Now here's the big Catch-22: Don't build the "profits will come" situations. Because there is so little new construction of anything, we get no real new hiring. Because we get no real hiring, we aren't getting the growth we would normally expect from the economy at this stage in the recovery. Plus, we have a retrenchment in government spending that will curtail growth. And we have a serious worry in how much it will cost to hire people with the new employment laws. We don't have enough small business formation to offset the constant streamlining of every large business I know. Ask yourself, which companies really are hiring aggressively?
So, we don't get the bountiful gross domestic product numbers we expect. And we end up paying more for companies that can charge more than we thought. At the same time, we pay less for companies that rely on foreign sales, unless they are defensives, as the drug companies just hit 11-and-a-half-year highs.
The Catch-22 does benefit stocks. As long as we don't build it, the Fed will keep flooding the zone with money. At a certain point, the commercial real estate and the factories will have to be built. At a certain point, the companies that can use our newfound cheap energy, the chemicals and the fertilizers and the steels, will all move to where the nat gas is cheap: east Texas, Louisiana, Ohio or Pennsylvania. That is more than a handful, like Dow Chemical (DOW - Get Report) and Nucor (NUE - Get Report), but it hasn't happened yet.
When it does -- when the building starts -- the profits will be diluted and the Fed will curtail the monetary policies that have been so good for the stock market. It's just that with the Catch-22, no one seems to be willing to take the plunge or get the credit to do so.So we hum along, just like this. And the market loves it, as long as we don't build it and the profits will come. Action Alerts PLUS, which Cramer co-manages as a charitable trust, has no positions in the stocks mentioned.