crushing whammy… should you sell Arch Coal, sell Peabody Coal, sell Massey Energy… I am tempted… but I have got to tell you, thankfully China still favors respiratory illnesses and the whole sell destruction of the atmosphere as a matter of public policy… so these companies should be able to make money even if Obama gets in the way with that cap-n-trade carbon emission thing… which effectively put a price on burning the dirty stuff… not to mention oil and natural gas too… this hurts the steel producers too… as we learned in today’s Wall Street Journal… now look at this, a positive article, they figured this one out… because coke, not the kind that you drink… and I like Pepsi… the kind of coal you use to make steel should get hit… if I were you I would sell US Steel in this… maybe if you really just love steel so much, you could swap it into Nucor, because they use less steel… you also have to worry about any utility that uses oil or coal… as they are all very threatened… I would sell Southern Company nine ways to Sunday… it has the largest concentration of fossil fuels at 71%… that is public enemies #2 poster boy.

Finally, we know Obama has it out for health care… he wants to put non before profits… a big change from the Bush years which were all about hyper profits… that means the drugs, healthcare, even biotech, which I used to think would be spared by Obama and the Democrats in Congress… they are all in the cross-hairs… the President is bent on getting the healthcare budget down… Obama’s priority is cost cutting… Bush wanted to make it so that owning the three B’s, CR Bard Inc. (BCR), Becton Dickinson & Co. (BDX), and Baxter International Inc. (BAX)… or any other pharma or medical device company… was a way to boost your bottom line… with his massive Medicare drug benefit give-away… now you think that instead of making life saving drugs, these companies might as well be making that gas… the gas that killed 99% of the world population in Cramer fave Stephen King novel “The Stand”…

For the last 8 years the idea that the President of the United States would ever do anything to actually hurt an industry’s profitability was just unthinkable… thanks to the Bush’s administration believe in a government of, by and for the corporation… with dividends and buy backs for all… for 8 years investors could blissfully ignore Washington and not pay any price for the lack of vigilance… alas, poor euric and profits, that is no longer true… this is one of those cases where you have to read the front page of the newspaper to get a feel for the danger that we are in… not the business section… the front page is where they tell you who is on Obama’s enemies list… this is Washington, but it sure matters to Wall Street, and of course your 401K… ignore it at your own peril… this is just like what President Clinton did to the nursing home industry… it should have been roaring for most of the ’90’s… but near the end of his second term, Clinton cut the Medicare reimbursement rate and crushed them… nobody on Wall Street read the darn papers, except for the business section… nobody saw it coming… they kept buying and recommending stocks like Genesis Health, all the way down… that would be the best of breed… some of them right up until it went bankrupt a year later… we are once again in a world where we have a President that is willing to wield that kind of profit destroying power.

Here is the bottom line…

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The Bottom Line!:     Obama's enemy list is for real!... And credit card companies, healthcare companies - especially pharma... and anything that emits carbon could all be potentially crushed by this President... And don't forget... this tone is not lost on the stock market... When you go gunning for a bunch of industries, everyone wonders who will be the next target of the White House's wrath... which, as we saw today, drives down the prices of all stocks... as investors flee to the sidelines, rather than risk exposure to a presidential profit pathogen...

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