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October 2001 was a really dark hour for the semis. Well, guess what? According to the SOX index, we are right back there Pretty devastating. We have also wiped out years of retail gains. Gigantic declines there. What's going on? There's a recognition that these two formerly great engines of growth are now no growth at all. The semiconductor business is profitless with little growth and we are over-stored. This is an amazing moment. We have all come to the collective understanding that the retail and semiconductor businesses are businesses that have changed their historic growth rates. The declines in a Kohl's (KSS) or a J.C. Penney (JCP) or a Macy's (M) are being regarded as secular, not cyclical. We don't need all of those stores. The problems with the semis are secular -- they are all commodities and can be made cheaply by people in Asia who just care about market share. I am amazed at these stunning declines. Look, I get autos. Ford (F) deserves to be this low because it is getting its butt kicked. Restaurants? They are at the fulcrum of rising gasoline and ethanol pricing. (I know McDonald's (MCD) is down huge today and I don't expect it to ramp back up any time soon because of this survey that showed a slowing in the U.S. I regard it as more of an international stock, as I have told Action Alerts PLUS subscribers. But my voice is lonely today.) But the real pressure points in this system, the ones that are killing this market today -- instead of the financials -- are the SOX and retail. I don't want to buck the tide on either one. Random musings: VF (VFC) will be relatively unscathed because it is seeking mostly international growth. ... No one wants MBIA (MBI) and Ambac (ABK) to fail. But when the smoke clears, if they don't reserve more, they will -- and I believe the bankruptcies will be prepackaged. ... Right now, WaMu (WM) is where Countrywide (CFC) was yesterday right before the takeover. At the time of publication, Cramer was long McDonald's. RELATED STORIES Financials' Strength Rides on Fed's Commitment Fed Fever Spurs Analyst Upgrade Cycle AT&T Didn't Warn, but You Should Still Worry
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