A natural post-Cyprus play

Now that the charts have had a rest, the banks look logical here.

By Jim Cramer Mar 25, 2013 9:05AM

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Bank sign John Foxx Stockbyte Getty ImagesLast week was too soon to recommend U.S. stocks, particularly bank stocks, off of the Cyprus situation. That's no longer the case. As harsh as this deal looks toward those in the Cyprus banks, it does protect the 100,000-euro account, which means it's pretty much similar to what happens in the U.S. if you are in a bank that's been seized by the government. Everyone loses everything, except for the assets covered by Federal Deposit Insurance Corporation.


If that is somehow a precedent, so be it. I don't see it that way.


Now it is time to reflect on what is rotten -- Europe and the euro -- vs. what isn't: the U.S. and the dollar. We have to recognize that bank runs in Europe, even simple ones as in Cyprus, make it so the money will come to the U.S. from now on. You don't want it in the euro -- it can't recover much of its lost ground, because it will be suspect due to the next round of crises to occur in a place to be determined at a later date.


You don't want it in the British pound, which is being purposely devalued. The yen's become a laughingstock currency. The Chinese currency? The ruble? The peso?


I don't think so.


No, I am not rooting for failure in Europe, and I think the Cyprus plan is about as good as it's going to get when you have regulators at last paying attention to things, the way our regulators at last paid attention to the California, Arizona and Texas savings-and-loan banks during that crisis in our country.


I am just saying the bears should be careful what they wish for. Last week was a real bad week for U.S. banks. The lead bank, JPMorgan Chase (JPM), which is like the lead dog in a husky race, is so caught up in bad publicity -- bad publicity that will of course mean nothing. At the same time, there are more lawsuits involving the agencies and outfits like Wells Fargo (WFC), which is breaking out on big insider-buying but was momentarily stopped by the parade of bad news.


Why do we focus on Europe at all, especially after last week's shrug-off? I think it's because this is a compelling story, something that frightens everyone. It sure beats filing stories on Williams Sonoma (WSM), or the run-up in Target (TGT), or the incredible performance of some of the natural gas stories.


They have no drama. As someone who has covered business news for longer than just about anyone still around, I have to tell you that it is a lot more fun to cover drama.

But now it is time to focus on what happens when people need the reaction to Cyprus to be a bad one. I always feel compelled to tell people how it works. When people have minimal exposure to U.S. stocks or are short stocks, they need to spread the word, and quickly, that very big pools of money will pull out of -- and then you provide the country name. Let's just say [fill in the blank], and that's going to lead to [blank] happening which will cause [blank] to get hit.


You can put in whatever countries you want. It doesn't really matter. Just make it hard enough to refute.


That causes U.S. futures to go down a great deal, so then you are stuck with people like me to come on television at 9 a.m. and explain how what you are hearing isn't true. But the damage is usually done until the 45-minute mark. Then the money that has nothing to do with Cyprus, and dismisses it, comes to play and gets good prices. It is a terrific time to be nimble.


So now that you know the fill-in-the-blank game and we know the Federal Reserve is on hold, you have to try to figure out where that money's going to go in the U.S.


It could go to natural gas, but if the weather gets warm later in the week, that trade will wilt. Caterpillar (CAT) has made the industrials difficult to own because of the "who's next" factor. Tech? Oracle's (ORCL) made a mess of that. Same with the Cisco (CSCO) downgrade wherein it seemed as if the analyst had its number. Retail works for certain -- maybe too well, given that the Merrill Lynch Retail HOLDRS ETF (RTH) hit a new high.


So how about banks? JPMorgan is almost through the press gauntlet, because those stories are getting really boring. Wells Fargo's right. We like KeyCorp (KEY) and SunTrust (STI) -- and don't forget that Bank of America (BAC) has had a real rest here.


Last week, it was very glib to suggest this kind of reaction when you had big-time strategists shouting "Lehman," and other bearish strategists and a former Fed chief telling you that things are good. But the charts have had a nice rest, so I think the group's a natural here.


Cramer

 


Jim Cramer is a co-founder of TheStreet and contributes daily market commentary to the financial news network's sites. Follow his trades for Action Alerts PLUS, which Cramer co-manages as a charitable trust and is long ORCL, CSCO, KEY and STI.

 

 

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35Comments
Mar 25, 2013 11:04AM
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There are 10 trillion in American bank accounts, the FDIC has 25 billion to use to bail out the banks, or .0025% of 10 trillion. The FDIC guarantees nothing.

 

Would Obama, congress and the fed confiscates our bank accounts? HELL YES!!!!

Mar 25, 2013 11:03AM
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If banks were just banks in the classical sense then I could give some credence to your analysis Jim.  But banks have become arms of guberment and are being used to alter the natural course of economies.  Banks have become tools for controlling peoples behavior, decision making, and enacting a political agenda.  I think most can conclude we are now seeing political agendas reflected in and through banks daily operations. Unfortunately capitalism is now taking a back seat.  You of course would take offense to the suggestion that banking is now part of a socialistic movement around the world because you are liberal and blind to many subtleties like freedom and private property.  Unless of course it is your property. But then again as you say you are old and have become out of touch.
Mar 25, 2013 11:27AM
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It´s stunning media manipulation. The market goes up and down for the same reasons, it´s all about spinning. The tentative Cyprus deal was a disaster, the cancellation of the tentative Cyprus deal was bad because it left the situation uncertain again, now the revived tentative deal that is becoming an effective deal is all good... I don´t know if recommending to people to be cautious or something has any meaning at this time, it would make sense only if we were in a free economy, but that does not seem to be the case. We are living in a government controlled world.
Mar 25, 2013 9:56AM
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all i know is the company i currently work for is "all in" dissolving europe ties.  most all the work in our sister companies in england and belgium are being moved to USA
Mar 25, 2013 1:31PM
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Maybe I'm wrong but getting rid of the bank with the bad investments and having the non-insured portion of depositors take the hit...... sounds to me like how it's suppose to work rather then tax payers from somewhere paying for it.  Could that be what has the investment world spooked?  Perhaps bailouts might actually start having strings and or consequences?

As a country that didn't have to bail out any of it's banks I'm really getting F'ing sick of seeing my investments get hammered for the greed and stupidity of global financial institutions and dumb foreign government policies/regulations or lack of them.

Anyone else thinking the global system just isn't what it's cracked up to be?

Mar 25, 2013 1:36PM
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I'd rather invest in the Best Little Whore House in Texas then one of the too big to fail banks.
Mar 25, 2013 2:21PM
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It will all end badly in a huge meltdown. By then, Bernanke will be out and the problems left for his successor to deal with. 
Mar 25, 2013 11:55AM
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Alexander....I think you are correct; Many of us on here are Crazy, but not all of us are investors..

Although many may have 401s and some IRA savings,many may only be dabbling a toe into Wall St.

 

At least that's what a large number say, because they consider WS or Banks to be a scam..

And would rather put their monies in a Mason Jar, under a mattress, bury it or buy guns and bullets with it...

Before O'bambo or Bennie the Banker comes and takes it from them...

YEAH, I CAN SEE WHERE YOU GET THE "CRAZY" OBSERVATION from...I understand clearly.

Mar 25, 2013 10:57AM
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First... Cypress: The hard-lined "deal" involved the elimination of the near-competitor to the biggest bank and a shift of depositors over to it. That makes one really big (oligarchy) bank in Cypress. Next, all accounts over $100,000 got a haircut. READ who got the cut... few Cypriots, mainly foreign money. So... Cypriots got another quarter's worth of fiat life with 10% or more taken off the top. It STILL has no economy and it STILL has no revenue stream. So... what exactly did Cypress get talked into and WHEN do we rein in these Central Banks?

 

Second... How many times do I have to write it... when you pull back jobs from Asia, Asia just moves in and continues copying whatever you formerly did there. When you pull back jobs from Europe, you are sticking your finger in the wound and further infecting it. A reminder that at LEAST 67% of our currency (actual, not Bernanke fiat) is buried in Euro Bonds. I certainly DID NOT go to Harvard or any other Ivy League school, but it certainly looks like those who did have us on some permanent skid towards oblivion. Yea, it's fun to invest, but where is this going?

Mar 25, 2013 10:49AM
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Yes, the futures were higher, yes, we opened up, yes, the S&P was getting closer to its all time high and also yes, manipulators are alive and well and will never give up...At about 1030 hrs they started doing their thing and now we are all in the red, why? Because they can....We see this stuff often enough...Lets see if this afternoon something can be done...More later.
Mar 25, 2013 2:20PM
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I was wondering what happened to Corzine, it seems he consulting the ECB.
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Quote

You don't want it in the British pound, which is being purposely devalued. The yen's become a laughingstock currency. The Chinese currency? The ruble? The peso?

End Quote

 

And the US dollar having lost over 50 percent of it's value since 1999 is not being devalued.

 

Pretty much the US is going belly up and all it's banks are going to be declared bankrupt soon perhaps by summer. In which case everyone loses all but $100,000 and the US will declare the dollar dead and come up with a new dollar worth 1/100 th of the old. So everyone will be able to save $100,000 from their bank accounts but that will be translated into only $1,000 of the new monies. I believe the new monies will be called Obama Notes.

 

The Federal Reserve can not inflate their way out of our debt crisis like they have in the past. They tried right before the collapse and pushed the Fed Rate up close to 5 percent and that collapsed the economy.

 

So the only way out is the bankrupt the banks and revalue the dollar. They will raid the banks to pay back the $3 trillion plus the Federal Reserve has pumped into the economy as QE1,QE2 and QE3 and then some interest on the debt so to speak.

 

Pretty much this will leave the US with no debt but unable to borrow money anywhere in the world.

 

This will happen folks get ready for them to steal your money all of it but $1,000.

 

Of stocks and bonds will go down to zero and foreign people will buy up American companies for pennies on the millions of dollars.

 

This will be the great selling of America at rock bottom prices.

 

Mexico will be a much better place to have your money at.

Mar 25, 2013 10:08AM
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Guess that could be a Good or Bad thing...??

 

If they are consolidating and cutting expenses, along with bringing work back to U.S.

Maybe good for you and other workers here...?

 

If they are stagnant or no orders from abroad, and no future work there; It could be cutting into the bottomline....Overall,pockets in Europe are having a much worst go of it..We all know that.

Much higher unemployment, and less spending.

Mar 25, 2013 2:46PM
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the government isn't going to take your god, guns ,or bank account.....terrorists aren't waiting outside your trailor ready to attack.....women will get abortions whether you want them to or not......you can't stop people from using whores and drugs.....gays are gay even though you are against them

RELAX..........AND DON'T GET DUPED BY CRAMER

Mar 25, 2013 3:59PM
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Eating your profit up at a whorehouse does sound like a bad idea...  :)
Mar 25, 2013 11:37AM
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I have to ask the question....Why would "67% of our Currency, be buried in Euro Bonds??"

 

With Volitilty running rampant in some of these members of the EU...; Even with Bonds at high rates of return, they are or have been setting up for failure or collapse..

 

Who the hell is that stupid, given the information that we get barraged with constantly, to go with such a high risk investments?....Knowing that there are other locations such as Cyprus that are on the Brink also..

WHERE DO YOU GET THESE FIGURES FROM ??..."certificate needed."

 

Mar 25, 2013 4:56PM
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Dow down 64, not bad actually, could have been a lot worse....Manipulators were shooting for triple digits all day; little rally before the close made it look not as bad...Today was one of those days these crooks just got their way all the way around; nothing justified this drop...Cyprus is just an excuse people, that is all, not many people were even talking about it on the floor today but, cheaters will always be cheaters...Let see what tomorrow brings.
Mar 25, 2013 2:35PM
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Yes it does appear that the Large Banks and then the Central Banks of Nations are in Cahoots..?

 

Maybe some of the smaller Regional Banks are less innertwined or the Homegrown Farmer's Bank are probably much safer operations...We have been invested in a couple of regionals in the past, but not for at least 4-5 years, because when one goes down..THEY ALL do, if they are a Public traded Company...And we have been skitterish since these failures started happening..

And then of course, Investment and Insurance Companies, haved turned themselves,(conviently I might add) into "Financial Institutions and Banks.." to not only scam the Investors, but also the taxpayers..Those parts need to be seperated..The scammers need to be jailed and then hung...

Not some azzholes dancing and partying on our dime.

Mar 25, 2013 4:10PM
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Old saying, amongst Brothel owners and Patrons....Wondered how many would catch it.:) ;) :^)
Mar 25, 2013 4:06PM
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Yeah, Socialist 1.....That pretty much wraps it up....This is not Cyprus nor Greece.

 

Probably one of the Best takes I've seen on America, in a long time....

Well thought out and concise...

 

No tinfoil here.....At least not on our heads.!!

 

And  Cramer is just another Analyst or Pundit.....Which some call a Shill..

He is just doing his job....Does it well Occassionally.?

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