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.
Itâ€™s 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 CNBCâ€™s â€śMad Moneyâ€ť famous for his outrageous antics, had a complete change in attitude coming off the Federal Reserveâ€™s decision to cut interest rates. He appeared on MSNBCâ€™s â€śHardball with Chris Matthewsâ€ť and said the stock market would plunge 2,000 points if the government didnâ€™t step in and keep bond insurance companies from failing.
Not so anymore.
â€śFor months I was worried about [MBIA CFO] Chuck Chaplin and MBIA (NYSE:MBI) and ABK [Ambac Financial Group, Inc.] (NYSE:ABK),â€ť Cramer said on the January 31 â€śStreet Signs.â€ť â€śEveryoneâ€™s worried about it now? Why should I be worried about it? When you have a problem on your hands and everyoneâ€™s worried knows about it, [New York State Superintendent of Insurance] Eric Dinallo to [President of the Federal Reserve Bank of New York] Tim Geithner, itâ€™s done. Itâ€™s done.â€ť
Just two weeks ago, Cramer was adamant about a stock market crash if problems with these bond insurers werenâ€™t immediately rectified. Flash back to January 18, on MSNBCâ€™s â€śHardball with Chris Matthewsâ€ť: Cramer warned these same companies â€“ MBIA and Ambac â€“ would cause a 2,000-point drop in the Dow Jones Industrial Average (DJIA).
â€śBut 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€ť Cramer said. â€śAnd, Chris, I think theyâ€™re all about to go belly-up; that will cause the Dow Jones to decline 2,000 points.â€ť
Cramer identified Ambac and MBIA to Matthews as the â€śgroup of insurance companiesâ€ť 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 â€śhousing shortage.â€ť
â€ś[A]ll Iâ€™m telling you is these banks are going out for a reason,â€ť Cramer said. â€śAnd the reason is because theyâ€™re 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. â€¦ 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 Iâ€™m telling you to build one.â€ť
Cramer wasnâ€™t as enthusiastic following the Federal Reserveâ€™s January 22 emergency rate cut. However, itâ€™s a marked change from his original â€śthey-know-nothingâ€ť tirade on the Aug. 3, 2007, â€śStreet Signs.â€ť