Lenny Dykstra
Fasten your seat belts, everyone, because it appears that we'll be seeing lots of volatility in the months to come. Explosions in the toxic subprime mortgage nearly guarantee some turbulence.
Much of the concern on Wall Street has centered on the health of the U.S. consumer as household spending takes a hit from the double whammy of a weak housing market and rising gasoline prices. However, the biggest blow may come from corporate America. Business investment was a key factor behind the stronger-than-expected second-quarter gross domestic product figure released last week. Although consumer spending advanced at a slim 1.3% annual rate in the second quarter, business investment rose at an 8.1% annualized pace. If companies pull back just as consumer spending is tapering off, it would hamstring the U.S. economy. Tighter credit is already stinging some smaller retail trade companies that supply goods to stores, says Richard Hastings, senior retail analyst with Bernard Sands, which advises retail vendors on credit risks. "We are seeing the beginning of some significant credit tightening, especially in the default market for trade credit risk," Hastings said. If terms stay tight through the critical holiday shopping season and into next year, suppliers will have little choice but to cut back on shipments, he said. So in your trading, it's doubly important to look for companies that will withstand any storms that might blow their way, whether they're on the consumer or the corporate side. I believe I've found such a pick, and it's a company many of you probably have not even heard of: Manulife Financial (MFC Quote - Cramer on MFC - Stock Picks).
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