We have a ton of stocks that are like General Mills right now. They have come back down to levels where they aren't cheap or expensive after they'd spent some elevated time as bond-market equivalents. It is going to be hard to get them off the dime if the U.S. stays at this 2% range of economic growth.
But here is what's important about that: These stocks have reached some level at which, because of their consistency and their dividend policies, it isn't worth selling them either. I think the action in General Mills explains why the market has stabilized. With this level of growth, you simply no longer want to sell stocks that look and act like General Mills.
Certainly you are more attracted to cyclical stocks that could do better if you think the second half is going to give you 3% economic growth. That's why, when you get an upgrade today of a company like Western Digital (WDC - Get Report) or Seagate (STX - Get Report), two uber-low-multiple stocks, you know you have winners. You are going to be drawn to companies like Boeing (BA - Get Report), too. Last night, on "Mad Money," Boeing CEO Jim McNerney traced out a 20-year-secular growth path for the company. That stock can go much higher.
But the main takeaway I can see here is stasis for the part of the market that had been falling apart. The General Mills-like companies out there -- with this Federal Reserve right now and this economic growth right now -- are just plain, well, hunky dory. They are clearly opportunities to be bought down a couple from where they are now, but they are opportunities to be sold if they climb back to where they had been before the Fed's May 22 signal that the economy's risk is now toward acceleration and not de-acceleration.The Big G doesn't have the cyclicality the market craves, but it doesn't have the pitfalls the market fears. So there's nothing to do and, sometimes, when there is nothing to do, it's a terrific statement for the market as a whole. Because this huge cohort just isn't going to hurt us anymore -- at least from these levels.