It's time to ask a simple question: Is this a coastal downturn? Over and over and over again I have heard the same thing from every company I follow: the problems are in California and Florida. I don't care if it is the spirits business or the homebuilding business or the office supply business, the problems are in these big coastal states as well as pockets of slowdown as we go up the East Coast (Toll Brothers (TOL - commentary - Cramer's Take) captured that in its call last night).
I don't want to make too little of the problems. The news out of everyone today is so bad other than Safeway (SWY - commentary - Cramer's Take) and Clorox (CLX - commentary - Cramer's Take) -- dividend boosts and buybacks -- that it's hard to believe that you can limit the losses to a couple of states. (I am lumping the negatives: Deere (DE - commentary - Cramer's Take), which I want to buy; Freddie (FRE - commentary - Cramer's Take), which is actually bad but not as bad as was feared; and the same retail, which is good vs. big guidedowns.) But the problems are solvable if only because the heartland and the companies within -- the new techs like Eaton (ETN - commentary - Cramer's Take), Emerson (EMR - commentary - Cramer's Take), Trinity (TRN - commentary - Cramer's Take), Owens Illinois (OI - commentary - Cramer's Take), Owens Corning (OC - commentary - Cramer's Take) -- is doing so much business. Plus, anyone in energy or alternative energy is can hardly keep up with the orders. In fact, if you got that American Axle (AXL - commentary - Cramer's Take) strike settled -- that's just killing GM (GM - commentary - Cramer's Take) -- you would see how crystal-clear the coastal problem is.
Of course, we don't get anything from Washington other than a rebate that goes to all, not to the states that need it, and a $300 billion farm bill -- not a housing bill -- that goes to the most affluent folks in the country. A $10,000 to $15,000 tax credit if you bought a house might just make the difference to the coasts. Bob Toll suggested as much last night.
You know I think this market bottomed when Bear (BSC - commentary - Cramer's Take) collapsed. I remain bullish, and the further containment of the problems to the coast could be the next theme you hear in the recovery of the economy.
At the time of publication, Cramer was long Owens Illinois.
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