Developing…
NOTE: Not to be outdone by the analyst featured in Barron’s this weekend, saying the Dow is going to 20,000, Dick Bove just said (I overheard him at a coffee shop) the Dow is “going to fucking rip through 50,000, by December of ’08—led by banks.”
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Bove is certainly not going to let some hayseed cracker from Corn county steal his thunder, I tell ya.
Not to be outdone by egregious 20K calls or Boves Dick call, Jimbo chimes in –
An End to the Bear Market?
By Jim Cramer
RealMoney.com Columnist
3/21/2008 2:59 PM EDT
URL: http://www.thestreet.com/p/rmoney/jimcramerblog/10408854.html
“No kidding.” That’s what I think every time I read an article that says business is slowing in the United States. That’s what stocks have been predicting for months. It’s why we have been in a bear market. It is why the Federal Reserve has had to cut multiple times. It is why everything seems to be going wrong.
And it is why you have to start thinking of the end of the bear market and the beginning of a bull market. First, understand that the last bastion of strength — oil/gas/agriculture/infrastructure — was taken to the woodshed in a remarkable move, one that went basically bull to heavy bear in about two heartbeat’s time. We knew that had to happen eventually, although the swiftness and viciousness of the swing shocked people.
Second, the rally in Fannie Mae (FNM) and Freddie Mac (FRE) signals the end of the talk about the “demise” of those two companies. The demise, to me, was always political. Remember that the losses from this mortgage situation would have to produce losses to these two companies. This is supposed to happen in troubled times, which is why they are quasi-governmental, and not independent, companies.
The real crisis of the last two months was the implicit denial of the implicit guarantee, a significantly irresponsible decision by a significantly irresponsible Treasury that raised mortgage rates even as the Fed was cutting short-term rates.
Those days are now over, and we should be most grateful because this slowdown has always been rooted in housing. Perhaps the most important thing that happened last week was that mortgage rates at last went back below 6%. In truth we all know they belong at 4% and change, and that would start the housing cycle once and for all. When you get FHA guarantees and lower rates and fewer homes built, and a peak in resets, you get a bottom. People will always want to own homes because the tax implications are just too positive and quickly over-run the losses that you might take in houses if you buy them at a reasonable prices, which we have right now. (Take it from me, a renter, who now, at last has seen the economics cross over in my well-to-do town.)
All of this is to say that when everyone acknowledges that we are in a tough recession, stocks reflect those prices and they reflect an endless recession just as they reflected an endless expansion not that long ago.
It is true that bear markets last a few months more than this, but anyone who saw a multimonth move happen in three days to the commodity markets has to think that we could be in for a slightly shorter bear market (even as it seems inconceivable that the bear market could ever end when the numbers just turned bad).
Make no mistake about it, so much of this recession is created by the sheer incompetence of this White House and its minions: everyone from a Fed chief who failed to understand the yield curve or the fragility of the banking system, to a Treasury Secretary who drank the “fundamentals are sound” Kool Aid, to a president that cared more about destroying Fannie Mae and Freddie Mac because of their long-standing ties to the Democratic Party and their violation of the laissez-faire market doctrine that this administration has pursued. When you layer in Presidentially mandated food inflation — do you think this president has ever gone to the grocery store? — you know that our own incompetence created much of this recession.
But with the Bear Stearns (BSC) collapse and the need to scrap the laissez-faire policies, which were so one-trick (cut taxes), you have to leave open the possibility that things can get better out there. And that’s what I think the rally this week was about.
I am not for a minute making a case that we are going to advance from here. I am making the case that the notion of a floor — something unfathomable before the Bear Stearns collapse — may at last be in place.
One thing I hadn’t considered, but could be a possibility we keep in mind…
The market could very well respond (and be responding) to the recent troubles of Barack Obama, vis a vis his “Reverend Wright” imbroglio.
If the market believes Obama is the “locked in” candidate, no matter what, it could very well be rallying on the news that Obama is in trouble here, and unlikely to be elected (again, at this point in time).
The pushing back of communism is generally a market positive, given all other conditions remaining the same.
How perfect is it that Cramer is just another dimwit Dem?
Jimbo, who’s in charge of the purse strings these last two years?
Jake – why continually blame the dems for everything ? they & the repubs are essentially one in the same.
Its under Bush’s/repubs watch that socialism/communism & its can’t fail policy, is flourishing
man, its so silly to continually bash repubs or dems .. ain’t no diff btw them worth talking about
Ron Paul was the only candidate who talked sense .. but this country ain’t interested . So we will learn the hard way, or we won’t learn at all
The socialist banks will lead the way to Dow 20k? You know what that means? That’s right, Wall Street bonus time again baybee!
Don’t get overexcited Brucie. I was just pointing out the delicious dimness of Jimbo Cee, falling back on the knee-jerk chorus of “it’s all Bush’s fault.”
I agree with you the problems of Congress are endemic, and more a symptom of its 200 year plus evolution into a cash providing machine than they are strictly party based.
But if you think there’s no difference between Reps and Dems, then you’re loonier than your boy Paul.
Shit.
I keep wanting to find reasons to be constructive on the market.
If ever there was a reason to hate the market, it’s Cramer’s bullishness.
good…good.
Do you guys have Dillard’s department store near you? It’s a southern staple…like Macy’s.
I went in today to buy a belt only to discover that they are having a massive sale on everything 75% with an additional 50%. Fine, end of season clearance I think.
I load up on some clothes and proceed to checkout. Chat it up with the grandmotherly sales lady.
She tells me they aren’t selling ANYTHING unless it is deeply discounted. She fears for her job because she’s not hitting her hourly sales quota. Says the store GM is in a panic. They still have heavy fall and winter inventories, now spring is here and the new stuff isn’t selling either.
She said all of her friends in the sales depts at the big chains are paniced. Rumors of cutbacks and layoffs.
This is like the 11th wealthiest county in the US (Williamson, TN), and if you can’t sell it here well…
Got some great deals anyway.
My mind says don’t fight the technicals but my heart says don’t fight the fed …. not to mention the tape which has turned from negative to positive.
I bot some stocks for my LT acct Thursday, so for sure the market is headed lower … when I capitulate the market is ready to turn on a dime.
The market is an ocean wave you must adapt at every turn and surf it gracefully and successfully with a few shark bites here and there (mostly there)
… off to Dillards.
Unbelievable, I was just being sarcastic in mentioning the Fed buying mortgage-backed securities directly instead of just financing the purchases of them. Even the thought of them being open to such ideas is repulsive.
http://www.marketwatch.com/news/story/central-banks-mull-buying-mortgages/story.aspx?guid={19410245-4C72-499F-B3AA-145238C529CC}
Rumored $6.5 billion writedown by Bank of America (BAC) is no big deal. Odd, no?
Don’t fight the fed. The 6.5 Billion dollar situation at bank of America is just a provision, is not a writedown. It is no big deal.
Short term trend is higher, you can go with the herd and make a profit…
Seems half the herd is crazy long, the other half is stupid short… I’m gonna put on some iron condors and pair trades.
Strange beast, this “stock market”.
Funny you mention that about Dillard’s Boomer as I was just there today with my lovely fiancee to register for wedding gifts. You’re right, everything was heavily marked down. The Waterford China and crystal set the lady wanted was marked down 50% if purchased by the end of the month. Everything else was marked down similarly. A Wilson’s Leather store in the same mall was also throwing a going out of business sale with everything marked down 50-75% percent.
Fuck you. The market does what I tell it to.
You’re all guessing fools.
what are you going to tell it to do? not rally to oblivion and then crash to 1929?
BOOM, I work at Dillard’s. All you say is true.
However customers are still using the plastic
and buying what they want not what they need.
This allows me to always double my sales goal.
I sell men’s fragrance of course. Pacesetter
for last 2 years.
you are perez hilton?
Lovely post. I like your pencraft and that’s great that you’ve opened this subject. Only fool can disagree with this!