Thursday, November 6, 2008
(Cont'd from above)...

Last night, we had David Novak on. He's the great CEO of Yum! Brands (YUM)... And, because the PR (public relations) people... you know what they did? They brought us buckets of Colonel Sanders... and you know what I did with the free KFC after the show was over?... I ate it. And then I didn't have to pay for dinner. I washed it down with tap water which, by the way, is the same as the $4 flat water you might have been buying... Oh, and when I go out for dinner these days at the fancy-schmancy places, I skip the appetizers, and I am not beneath a doggy bag when I can't finish... especially because my Dad sells them to expensive restaurants for a living. I say it's for the dog... I don't even have one!...

The second source of business that's hurting is autos... Hey, Toyota (TM)... They make a good car right? That stock was down 13 points today... 13 points! And I'm calling for the U.S. government to recapitalize GM, Chrysler and Ford, by rolling the first two up, and buying the common and preferred stock of all three. They'd have to issue a lot of stock like they did for Chrysler in the '80s... Otherwise, we're going to see whole states in retreat.

The third source of business is housing...

Now, I actually believe that housing will bottom next year, and I believe that Obama will find a way to go at it root and branch. I think there'll be a program to actually buy up homes... for $400 billion, what's left of the TARP program, we could actually buy about 1.5 million homes and clean up a lot of inventory... We also need to stop the deportation of the natural buyers who are the immigrants who, by the way, pay their mortgages. That's a better plan than the one we're currently using which is... I've done a lot of work on it and I've figured it out... The plan is to pay big bonuses for bankers to make them feel good and retain them at their company, so they can still spend at fancy restaurants. That's what TARP's doing right now.

Now, one of the positives is that Obama may actually go beyond that... My view is still that housing may drop another 25% before we find a bottom... Wall Street bonuses... good use of the money (he says sarcastically)... you can't make this stuff up.

And that brings us to the last potential source of a turnaround...

The rest of the world's economies... and this is what I was banking on for the next 1,000 points... which we've now seen which direction that's in...

Over the last decade, we've seen a radical shift, where our best industrial companies do business, not here, but away from the U.S., and into Asia and Latin America, and most importantly, Europe... because all of these areas have better growth...

These economies are the fulcrum in the next 1,000 points in the Dow Jones Average... and now we've seen which way the see-saw goes...

In order to stimulate worldwide growth that would give us demand for our manufactured products, we need to see rate cuts, rate cuts, rate cuts... radical rate cuts... like we saw last night from the British... wow, the Brits, man... they're pretty smart... It's like Churchill over there... a fabulous 1.5% cut...

But we got something else this morning that made me sick to my stomach... There's this guy named Trichet... He's the European Ben Bernanke... and, from now on, we're saying, He knows (nothing!)... because he refused to acknowledge that we're in a recession, and even refused to acknowledge that we're in a credit crisis... I mean, what planet is this guy on...

He then only cut rates by a half a point. We need a meat axe... he gives us a butter knife. Throw in the fact that rates are way too high in Latin America... China... you lose all near-term hope for practically every industrial in our country... That's what happened today and yesterday... capitulation on every front... miserable retail sales, horrible auto sales from primo automaker, Toyota... of all companies... continuing massive increases in housing cancellations... a disappointing number from Disney (DIS)... That's okay... I told you to buy that after that... And then, on top of all this, we get this Trichet guy, who did the big old Kabosh... With all that, is there really any wonder why we've been clobbered for almost a 1,000 points?...

Now I know that fellow Warren Buffett will be right about buying someday... but he wasn't right yesterday, and he wasn't right today. And he, by his own admission, may not be right for the next five years. I think he's giving himself a 50-year leeway... which is fine... I mean like, look... I may not be right for the next 100 years, but bam-oh... Okay, I could say that to you too, and you could call me, "a fraud"... but that's okay, I'm just a TV host...

For the here and now, we need reasons if we're going to buy anything more than just the recession-resistant stocks that are getting killed, because they're part of the S&P 500, which is being crushed by redemptions... the accidental high-yielders, which now need to be rebuilt, after that great 20% rally we had... and I do hope you did some selling... and then the companies selling near cash. I have a good one later in the show... Don't forget the Caterpillar (CAT)'s... off the big infrastructure plan that Senator Dodd announced today... Senator Dodd, I love you, but you were part of the problem. I don't know if you can be part of the solution...

Oh, and then there are just two freebies... Verizon (VZ) and AT&T (T)... two great American companies... When those yields get to 7%, do you mind?... Perfect domestic exposure. You're going to have to pull the trigger. I call these the "Steady Eddie Haskell" stocks...

So the Europeans trashed us, the Chinese still haven't been heard from... Russia's basically imploded... The Middle East, amazingly... after all the money we sent from here... they're like cancelling projects like mad... like, what did they do with the money?... And then Latin America - wonder of wonders - has decided to be fiscally responsible... Oh, that's just... what a great thing... Hey, let's not be the jokers we've been and spend all the time... now let's be, like, good...

The bottom line....

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The bottom line!:     I said that it was out of our hands... I said that the rest of the world's central banks control the next 1,000 points, as we have done everything we can now to stimulate demand until Obama takes office. Now it turns out that Trichet and the rest of the Europeans do indeed... yes, indeed... they know nothing! And, thanks to them, we got clobbered into retreating into those three lone areas that have the aura of safety...

[verbatim recap]

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