"Street Critique"-Hilary Kramer, Chief Market Strategist at Greentech Research
Wednesday, April 08, 2009PAUL KANGAS: Tonight's "Street Critique" guest thinks we've seen our bear market rally. She's Hilary Kramer, chief market strategist at Greentech Research. Hilary, good to see you again. Welcome.
HILARY KRAMER, CHIEF MARKET STRATEGIST, GREENTECH RESEARCH: Paul, thank you for having me on tonight.
KANGAS: You're still of the opinion that the market which has been up nicely in March and only a two-day downturn this week can gain no further traction?
KRAMER: That's right. This was the big roaring bear market rally that we were waiting for. It was violent and it was fast and it was 22 percent upside and there's now going to be a pullback.
KANGAS: Is that because the economy can't justify any further gains?
KRAMER: That's right, Paul. There are so many fundamentals that are really quite negative and what's bringing the market up is news that's really almost negative news with a good slant which is what the market's been taking. For example, that the insurers today are going to be able to qualify to receive government funds. That was considered excellent news. It's not excellent that they need money.
KANGAS: Right. Well, these government bailout efforts will eventually help, do you believe, in turning the economy?
KRAMER: Well, they've already made a difference. You know, we'll never know exactly how bad we could have been or we would have had an absolute implosion in our financial system which would have been systemic, but at the same time I'm very concerned that our government has used the last of its bullets. There's a lot of other sectors that are going to need help. The financial institutions seem to get all of the money.
KANGAS: Do you see any positives in the market developing here?
KRAMER: Only that hope springs eternal. Ultimately some of these stocks that have been thrown out for dead will come back, Paul. And there's some promise with some companies. And it's not as if the economy is at a complete standstill. It's just that it's contracting.
KANGAS: What's your biggest market negative?
KRAMER: Lay-offs. That's the problem. We're in an economy where people are getting laid off and it's not like they can just rebuild overnight because they potentially could lose their homes, credit cards, their cars because we're a society that has over borrowed and it took years for us to get into this situation. It could take years to get out.
KANGAS: On your last visit with us March 11, you were buying for yourself but not recommending for others three stocks. Starbucks (SBUX) is the first one, then Harley Davidson (HOG) and Citi (C). Tell us about them.
KRAMER: OK. I was recommending that I as a trader was looking at these stocks especially Starbucks which was completely oversold. It was given up for dead. The media and Wall Street started to hate Starbucks especially when they announced store closings but there's still a consumer following. There's loyal consumers.
KANGAS: Big gain.
KRAMER: Yes and look at how well it's done. Harley Davidson. This is another stock. I mean there are consumers that are loyal, loyal buyers of Harley Davidson. For some reason, it was being priced as if this company were going to go out of business. Harley Davidson won't. You can see in the stock price. Now I've traded out of both of those. The last one Citigroup, it became very clear it was a bargain in that $1 range because it's a government entity. It's a government business. It's not going out of business. I'll be (INAUDIBLE) of my Citigroup because you're not going to see it go much higher than this because again it's now basically a government company.
KANGAS: The only one of those that you're still with is Citigroup.
KRAMER: That's right. Even that I'm scaling out of, not much upside from here.
KANGAS: All right, very good. Apparently no new recommendations on the long side then.
KRAMER: No. Just remember cash is king. That's my mantra.
KANGAS: Hilary, thanks for being with us once again.
KRAMER: Thank you, Paul.
KANGAS: My guest, Hilary Kramer, chief market strategist at Greentech Research.
