Credit markets remained strained while stocks remained volatile on Friday, trying to figure out which way this market would go with the approved bailout plan.
The one obviously bullish sign on Friday was the fact that Wells Fargo (WFC) would buy Wachovia (WB) in a $15.1 billion deal. One thing is clear: Warren Buffett is like a kid in a candy store, picking up Goldman (GS), General Electric (GE) and now Wachovia for what he thinks are deep value prices (and he is rarely wrong).
Also making headlines was Friday's report from the Labor Department, indicating that the nation's unemployment rate held steady at 6.1% as hundreds of thousands of people streamed out of the work force for any number of reasons.
Stocks responding well included Cisco (CSCO), Pfizer (PFE) and Vale (RIO), while big losers included Citigroup (C), JPMorgan (JPM) and Bank of America (BAC).
But where does this bailout take us?
With this in mind, we thought we'd take a look at some of the stocks people have been searching for on TheStreet.com and see what Jim Cramer's had to say about them recently.
These stocks could be getting attention for a number of reasons. Some require immediate attention; others may not. Regardless, it never hurts to hear what Cramer (or any of the other professional investors on the site) has to say about them. The key is to gather as much information as you can in order to make the most informed investment decisions you can.
Today, we'll start with Cramer's take on retail, especially Macy's (M). In a recent post to his RealMoney blog, Cramer wrote:
"Rummaging through the trash of a hedge fund manager last night I found a new game plan for after the wipeout of the insurers and the industrials -- the retailers.
This is a simple one. Buy credit default swaps on Macy's and JC Penney (JCP) debt, maybe add some Nordstrom (JWN) or Kohl's (KSS) and then spread the word that they won't be able to get a line of credit to buy goods for the holidays. You may not even have to do much here, as the numbers next week will be awful and the stocks will most likely trade lower on their own weight. (Notice Doug's Aeropostale (ARO) short in the Columnist Conversation.) Think about it like this: Nordstrom just dropped a ton of points on nothing; wait until we see the bad numbers, get estimate cuts, and then see where it goes.
This one's just too good not to do, especially because the short-selling rules don't apply to retail. (Is this why Zale (ZLC) wanted to be covered?)
Of course, I have no idea what the game plan is and I don't rummage through trash, but you can only imagine that it is such a natural trade that it has to be done.
Macy's in particular has a ton of debt. It would be so easy to operate on.
It is a natural, plus it is an easy sell to the media once the swaps are bought, the puts purchased and the 'no uptick, short common' trade gets put on.
Thing of beauty."
For more ideas, check out the Honeywell (HON) and Yamana Gold (AUY), Cramer's Take on Top-Searched Stocks portfolio at Stockpickr.com.
(Editor's note: At the time of publication and/or original publication of his posts and shows, Cramer owned Cisco, General Electric, Goldman Sachs, and JPMorgan for his Action Alerts PLUS charitable trust.)
Posted on Oct. 5, 2008
