Jim Cramer finally officially eliminated himself from any serious discussion about any economic issue, forever. I know, to many he eliminated himself a long time ago with his ludicrous housing is bottoming call a year ago, but for some reason he is still being hailed as some type of guru on CNBC. It is easy to do a hit piece on Cramer, I know, but this time he has gone a bit too far.
First, he claims he told people to sell last week before the big selloff on Friday, he did not on his Mad Money program. Second, he ran a piece tonight HERE, claiming he is giving you tomorrows headlines today, at 6 PM, what good is that, about the housing data tomorrow. Guess what he said? It is going to be bad. Really, no one had any idea since the data has been horrible for how long now? Not to mention everyone is expecting the data to be bad so even I am not convinced it will be the catalyst it should be. Regardless, the insanity doesn’t end there, it gets better.
He claims he gets his information from the home builders who sell thousands of homes and have been extremely negative on housing versus economists who own only one home. He goes on to say how overly optimistic economists are and so forth which is not shocking to anyone since they have all overestimated the economic data we have seen recently and, frankly, he had also overestimated the data as well. Basically, he is jumping on the bandwagon which means the data is probably going to be better than we all think to begin with because Cramer is the freaking kiss of death for everything, seriously, he is. But it gets even better!
Cramer goes on to say that the poor housing data doesn’t mean anything because it is such a small part of GDP. He said; “Housing, he added, is not a big percentage of the economy and said executives who have appeared onMad Moneyhave moved “well past” housing as the drivers of their earnings.” WHAT!? OK, housing is not a big part of the economy, sure, I guess that depends on exactly how you define housing. Sales or residential investment account for about 5% of GDP, but I would hardly call that inconsequential. However, it is the services that go into housing that is the driver of GDP growth, like appliances, materials, jobs, etc. which account for about 12-13% of total GDP. That is a combined total of 17 to 18% of GDP that is impacted by the housing market being in the tank, conservatively, according to the NAHB. That is not inconsequential to the economy and that is something that companies cannot just “move past” in their earnings cycle.
The reason housing is such a big deal is because it touches so many parts of the economy and when housing falters so does the broader economy, obviously. To discount weak housing data from the overall economy or to not know how big housing is within the overall economy is incredulous. This matters because this impacts people’s lives, especially when construction workers are one of the largest segment of the workforce unemployed right now, and shows that this person has no business talking about broader economic issues. I respect the fund manager and he has one hell of a track record, but as a macro guy or a guy putting the pieces together to figure out what the economy looks like he is officially, totally, disqualified now. His horrible housing call a year ago combined with not knowing how important or big housing is today proves it.
A few things have been out there that just blew me away over the past couple of days. The first was when I saw a video of Jim Cramer advocating for the Treasury to issue $2T in 30 year paper to solve our debt issues. The second is that some talking heads believe that we will get a 700K print for the NFP, non-farm payroll (employment report), on Friday. It leads me to believe that most people in the world have just lost their mind or at least lost touch with reality. There is some logic to the aforementioned items, but reality just does not work like that and when one throws out an idea make sure it is feasible first or make sure it is a clean number, as in the 700K NFP on Friday.
First, Jim Cramer, the man I love to hate, but I respect the hedge fund manager as a take no prisoner SOB who got the job done, but this “I am going to make you mad money” thing, well, I think not. He has been giving out some decent advice lately, too little too late, but nevertheless, he has advocated high dividend stocks for sometime which is a good strategy as I see deflation. However, he said yesterday that the Treasury should issue $2T in 30 year paper while rates are low because we have too much short-term debt, he is right, and we will eventually have funding issues, he is right again. The issue I have is that the U.S. has $13T in total debt with much more coming so $2T does nothing to “solve our debt problems” and the bond market would reject $2T in 30 year paper. I mean come on, the market would demand a higher yield than 4.23% for that size paper. This is also the same guy who said, no more than 8 months ago, that Treasury should issue a 5% 30 year Retirement Bond as well, yeah right.
If one has been paying attention to the bond auctions they would notice that there is a reason Treasury is issuing shorter maturities, no one wants long-term paper from the U.S. government. Investors would just assume buy 10 year TIPS instead which offer some protection from the inevitable inflation risk that exists. Why would Treasury want to steepen the yield curve even more than it already is? If Geithner has half a brain he will try to move our maturities out to the 10 year mark and if Treasury swamped the 30 year they would move the yield up on the 10 year. It is just a bad idea and it impresses no one, period. I am surprised that Cramer would even say such a thing as he did run a ton of money, but, well, I guess I am not surprised.
The other hot issue of the day is the employment report due out at 8:30 AM EST Friday morning, it is THE report on the first Friday of each month. This month we are due for some really interesting data I suspect, especially given the smooth work last month in the Birth/Death model, I know I talk about that a lot, but it is important that you look at that figure and understand it. I see some estimates that we will see a print of 700K on Friday and, frankly, I would not be surprised, it won’t be real, but I would not be surprised at all.
The NY Post ran a story on how some Census workers were hired for a few hours, paid, fired and rehired which will boost the NFP figure on Friday. Are those accusations true? I don’t know, but it would not surprise me if they were. All I know is that it would be awfully tough to pull off a huge private sector growth figure with 460K+ weekly initial claims and with many blue chip companies announcing more layoffs, H-P is laying off 9K, seriously. There are still almost 6 people available for every open position which is not good news or bullish for new hiring. I am not saying it is getting worse, but I am saying it is not getting better.
There are specific area’s to watch and the first one is the actual unemployment rate, I think we will see it uptick to 10.2%, remember we now have an oil spill which impacted a very large area. Another area is the BLS Birth/Death model, obviously, which may add another hefty 200K to this month’s report. I also believe you must subtract all government jobs out of the report since they are temporary and we need private sector jobs to pay for government jobs to begin with. The U-6 report is also very important as it will show the under employed, which is a huge, and growing, problem in America that everyone turns a blind eye towards. Finally, temporary jobs are no longer a bullish indicator. Perhaps a year ago they were, but if they are not converting to fulltime employment by now they never will, sorry, but subtract them out.
The other painful part of the report is the time it takes to find a job, this is the heart breaking, in my opinion, part. The vast majority of unemployed are taking far longer than 6 months to find work, in many cases more than a year, this is the worst since the DOL has ever recorded, it started keeping records in 1948. Basically, those are Depression era numbers there are just no other times in our history where it took so long to find work and I can assure you people are not voluntarily staying unemployed to collect that whopping $400 a week unemployment benefit check. This is a major problem and it is not getting better, sadly, and you need to look beyond whatever the headline number is to see what the real situation is like. I am sure Joe Biden and President Obama will be patting themselves on their backs on Friday, but I can assure you that whatever the number is it will be the equivalent of Enron accounting.
I said it on Friday, I wonder how Jim Cramer will revise what he says when there is a bounce in the markets from his; “Don’t buy until Dow 9000” call. Well, we certainly did not have to wait long for the mighty Cramer to revise his history, yet again, and spin “what he meant to say was” moment. As it turns out Cramer meant to say that if Trichet did not do anything he would not buy until Dow 9,000, but that is not what he really said.
Anyone who watches his show, I only do at night when I am going to bed because I like to laugh before I sleep, knows that this guy says one thing, will be wrong and will then “remind” you of what he said. Unfortunately, he reminds you of the complete opposite of what he says, almost every time. I think he forgets that video is forever or something because I am not sure how he thinks he can spin what he says when he is on tape saying pretty much the opposite of what he says he said. Cramer was a great money manager and a great self promoter, but as far as “looking out for you,” well, I think Congress looks out for you more than Mr. Cramer and that ain’t saying much.
This is not the first time he has done this and will not be the last time either. It kills me that he just slams bears and short sellers when he also sold short and was not an investor in his hedge fund. He also wants you to believe that the markets should go straight up and never down, unreal. What I find humorous is that he thinks the fundamentals are “great,” even in Europe. In May 7th he says Europe fundamentals are junk, but on May 10th the fundamentals are great, huh? He was extremely bearish on May 7th and bullish on May 10th, huh? Make up your mind. I am bearish on the markets, but like individual companies, what does that make me? I think a realist, but Cramer is just a damn phony.
The EU is in for some awesome austerity in the near future and the EU is 20% of the world GDP. If they are going to be thrown into a recession because of austerity, let’s just call it higher taxes, that will be a drag on the world economy, right? How can this Mad Money guru not know this? If you watch the full May 7th video he talks about the 290K employment report, how can he not see the 188K phony birth/death model addition? How can he not discount Census hiring, 66K temporary jobs? On top of another 26K actual temporary jobs in the private sector? Let’s face it, this guy is a headline reader and not a fact checker. I am not sure why he gets under my skin, perhaps it is because he acts like he is looking out for you when he is not and knows nothing about macro events. Most of all, he rejects what he actually said and replaces it with what he thinks he said. Some people have a word for that, it begins with an L.
Here is what he said May 10th:
Compare that with what he said on May 7th and you be the judge:
Bad things often happen to good people, but why would anyone take advice from a guy who is bankrupt? Lenny Dykstra famously lost his house and fortune last year in a very public bankruptcy and at one point the judge ordered a trustee to take control of Dykstra’s assets because Lenny seemed a bit, um, well, aloof. Lenny claimed that he got bad advice from a mortgage broker and was a victim of fraud. I do not know if the allegations are true or not, but one thing I do know is that you do not buy a house you cannot afford, he clearly could not afford it, and then claim fraud.
Lenny famously wrote for the TheStreet.com under the watchful (?) eye of Jim Cramer who had nothing but praise for Lenny. That is, of course, right up until his bankruptcy hearing when he was quickly and quietly let go from Cramer’s outfit. You would think after such a public display of horrors Lenny would simply just go away to rebuild his life somewhere, but that is not to be. Apparently Dykstra decided that he needs to get back up on that horse and has started a website to sell his top picks.
The service for Lenny’s top picks range from $899 to $1548 a year, depending if you pay monthly or all upfront. For this service you get access to Lenny and a signed baseball as a value add proposition, ever hear of Ebay? Regardless, his website mainly brags about his baseball achievements and his prowess as a deep in the money option player, but you have to pay to find out how good he is. What his site leave out is the facts regarding his own personal financial problems.
While I could never hold a personal financial issue over someone’s head or a string of bad luck, maybe he was a victim of fraud, but to omit such information is sketchy to me. If he was so good at picking winners, he boasts a track record of 140-0, how could you lose your home? I honestly wish Lenny the best, but why anyone would trust his picks or why he would omit his public financial problems is just dirty pool, in my opinion. Everyone is entitled to make a living doing what they do best and, in this case, perhaps Lenny should go back to something baseball related instead.
I was a bit desperate tonight for entertainment before the ball drops and happened to tune into Mad Money, I am sure Cramer is please as I single handedly increased his ratings from 1 to 2. Regardless, tonight I realized why I stopped watching this guy. He has no sense of decency, memory or humility whatsoever. In fact, all he does is revise his picks, his history and track record all the time. I will post videos to prove it in a little bit.
Tonight he was talking about retirement, which is a joke since he ignored what I rightfully pointed out is the most important thing in retirement planning, the sequence of returns, oh well, why let the facts, oh forget it. Anyhow, here is what you need to remember about good old Jim, he invested in the greatest bull market ever, yes he was a hell of a fund manager, but regardless it was also the greatest bull market ever, and he rarely held positions for very long. If you doubt this then go read Trading with the Enemy which was written by a guy who worked for Jim, apparently Jim is not a nice guy, go figure.
My point is Jim knows nothing about retirement planning because it is a totally different ballgame than trading stocks. It involves a complex range of skills sets and knowledge that not just any person has, sorry, but it’s true. This does not mean I am not a guru and I am not claiming this, but I do consult in this area and speak with experts all the time so I have a good grasp on the topic. Anyhow, tonight Jim claims that he “loves” index funds, but does he really?
It is true he used to tell people to invest in these funds until they built up $10K to trade stocks. However, earlier this year he got rather upset at a guest on CNBC, I am searching for the video, where he went off on the guy saying that anyone who invested and held, i.e. buy and hold investing in index type funds, were losers, literally, because they got killed over the last 12 years. At that time the markets were at historic lows so we were at levels not seen in over a decade. At that time he advocated being active in your account and moving money, which has always been my belief as I believe that passive and active management performance is cyclical. I guess he changed his mind since the market recovered though because now you should own index funds and then add stocks after awhile.
This man must confuse the hell out of his viewers. I mean, one day he is telling you to buy dividend stocks, then buy internet stocks, wait, now buy Best Buy before the earnings and the next day he is saying never buy a stock before the quarterly earnings and now he is saying that your core holdings should be index funds? If you are confused, so am I, but that is what the man said, so don’t blame me. The kicker is his disclaimer is that he is merely trying to entertain you, but here is what I just cannot figure out. If he is entertaining us and we really should not take him seriously, you should never take an entertainer seriously in my book, then why is he dispensing buy and sell recommendations on stocks?
Worse yet, why is the advice he’s giving one night in direct conflict with the advice he has given the night before? Honestly, I am not trying to give him a hard time, but I have a real problem with people revising their history, especially when it is on TV and it is easily searchable. If a broker or a financial advisor acted like that or dispensed advise like that FINRA would slap them so hard it would not be funny, but not commentators, even though the history of what they said is recorded. It is just unreal that this type of behavior can continue and no one says anything about it. I don’t care if the advice is bad, hell Suze Orman says lose your house before you even think about tapping your IRA for an emergency, yeah, that makes sense, everyone gives bad advice, but don’t cover it up.
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