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Cramer to White House: Wealth Destruction Is Real
White House Press Secretary Robert Gibbs on Tuesday pushed back against Cramer’s comments that President Obama has caused “the greatest wealth destruction I have seen by a president.”
“I’m not sure what he’s pointing to, to make some of the statements,” Gibbs told reporters, adding that Mad Money is geared toward a small audience while Obama has to help the entire country.
Cramer in response pointed to the Dow Jones Industrial Average, the S&P 500, Nasdaq and the Russell Index, all of which are down huge since Inauguration Day. And the only small thing about the MadMo audience, he said, is its 401(k)s, pension plans and annuities after the damage Obama’s proposed spending plans have caused the markets.
The stock market right now is a better barometer of Americans’ wealth than the president and his press secretary seem to realize, Cramer said. And while Obama said he’s focused on Main Street rather than Wall Street, he needs to realize the two are merging. Everday people today have a tremendous amount of exposure to stocks and the declining markets.
President Obama even went so far as to say that right now was a good time to buy stocks. Cramer, of course, is far less optimistic, but he did find 10 reasons for investors to be hopeful.
1. Treasury Secretary Geithner actually came out of hiding and spoke intelligently about the present financial crisis. While it’s true he didn’t yet offer a plan to get us out of this mess, he did emphasize how much money is needed to jumpstart the economy. Geithner take note: When you surface, we feel more confident, which is why traders responded positively Tuesday.
2. Federal Reserve Chairman Ben Bernanke today talked up the possibilities for the new Term Asset-Backed Securities Loan Facility. This initiative should entice private money into the asset-backed security market, boosting credit for cars, college and homes. That’s just what we need, and Cramer thinks it will work.
3. Two semiconductor companies, Altera [ALTR
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] and Xilinx [XLNX
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], on Monday night either guided up or announced that business wasn’t as bad as people say. That was enough to rally the Nasdaq, giving traders reason to believe our present situation isn’t entirely hopeless. In turn, that lends hope to the Intels [INTC
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], Microsofts [MSFT
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] and Ciscos [CSCO
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].
4. London’s copper inventories are on the decline, which signals increased economic activity. Cramer said it’s most likely coming from China because copper’s needed for construction, and that country is starting a major infrastructure buildout.
5. China’s resiliency is shining through right now. Despite big trouble in its regional banks, the Chinese market is down only 1.1% so far this year, while the Shanghai Composite Index is up about 14%. The Baltic Freight Index, which measures the cost of shipping bulk items, is also up, indicating China’s consistent demand for natural resources.
6. Stocks like U.S. Steel [X
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] and General Motors [GM
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] have experienced drops not seen since the Great Depression, even though the economic drivers that should be behind those declines aren’t there. How much further could they possibly go?
7. Cramer thinks oil is done going down. The sector’s stocks might say otherwise, but the stabilization in oil signals that we’re suffering through only a recession and not a depression.
8. Houses are more affordable now than on any other time on record. Yes, it’s hard to get financing, but price declines and reduced inventory have Cramer thinking his call for a June 30 bottom could still happen.
9. Many companies that either can or have raised their dividends are yielding between 4% and 5%. They wouldn’t have upped their payouts if they planned to cancel them soon after. So while some earnings can’t be trusted, these yields can be. Cramer said to take advantage of the value these dividends offer.
10. And lastly, Cramer has never seen people more negative than they are now. The market looks so oversold that a sharp snap back is likely. When everyone is hopeless, Cramer said, that might be the one time when being optimistic pays off.
So as bad as things seem, Cramer sees reasons to be positive. He thinks the market goes higher. Investors should stop selling because the chance for better prices is coming.
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