Nobody thinks "buy defense" any more when oil spikes. They just think buy oil and ag. And they sell retail.
I find that pretty amazing. Higher oil prices mean a slowdown in the economy, which means buy drugs and foods, or at least drugs.
But the group is bizarrely despised. Lilly
(LLY)
getting killed again by yesterday's lackluster quarter. Merck's
(MRK)
quarter was actually good and nobody cares. Wyeth's
(WYE)
was real good and it's getting sold off.
Meanwhile, the Pepsi
(PEP)
/Procter & Gamble
(PG)
complex trades like the airlines! I think that's a big mistake.
They aren't that levered to the oil/grain complex. Certainly not as levered as General Mills
(GIS)
, and that's the strongest in the group. Or Kimberly
(KMB)
, which I didn't like that much at all and is hugely levered but didn't go down.
Meanwhile, the ultimate defense plays -- Altria
(MO)
and Philip Morris International
(PM)
-- can't buy a point gain.
In fact, the only real defenser that is higher is Medco
(MHS)
, and that's because UnitedHealth
(UNH)
blew it again. Oops, hate to write this, but UNH really is a bunch of clowns.
I am not counting AT&T
(T)
because that's not considered defensive anymore; it's a cyclical and trades like one, which means it has strength!
I read this terrific article last night in SFI, the Santa Fe Institute magazine, that talked about this market's inherent emotional irrationality.
Today's Exhibit A about how right that article is.
Too nutty, even for this guy.
At the time of publication, Cramer was long Altria, Philip Morris International and UnitedHealth.
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