This Day On The Street
Continue to site
This account is pending registration confirmation. Please click on the link within the confirmation email previously sent you to complete registration.
Need a new registration confirmation email? Click here

UPS' Monkey Wrench, Why New Highs Matter : Cramer's Best Blogs

NEW YORK ( TheStreet) -- Jim Cramer fills his blog on RealMoney every day with his up-to-the-minute reactions to what's happening in the market and his legendary ahead-of-the-crowd ideas. This week he blogged on:
  • a lesson from UPS; and
  • market psychology.

Click here for information on RealMoney, where you can see all the blogs, including Jim Cramer's -- and reader comments -- in real time.

UPS Throws a Monkey Wrench

Posted at 11:49 a.m. EDT on Friday, July 12

Will the real economy please stand up, please stand up?

I can't tell you how many people I know who were using United Parcel Service (UPS - Get Report) as the giant chit in the recovery play. It made so much sense. We know that the U.S. is getting stronger. Europe seems to have bottomed. How bad could Asia be? We have so much Internet business. We know that this is one of the best-run transports in a totally transport-driven leg of the bull market. Plus, let's face it, since FedEx (FDX - Get Report) is all the way back to almost $105, why not play the laggard?

What can I say? How wrong could investors and traders be? A preannouncement of all things. A darned preannounced shortfall. And a bad one. So $4.98 in earnings per share for the year goes to $4.65-$4.85. Or more like it, $5 and change -- the whisper -- is going to be perhaps 10% too high. You want to get really down and dirty? The reasons for the shortfall read like a disaster roll call:
  1. Too much capacity in the industry -- this, even though we have had FedEx take out a ton of capacity.
  2. Customer preference for lower-yielding shipping solutions, meaning that people are feeling less rich and opting for slower shipments. I mean, what's the hurry? It will get their eventually. Where is the urgency in the economy? Don't look at UPS.
  3. And worst of all, a slowing U.S. industrial economy. Huh? I thought it was accelerating.

Talk about a triple whammy. What does it say? To me it says that everything you have heard about a strengthening economy must be put on hold, because perhaps rates went up too much, the consumer confidence figures aren't representative, and there's been a big decline around the globe -- this is a global economy that has affected perhaps the most important commerce bellwether, save FedEx, in the world.

Now, before we jump to conclusions, we do know that there are some parts of the economy -- at least the U.S. economy -- that fly in the face of this preannouncement. Auto sales are very strong. You don't get a big increase in the price of gasoline if there isn't a pickup of some degree in business. We know there is job growth.

Check Out Our Best Services for Investors

Action Alerts PLUS

Portfolio Manager Jim Cramer and Director of Research Jack Mohr reveal their investment tactics while giving advanced notice before every trade.

Product Features:
  • $2.5+ million portfolio
  • Large-cap and dividend focus
  • Intraday trade alerts from Cramer
Quant Ratings

Access the tool that DOMINATES the Russell 2000 and the S&P 500.

Product Features:
  • Buy, hold, or sell recommendations for over 4,300 stocks
  • Unlimited research reports on your favorite stocks
  • A custom stock screener
Stocks Under $10

David Peltier uncovers low dollar stocks with serious upside potential that are flying under Wall Street's radar.

Product Features:
  • Model portfolio
  • Stocks trading below $10
  • Intraday trade alerts
14-Days Free
Only $9.95
14-Days Free
Dividend Stock Advisor

David Peltier identifies the best of breed dividend stocks that will pay a reliable AND significant income stream.

Product Features:
  • Diversified model portfolio of dividend stocks
  • Updates with exact steps to take - BUY, HOLD, SELL
Trifecta Stocks

Every recommendation goes through 3 layers of intense scrutiny—quantitative, fundamental and technical analysis—to maximize profit potential and minimize risk.

Product Features:
  • Model Portfolio
  • Intra Day Trade alerts
  • Access to Quant Ratings
Real Money

More than 30 investing pros with skin in the game give you actionable insight and investment ideas.

Product Features:
  • Access to Jim Cramer's daily blog
  • Intraday commentary and news
  • Real-time trading forums
Only $49.95
14-Days Free
14-Days Free


Chart of I:DJI
DOW 16,027.05 -177.92 -1.10%
S&P 500 1,853.44 -26.61 -1.42%
NASDAQ 4,283.7530 -79.3910 -1.82%

Our Tweets

Free Reports

Top Rated Stocks Top Rated Funds Top Rated ETFs