No-Win Fed Expectations
08/04/06 - 11:16 AM EDT
Jim Cramer
We could do without this move. It is a move based on a for-certain tightening.
That means if Federal Reserve Chairman Bernanke wants to show guts and tighten, we are in for a world of hurt and a big move back to Pepsi(PEP Quote - Cramer on PEP - Stock Picks) and Anheuser-Busch(BUD Quote - Cramer on BUD - Stock Picks). On the other hand, if he pauses, we will have already had the cyclical rally but we will be worried that earnings are too weak to support the group. We will be worried of that because the Fed's telling us by a pause that there is reason to worry. That's a no-win, May 11 type of thing. I listen to these talking heads saying that Bernanke should pause. There is a difference between "should pause" and pause, however; because if things are really weak, Bernanke will have plenty of room to cut if he has to. The only area of the economy that is weak is housing. That's where all the speculation has gone on, and that's cooled. Maybe that's enough, but if you are Bernanke, why not go in for the kill instead of following the rote Hollywood movie sequence of leaving the villain after you've cracked him, only to watch him resuscitate? Again, I believe he should have paused last time. My point is that I don't like it when there is a consensus of what he should do. That means the move's built in but the downside isn't. If we were oversold, I would be less worried. And I don't believe, as my friend Helene Meisler says, that he can crush the market either way. I just don't trust the market to do right for the bulls right now. It feels like the week leading up to the May meeting. It's a bad feeling. Random musing: There are two things worth noting that I find interesting --- News. Corp.(NWS Quote - Cramer on NWS - Stock Picks) shrugs off CBS(CBS Quote - Cramer on CBS - Stock Picks) -- no radio, good hot shows and movies.
- Apple(AAPL Quote - Cramer on AAPL - Stock Picks) is down on options -- one good Nasdaq 100 (NDX) stock out there.
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