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tv   Mad Money  CNBC  June 14, 2013 6:00pm-7:01pm EDT

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zynga, i want to do this when the stock comes in at the cash level. but i bought the stock today. good opportunity to get in. >> looks like our time is expired. for more "options action" get to our >> my mission is simple. to make you money. i'm here to level the playing field for all investors. there's also a bull market somewhere and i promise to help you find it. ""mad money" starts now. >> hey, i'm cramer, welcome to ""mad money", i'm just trying save you money. my job is not to just entertain with but to educate, call me at -- don't bury the lead. the dow dropped 106 points, and
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the s&p 500 tumbled, i'm leading my game man with what really matters next week. that's the federal reserves open market committee meeting that starts next tuesday and concludes wednesday. because if ben bernanke says the wrong thing, meaning he gives any sellers the reason to dump bonds, we will revisit the ugliness from earlier this week and maybe like today. based on the comments from the "wall street journal," i think it's fair that the fed does not like his comments, saying that one day, one day, the fed plan that kept the stimulus down will end. i think he was inartful about the whole thing. the fed previously said they
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were targeting employment. and that lulled a lot of people thinking that we can continue to hunt for yield and emergent bond markets and in high yielding stocks we are nowhere near the 6.5% target yet. bernanke gave a wake-up call when he said rates would go higher sooner than later. now that interest rates went back down a bit, he is in a position to say, right now, we are fine. we will keep doing what we are doing. those of you reaching for yield, you can now see what can happen. why not position yourself better next time around. meaning, stop it with the wreckless search for returns, somewhere, anywhere, you will lose money when i'm done. if he does that, then the end of the stimulus has a chance of being more orderly. and the wake-up call should be
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loud and clear for those trying to take on too much risk. that is what the last week has been about. we do not have all that much on the earnings front next week. that means we will interpret data through the fed's eyes and ears. we will get the empire state survey. do i care about this? i do care, i think it will show weakness. it will remind us that the economy does not support the much higher interest rates like we had overnight. but ultimately they will go higher. that is the thing about the run up in rates that caused the stock market to get hit. it has not been justified by the data. thank heavens for bernanke, if he had listened to the endless chattering hawks in the fed, it would have behorrible. i hear that he is over his head
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and it must end badly, have you looked at the rest of the world? we are doing better than any other place on the globe, because our chief executives have done well, and because of what bernanke is doing. it's why we are not in the same shape as europe, as china, as brazil or india. we are -- tuesday we have a slew of japanese industrial production reports. we have machine tools. we have merchandise trade deficit. for years i could not care less, i mean, really, like japan, it -- these market players are drawn to japan, because they have a policy of driving down their currency to build exports. if it does not work, and the government has nothing to say about it, expect for 6% declines like earlier this week.
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the japanese futures, stocks indicated that japan will be down huge on monday. there's two big reports wednesday along with the fed meetings results, when we come in in that morning we will hear from fedex, and this one has become, fedex has become a two-part drop. then comes the farce. when the company said it taking out costs and they are hoping things change in the second half of the year. that puts fedex back where it's started. it's a roller coaster, be sure to realize that the gloom is not followed by doom, but by predictions of a modified boom. then we have to listen to micron, one of the most interesting phone calls of the week. having bought a japanese company for peanuts. they make everything.
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they are just kind of in things that we take them for granted now. they used to be ten players and now there are three, we may see the fruits of this in micron's earnings and better than expected prices in flash memory. micron is going to have a problem, that it will run endlessly in the quarter. fed, somehow has to send is things down. and then, you can buy micron, otherwise, i'm forbidding it. thursday, if best in show supermarket chain, that is kroger, gives us this report card, i bet we like what we see. that has been the case consistently since the time when this great chain decided to pursue their own prieflt label brands that are doing well. and taking advantage of the weakness pss of their competitors, we prefer whole foods, because we like growth. thank you audience for coming t
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i bet krogers got a terrific quarter coming. you get results from pier 1, after listening to the restoration of the conference equal last night. a stock that rallied today and up from the secondary a couple of weeks ago. now, restoration hardware, best selling, pier 1, not a premium place like restoration harbor, it's like an every woman and man's place. be wear, i think hedge funds with short restoration hardware. so, i don't think that pier 1 with a lower price point will see it. friday, we had two windows in the consumer that are better than the numbers we have been getting from the government numbers. darden, and from carmax, the big
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car dealer. first, darden has to fight the suggestions that are not eating out. i think they will perform better than expected. given the move up in stock, that may not be a revelation. if we are going to finish the week on a high night, they have to show that new car sales are strong. we have to hope that carmax puts a kiebosh on that story. the fed is in charge of stocks and bonds for the moment. if bernanke throws cold water on stories that says he is done with his bond buying. it will be a good week. if he doesn't, it will be a bad one. no matter how many earnings we get. sadly for the moment, hopefully for the moment, it's a binary, please be careful, it's no longer that easy to make money. it's possible that bernanke may
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no longer have our back. although i'm confident that he will the continue to do the right thing, longer term for the u.s. economy as he has since 2009, when he ended the bear market, saying no more big banks are not allowed to fail. let's go to al in california. >> caller: i'm an owner of pfizer shares, jim and i'm interested in your opinion as to whether i should exchange, all, half or none for the offering that is being offered by pfizer next week. if you have a thought as to the -- >> let me opine on both companies. i think that animal health care is a powerful multi-year growth and pfizer is a good company with a good yield. you are not going to go wrong with either. for those that say split the difference or whatever. if you take the offer or keep it, i bless it. peter in new york, peter?
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>> caller: big, booyah to you, sir. >> thank you. >> caller: reason for the call, we love your show and value your opinion. i'm a shareholder of groupon, i own it lower than this, buy, sell or hold? >> okay, i'm not a huge fan of groupon, but ever since anthony -- andrew mason left -- no, ever since he left, i decided kind of a mixture, but the stock was you have 10%, let it come in if you really like it. i do like the new managers very much, they are interim managers, but it's not a short. to donna in texas. >> caller: i'm interested in learning more about dean foods. what happened and where is it headed? >> we have the spin off it completed. it's now a commodity player, i like the other side. i like the organic side of white
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wave. i'm not a backer of dean foods. sure there are important companies importing next week. but what really matters? here it is, it's all about big ben. ""mad money" will be right back. >> coming up, better half? health care giant covidien is going under the knife, slicing off its business into a new company. which will be the healthier stock to own? cramer decides. and later, spec-tacular stock, shares of this company are up 20% despite being in bankruptcy. as it emerges from chapter 11 could it have the right formula for compounding returns? all coming up on ""mad money". >> don't miss a second of ""mad money" follow,@jimcramer on twitter. send jim an e-mail, to
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matmoney@cnbc.com. or call us at 1-800-743-cnbc.
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>> on a frightfully ugly day, in an increasingly scary market. why not fall back on a story that should work, regardless of what happens in japan or china -- what story is it? it's the oldest tale out there, a narrative that we have been featuring a lot on ""mad money", it's been so lucrative so often. i'm talking about the story of a good break up. not one of those medium mogul divorces, where a company can split up into smaller cleaner more easily understood pieces. these have worked for us time and time again. and you know what? one of the break-ups we have
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been eagerly anticipating for 18 months now is finally upon us and i know you are going to ask us what to do. i'm talking about the break-up of covidien. it's a spinning off the pharmaceutical company to mallinckrodt. it's a big chemical haul. i've been telling you that this move would create immense value. since the time of covidien and we said buy it, it's up. it was being dragged down by a not so hot pharma division, mallinckrodt, did not belong under the same root. now the spin off is happening. covidien shareholders of record, as of june 19th, that is 96 wednesday. will receive one share of mallinckrodt for every eight shares of covidien that they own when the spin off starts.
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now we have the moment of truth, the question is, what do we do with the to pieces. first of all, you could have made a bundle on covidien. i mean, why not just book profits, you know, say it all with me, no one ever got hurt taking a profit. however, i do think there's more money to be made here. now the whole time, i'm saying that the core medical device business is stronger than the pharmaceutical business. we love that business. and half the point of the break-up is to allow the medical device department not to be dragged down by the pharmaceutical loser division. that said, i would not sell mal malmaoff mallinckrodt, i think hang on to them both at first. the reason? first, we have a recent precedent for what covidien is doing here and that is the abbott labs break up from the beginning of the year. and another one that i have been
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telling you about. abbott spun off the drug service as abbvie and it started to trade off in the beginning of the year. i thought it was going to go down, but i was wrong. shove kept both. in the 5-1/2 months since then, abbott labs had a return. that means there's more room to run for both stocks even after the split happens. so own both mallinckrodt and covidien. this is a big but, you own then differently. covidien is an investment, their products are in just about every hospital in america, the analysts will go crazy for it when mallinckrodt is spun off. but mallinckrodt will be for speculation, there's value to be brought out here, as they will be able to focus on the drug business, and i know that mallinckrodt will be facing increased generic competition next year, so you probably want
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to sell it before next year starts. just don't sell it he immediately. they can both go higher after the split, i learned the lesson, i'm at thing you to hold on. remember, covidien has been playing this game for a year and a half. covidien will be a medical device company that will shine. it will post consistent 4% to 6% organic growth. with double digit long-term earnings. and let's not forget, covidien's 3 billion dollar buy back is equal to 10% of the market gap for the company. they will be in there buying. right now the nonbroken up covidien is a $66 stock, trading at 15.7% times next year's earnings. i think the valuation will get bit of a boost. they will be pure medical device company. if the new covidien sells for
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the same multiples as abbott medical labs. and their post spin off should trade up to $68. that is only a couple dollars hire. i told you you were getting mallinckrodt for free, 18 moss later, even after a 56% rally, you are still getting mallinckrodt for free. they get half of the sales from injectable products that are used in various imaging applications. then the other half of mallinckrodt is their specialty pharma business, that involves makes active ingredients and adhd drugs. only a piece of their business involving selling patent protected drugs. the company does have some interesting late stage drug candidates in the pipe. including two drugs with abuse
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deterent characteristics. and one for arthritis. mallinckrodt is far from being a great drug company. but it could be worth $6 per share of covidien. that moons that mallinckrodt could translate and trade at $48. so let's add it up. after the split, the two should be worth $74. once the break up comes this move could happen quickly. remember that mallinckrodt is for speculation and you should be willing to let it go to strength. when it reaches $48 or once we get to september. when their current fiscal year-ends, which ever comes first, frankly. i do not like the additional generic competition coming for mallinckrodt in 2014. bottom line, the covidien break-up is at hand and like
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when abbott labs spun off its pharma business, i expect covidien and mallinckrodt to jump higher in the months following the spin off. mallinckrodt, it's a speculative trade, that does not sound like you want in your portfolio, he sell it, but sell it into strength after the split. after the break, i will try to make you more money. >> coming up spectacular stock, shares of this company are up 20% this year, despite being in bankruptcy. as it comes out of chapter 11, does it have the right formula for compounding returns? oh, he's a fighter alright.
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i'm with scottrade. (announcer) scottrade... ranked "highest in customer loyalty for brokerage and investment companies." >> we are always looking for good under the radar stocks. when they do come out, they can roar higher, and because today is indeed speculation friday, i got a new one for you. it's a new old one. it's not really a new one. it's a company with a ton of internal catalysts that can put the stocks higher. it's exciting for me, it's one of the first stocks i bought. i'm talking about wr grace. gra for all you old timer. it's a specialty chemical
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business that is on fire lately. get this, you probably do not think it can happen the underlying company is still going through bankruptcy. this is actually pretty interesting story. a decade ago in 2011, wr grace filed for chapter 11 bankruptcy because t because of the asbestos claims against it. because of that they declared bankruptcy for a business strategy. don't worry, grace, there were a legion of companies that does it. in the idea of it, is they consolidate the claims and deal with it under a central umbrella and they did it and now they are in the final stages of the bankruptcy process. in fact, they are expected to emerge in the fourth quarter
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from bankruptcy. and this is where your opportunity comes in. i think the stock is a buy and it's not done going up by a long shot. see the reason wr grace can fly under the radar right now is it's still technically bankrupt and believe it or not, few mutual funds want to own companies in bankruptcy, many are not allowed by their charter. basically a continue of institutional investors are not permitted to own the stock right now, even if they loved it. so once wr grace emerges from bankruptcy, that should be a game changer for their share price. they have been roaring for the past few years despite the bankruptcy status because they have been making great acquisitions over the last few years. 12 months ago, it was a $48 stock, now it's a $82 stock, i think it has a lot more room to run. it's a specialty chemical business, what is so special about chemicals? what does it mean? it has three divisions, the first and largest is catalyst
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technologies, that is where they make fluid cracking catalysts that refine oil to gasoline, a booming business in america now. as well as a number of additives and they have other chemicals that turn oil and gas to -- i call it chevron, and this catalyst division is the crown jewel of the company. it gives refineries and chemical companies what they need. they are opening, opening opening factories. go to louisiana, go down there, plus, the catalyst industry is something of a, yes, indeed, limited number of prosecutor e limited number of producers that play nicely. they make construction chemicals as well as building materials for various construction markets
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the reason i'm not as crazy about it, the market is not doing that well. it's a business we like, given what i expect to be a rebound in the united states, just hasn't happened yet. and third and finally the materials technology division. the bulk of the business makes industrial consumer and life science applications products. pristeen business. you have seen them, they increase the shelf life of various canned and bottled products. across all three of the businesses, wr grace tends to have strong pricing power and the best company in the business and the beauty of making proprietary chemicals, along with higher margins than most of their peers, there's just not a lot of companies that do what they do. it's almost as if these territories have been given to grace. it's a high quality specialty chemical company, you probably have not heard of it unless you
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are as old as i am. when they come out of bankruptcy, the company will be able to change the capital structure to be more shareholder friendly. they have a lean balance sheet, and once grace is out of bankruptcy, they plan to double their leverage to three times the earnings before the bad stuff and that will give them the ability to make acquisitions and pay out a juicy dividend and buy back a lot of stock. wr grace has not been permitted to return dividends. the company emerges from chapter 11. when that happens, how well do i think it will work? given they have three businesses, programs the best way to analyze it is sum of the parts. goldman sachs came out with a terrific piece of research and suggesting that the wr grace
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catalyst segment could be worth $5.3 billion, construction segment, not that cool $1.2 billion and materials $1.9 billion. subtract the debt on the balance sheet and add in the net operating loss carry forwards that are worth $792 million, they should be worth $105 a hair. 26% higher than where the stock is trading right now. if everything proceeds as planned i would not be surprised if the stock gets there in the next 7 or 8 months. here is the bottom line. there's specialty companies left, but every time a company filed for chapter 11 has come out of bankruptcy, the stock roared hire. that's the position that wr grace is right now. here is a specialty chemicals company that is flying under the radar for the moment and i think
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you have a fabulous opportunity to buy the stock right now, before it exits bankruptcy in the fourth quarter and starts to get positive attention from wall street. attention it so richly deserves but cannot be given until the company emerges from bankruptcy. i want to go to tim in oklahoma. tim? >> caller: booyah from tulsa, tim? i'm wondering about trox, tronox. >> they have a lawsuit, and i like the company, because i think, let me just put -- forget the lawsuit. the tio business is coming back and coming back strong. but i'm in the minority, that would make me like tronox very much, i think i will be right, it's the white ener that makes toothpaste white and paint white. it's amazing. let's go jim. >> caller: first time caller,
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long time listener. i just have a question about the fmc corporation, fmc, and i bought it a couple years ago, it double split. i sold most oift, i'm working on house money now. -- i'm playing on all house money now. but i still think this thing has room to go. question is, buy, sell, hold? >> i agree with you, it has room to grow. the ag business has been bad because we had the worst wettest spring season ever. it's the old food machine company. do not sell fmc, and may i say do not sell f -- fmc technologies. wr grace, good chance to get in before they go up.
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don't move, lightening round next. >> still ahead, tweet your most pressing questions to,@jimcramer #madtweets. stick around and see if jim cramer answers yours on the air. sparkly water and pure white sand
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>> it is time! it is time for the "lightening round" are you ready? time for the lightening round, i want to start with nathan in west virginia. >> caller: hey, jim, a big mountaineer booyah to you. >> i love the mountaineers and i like john chambers went to west virginia, what's up? >> caller: i'm calling clorox, cos. >> they are in a thing with the fed, as long as it's going on,
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back and forth, back and forth, you can't be, you have to hold clorox, don't buy it. you can own it, don't sell it, but don't buy it. to neil. >> caller: booyah, i'm a fan of the show, an investor doing well. shear my question. hi? >> sir, how are you? >> caller: i'm doing good, orbi tech is a futuristic company that is israeli based getting earnings at the end of the year. do you think it's a hold or a sell after a bullish trend? >> i will be candid, i have have not looked at orbotech, i don't know, and i cannot opine, i will come back. chris in new york? chris? chris? go ahead, chris. >> caller: hey, i'm calling about lockheed martin. lmt.
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>> we like it we have been behind it for some time, and revisited it before the recent dip and liked it before the sequester and like it now, we would like the lockheed martd--n martin ceo to come on the show, and we know you like the show because we have spoken. vernon? >> caller: big booyah. >> i'm liking the dog in the background. >> caller: i want to thank you for all your help and advice. it is greatly appreciated, jim. my question is, what is happening to first cell ular? >> they did a sell off, and it removed the tightness. i like it, but to me, the cool -- under the radar solar
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play, that is, amac. that is the one. okay. let's go the larry in connecticut, larry? >> caller: afternoon, jim, how are you? >> good, how are you. >> caller: i'm interested in your long-term investment views respect to -- i'm a huge bull in housing and i'm not fretting the facts that mortgage rates have gone up. enough with it already. that is the conclusion of the lightening round. >> booyah cramer! >> i'm dead serious, i honestly
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believe you should be the chief of the federal reserve. >> booyah, we are huge fans. and we have a license plate. >> i love that, i have a horse named booyah. >> booyah, jim, my two children know that when "mad money" comes on, no more sponge bob square pants. >> hi, jim, i'm robin from noew york, i am a action alert subscriber and if you are single i'm interested. >> oh! >> here is -- >> no, i better not. >> booyah, love to watch your show, watch it every night. this is my husband, carl. he does not like your show, but he has to watch it. >> hey, just a sec, clear him out of here. okay, as soon as the ball -- and i catch, i'm looking. all right? [ applause ] >> that's my cue to start. >> i want you to look at tyler for the pass. don't look at the camera and
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miss the ball. ♪ ♪ [ applause ] >> welcome back to our special family affair edition of "mad money." ♪ ♪ [ cows moo ] [ sizzling ] more rain... [ thunder rumbles ] ♪ [ male announcer ] when the world moves... futures move first. learn futures from experienced pros with dedicated chats and daily live webinars. and trade with papermoney to test-drive the market. ♪ all on thinkorswim. from td ameritrade. all business purchases.
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>> before we get to on your tweets,@jimcramer it's time to catch up on home work. we had a call about the unsa, i said i would get back, it's a multi-level supplement, personal care product company. sounds a little like the highly controversial battleground stock that is herba-greenberg, herbalife. there's a short position in the stock. maybe the shorts are dead wrong. here is what i know. they have rallied 125% since the beginning of the year. they are in the middle of a big management reshuffle.
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if you own them, take a victory lap and ring the register. if you do not own it, it's risky and i suggest you stay away. it's a true battleground and you do not want to step into a cross fire, do not go over the top into the machine guns and last friday, i got a question about clovis oncology, from virginia, who lives in virginia. they have had a staggering, staggering 320% run year-to-date. that is amazinamazing, largely 8 point spike earlier this month after they presented positive data of two cancer drugs. it was impressive and that caused the analysts to up the stock and boost the target dramatically. you have to be careful, especially since the smoking hot cancer drugs that caused the rally are in phase 1. and clovis used the new found strength to do a offering at $72
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a share. increased the stock by 14%. that is why the stock fell today. fell 5.64%. i like their prospects but they need time to digest the run. let's wait for a pull back, and then we will revisit it in a full segment. now let's get your tweets. this is from db, up over 30% in fair way. fwm, over the past two months, time to sell? >> i like whole foods. obviously this has been a winner and i have liked fairway to shop at, i still like whole foods more. you could say jim tell people to sell whole foods and buy this one. but i like whole foods for the long-term. here is paul david.
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a position to keep. lemon aid girl did great inspiring your staff. i almost did not want to go to her, i was afraid that it would make h make her nervous, obviously this lemonade business is big. i know, mark, you watch the show, put her on the payroll. at chris car 13. jim, please respond, what do you see for line energy, aap, that means action alerts, there's affirm that is very helpful to, in this particular case, a short story, a short case against line, that firm has been right about the stock, there's no doubt about it. action alerts plus has been wrong about the start. there's no doubt about it. i never say that i'm doing well on something when i'm not. okay? that said, i would like line
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when the show began, so i will not change my view on it because the stock went down. i do wish the stock would go up? yes. because i like to make money for charity in the charitable trust. have the shorts been right? yes, are they going to stay right? they will have a conference call next week and the shorts will have to start paying the distribution and that comes moll. mark ellis is the ceo, i trust mark ellis. does that make me a chump or idiot? that is your call. i know i did my work on it. i have done more work on it than almost anybody. i like the accounting. you may not, i put it out there, the shorts have been right, action alerts have been wrong. i take a longer term view as i have since the show began. our next tweet comes from did -- jim, gold typically good from july to september. you think we are in for a bit of rally in the price of gold. you will not get the seasonal
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rally of the way that india has made it difficult for the jewelry sales to occur. it has hurt the physical metal. that is what you are up against. stick with cramer. we're cracking down on medicare fraud.
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impression. every plus 1% day is manipulated and every down 1% day shows the market's true colors. that is the conventional wisdom. stocks must go down and rates must go up. all that matters for the entire raleigh were the fed reserve. the down openings where everyone sees the doom and gloomy, those are made for reversal days. that is what we got. once the market reversed, bernanke had a master stroke moment. the bears it were busy betting against the big fat phony rally, because the truth about the stocks is out of the bag, the rates have to go hire. i suggest yesterday that bernanke had picked a time to spread the gospel. initially people were
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suspicious. did the fed do anything at all in that interview? or was i being naive? i'm anything but naive, i said that bernanke played the game. he knew his words were going to have an impact. they were not going to try to stem a decline. they were saying, you think i'm done? think again, i will slam your head against the wall. for those that think he is not sophisticated and that he does not know the impact of his words? he does. his inartful comments led people to believe that interest rates can go both ways. now, under this charge of manipulation. ben bernanke is the darn fed chairman, influencing markets for the good of america. that is part of his job. the truth is an abstraction, it
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does not matter if it's true, just that people believe it's true. did bernanke have the power to contain the rates? maybe, maybe not. how do you know that the trader next to you doesn't belief he is for real and says, we have to cover our short position, we have to do it now. that's the kind of talk you hear on the trading floor. brings us back to the point. whether one market is true and one is phony. i have lived with this allegedly phony belief, but all i can say is nothing is phony if the market is up, if a bid can be drilled for a stock. nothing. if you are able to sell a big piece of merchandise, what is phony about that? at the end of the day, the joke is on them. i don't care who rig ares what, i don't care what is real or
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fake, what is different, what is fresh, what is stale or known or unknown, all i care about is what is working. i'm neitherer a bull or bear, manipulation is going to happen on both sides and the fedex opposes that people lie and cheat to make money. i want those of you at home to know it goes on and to recognize it and when possible, game it for what it's worth, a wave you can ride to profits, nothing more but nothing less. stick with cramer. oh, he's a fighter alright.
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since aflac is helping with his expenses while he can't work, he can focus on his recovery. he doesn't have to worry so much about his mortgage, groceries, or even gas bills. kick! kick... feel it! feel it! feel it! nice work! ♪ you got it! you got it! yes! aflac's gonna help take care of his expenses. and us...we're gonna get him back in fighting shape. ♪ [ male announcer ] see what's happening behind the scenes
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>> a very rough day and what changed is the coloration of the market. we are in a position to have good and down days, it may not be the magic i'm jim cramer, see you monday! the white house continues to move closer to arming rebels in syria. is this a good idea? or by leading from behind, will we now be arming al qaeda? we'll try to get some answers for all that tonight. and now to your money. the big fed meeting next week, our own jim and stanford professor john taylor will slug it out over what ben bernanke should do. and from the great debate, we go to the great divorce. forget about rupert murdoch. harold hand and his wife suzanne are splitting up. here's the thing, there's no prenup. we're talking

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