A Tale of Two Cramers: CNBC Host Does Complete Reversal on Market Outlook
One day, he says the stock market is supposed to drop 2,000 points; two weeks later, nah.
Itâs funny how a 125-basis-point drop in the Federal Funds rate in two weeks will change someone from a completely downbeat bear to the most optimistic bull market cheerleader.
Jim Cramer, the host of CNBCâs âMad Moneyâ famous for his outrageous antics, had a complete change in attitude coming off the Federal Reserveâs decision to cut interest rates. He appeared on MSNBCâs âHardball with Chris Matthewsâ and said the stock market would plunge 2,000 points if the government didnât step in and keep bond insurance companies from failing.
Not so anymore.
âFor months I was worried about [MBIA CFO] Chuck Chaplin and MBIA (NYSE:MBI) and ABK [Ambac Financial Group, Inc.] (NYSE:ABK),â Cramer said on the January 31 âStreet Signs.â âEveryoneâs worried about it now? Why should I be worried about it? When you have a problem on your hands and everyoneâs worried knows about it, [New York State Superintendent of Insurance] Eric Dinallo to [President of the Federal Reserve Bank of New York] Tim Geithner, itâs done. Itâs done.â
Just two weeks ago, Cramer was adamant about a stock market crash if problems with these bond insurers werenât immediately rectified. Flash back to January 18, on MSNBCâs âHardball with Chris Matthewsâ: Cramer warned these same companies â MBIA and Ambac â would cause a 2,000-point drop in the Dow Jones Industrial Average (DJIA).
âBut there is an element â something that I would urge all the candidates to think about and our Treasury secretary, which is that there are a group of insurance companies that insure all these bad mortgages,â Cramer said. âAnd, Chris, I think theyâre all about to go belly-up; that will cause the Dow Jones to decline 2,000 points.â
Cramer identified Ambac and MBIA to Matthews as the âgroup of insurance companiesâ later in the interview.
Cramer also made some other surprising predictions â the revival of the financial sector and a complete reversal of the housing crisis to a âhousing shortage.â
â[A]ll Iâm telling you is these banks are going out for a reason,â Cramer said. âAnd the reason is because theyâre going to make a fortune. If we get any tick-up, I'm predicting a housing shortage and a bank stock shortage right here â housing shortage. âŠ I'm telling you, there will be a housing shortage a year from now. I was the first guy to tell you to burn your house down, now Iâm telling you to build one.â
Cramer wasnât as enthusiastic following the Federal Reserveâs January 22 emergency rate cut. However, itâs a marked change from his original âthey-know-nothingâ tirade on the Aug. 3, 2007, âStreet Signs.â