Cramer vs. Kass: Consumer Staples

Jim Cramer and Doug Kass debate the direction of the consumer staples.

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Jim Cramer
Lower Oil Will Be a Boon -- Next Year
11/20/2008 6:50 AM EST

This blog post originally appeared on RealMoney on Nov. 20.

These year-over-year declines in energy costs along with the inability of the Chinese market to fall much further are the two bright spots that long-term investing can give us. The notion that there are consumer-products companies that have put in price increases that for the most part are sticking and that the developing world could come back with lower rates, makes me feel that the Unilever (UN)/Procter & Gamble (PG)/Colgate-Palmolive (CL) cohort could have a remarkable rally.

But not until after this current quarter, because the price decreases have been incredibly slow to come in and the dollar is so strong.

I key on those because frankly, oil looks like it is going to struggle to hold $50, and while that is a sure sign of a terrible recession coming, it is, alas, good news for the companies like Kellogg (K) and General Mills (GIS) that use energy and whose product pricing has held.

Oil going down is good. It isn't what this particular market wants -- this market needs those stocks up no matter what because of the trapping of the hedge funds -- but it will be good.

Why point it out?

Because I think this year will be a washout. You have to think about next year. With oil at $50 and going a little lower, energy users that don't have to roll back prices to consumers will be the best game in town. The year-over-year comparisons beginning at the end of the first quarter will be like a windfall of unbelievable proportions, and you will want to be in them before it happens.

Why even bother to point this out? Because the gloom is beginning to anticipate horrible things for all companies, but horrible things for energy simply removes the possibility of horrible things for all companies. It's one of the rare positives in an endless litany of negatives.

At the time of publication, Cramer was long Unilever, Procter & Gamble and General Mills.