We're Just Taking a Much-Needed Breather

Housing's recovering, but it can't stay strong unless mortgage rates stay down. The whole thesis I have is that rates stay down, and that 30-year auction today isn't in my script.

Now, we have repeatedly heard that inflation is going to be a big problem; we are increasingly going to see higher rates on the 30-year. I get that.

But I am more focused on mortgages and the foreclosure pool.

We are seeing commodity inflation as we reflate the economy. We are seeing housing prices going up.

I just want to point out that the only thing happening here is we're moving out of depression -- where we were -- and into a recession. We are not in a growth mode, and as I search for reasons why a Lilly (LLY - commentary - Cramer's Take) or a Procter (PG - commentary - Cramer's Take) or a Gilead (GILD - commentary - Cramer's Take) or a Unilever (UN - commentary - Cramer's Take) is so strong, I come back to housing and the possibility that rates are going to go so high that it will stall out the housing boomlet. That would explain this strong rotation better than the notion of catch-up.

The rotation's gaining strength is worrisome for me if it has legs. It undercuts the legs of the major trend, which cannot happen if we are going to fight our way higher over time. I am hoping we're just working off the oscillator, but the charge in the General Mills (GIS - commentary - Cramer's Take) / Celgene (CELG - commentary - Cramer's Take) group is way too strong to think it can wane today. Touche, Doug!

I continue to believe that what is happening here is a garden-variety pullback and that we should accept it and be looking for buys, not sells. But it doesn't feel like one day anymore. That doesn't mean I don't want to pick up things. It does mean I want to pick up some things at this level and then wait. It also means I am kicking myself for selling some of the staples in frustration. It also means that I am furious at Pepsi (PEP - commentary - Cramer's Take) for doing this acquisition as that stock would be at $55 today.

I am obviously in the big-time minority today in believing the selloff is not the start of something really serious. I am worried that the bond market freak-out is scaring everyone into believing we are going to have higher rates and the gains we have made in the economy will be obliterated.

Still, here's a saving grace: The drugs and foods don't go up on stagflation and gold's tame today.

So I am not willing to admit that this is anything other than a correction after a vicious rally. But I am hurting and feeling bruised for the day!

At the time of publication, Cramer was long Pepsi, General Mills, Celgene and Gilead.

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