Cramer: "The Fed Solved a Big Problem"
1 Mensagem
|Página 1 de 1
Cramer: "The Fed Solved a Big Problem"
"The Fed Solved a Big Problem"
By Jim Cramer
RealMoney.com Columnist
3/12/2008 6:50 AM EDT
"Oh, shoot ... the fundamentals. Remember them? The ones not covered by Caterpillar's (CAT - commentary - Cramer's Take - Rating) rosy forecast for 2010? Yeah, those bits and pieces called earnings?
That's how I always feel after a big rally day when I know the economy is slowing, not getting better. We get some terrific news from the Fed as we did Tuesday, and we want to sound the all-clear. Instead we have to now deal with companies' earnings, and we know from Wellpoint (WLP - commentary - Cramer's Take - Rating) et al and Texas Instruments (TXN - commentary - Cramer's Take - Rating) et al that the Fed safety net doesn't take everything in with it.
So what did happen yesterday? After pondering it for seemingly every waking -- and sleeping! -- hour since it happened, I am thinking that yesterday's Fed move took off the systemic risk of a major financial failure.
By being creative and actually addressing the bad inventory that is clogging the system -- consider it a drain, if you will -- it made it so the system is unlikely to back up and overwhelm all who are using it. If you clean out the debris, the detritus of AAA mortgages that is making it so everything is stopped up, you give the system a chance to refresh.
I have always felt that when you get rid of the systemic risk you bring in sidelined people and sidelined money. You also -- and this is very important -- get the shorts to stop laying on everything and making it so refinancing is impossible. It is difficult to get off the canvas with the shorts laying all over you.
That's what happened yesterday. We eliminated a major catastrophe, which matters.
When we eliminated a major catastrophe in 1998 -- Long Term Capital -- the market exploded upward.
Is this the same? No, that was isolated. This is spread out. But the mere hope that things can get better made it so shorts cover, new money comes in, companies like Washington Mutual (WM - commentary - Cramer's Take - Rating) can get new money because the other money that came in isn't wiped out, and we put in a bottom.
That's what I felt happened yesterday. We put in something that will bring buyers back if we go back there.
Obviously you want to do more than put in a bottom. But taking systemic risk off the table is very important and that's what I saw happen yesterday. Doesn't solve earnings; does solve insolvency of the system. "
(in www.realmoney.com)
By Jim Cramer
RealMoney.com Columnist
3/12/2008 6:50 AM EDT
"Oh, shoot ... the fundamentals. Remember them? The ones not covered by Caterpillar's (CAT - commentary - Cramer's Take - Rating) rosy forecast for 2010? Yeah, those bits and pieces called earnings?
That's how I always feel after a big rally day when I know the economy is slowing, not getting better. We get some terrific news from the Fed as we did Tuesday, and we want to sound the all-clear. Instead we have to now deal with companies' earnings, and we know from Wellpoint (WLP - commentary - Cramer's Take - Rating) et al and Texas Instruments (TXN - commentary - Cramer's Take - Rating) et al that the Fed safety net doesn't take everything in with it.
So what did happen yesterday? After pondering it for seemingly every waking -- and sleeping! -- hour since it happened, I am thinking that yesterday's Fed move took off the systemic risk of a major financial failure.
By being creative and actually addressing the bad inventory that is clogging the system -- consider it a drain, if you will -- it made it so the system is unlikely to back up and overwhelm all who are using it. If you clean out the debris, the detritus of AAA mortgages that is making it so everything is stopped up, you give the system a chance to refresh.
I have always felt that when you get rid of the systemic risk you bring in sidelined people and sidelined money. You also -- and this is very important -- get the shorts to stop laying on everything and making it so refinancing is impossible. It is difficult to get off the canvas with the shorts laying all over you.
That's what happened yesterday. We eliminated a major catastrophe, which matters.
When we eliminated a major catastrophe in 1998 -- Long Term Capital -- the market exploded upward.
Is this the same? No, that was isolated. This is spread out. But the mere hope that things can get better made it so shorts cover, new money comes in, companies like Washington Mutual (WM - commentary - Cramer's Take - Rating) can get new money because the other money that came in isn't wiped out, and we put in a bottom.
That's what I felt happened yesterday. We put in something that will bring buyers back if we go back there.
Obviously you want to do more than put in a bottom. But taking systemic risk off the table is very important and that's what I saw happen yesterday. Doesn't solve earnings; does solve insolvency of the system. "
(in www.realmoney.com)
-
- Administrador Fórum
- Mensagens: 31013
- Registado: 29/10/2002 4:04
- Localização: Aveiro
1 Mensagem
|Página 1 de 1