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NEW YORK ( TheStreet) -- It's going to get ugly before it gets pretty, Jim Cramer warned his "Mad Money" viewers Thursday after the markets received their first sizable haircut of the week.
Cramer said the government has finally created enough concern that people are starting to notice, and the earnings estimates will have to come down as a result.
That will be the case with United Technologies (UTX) -- the company announced it will be cutting 5,000 jobs as the government shutdown enters its third day. Cramer said that investors can expect estimates to Lockheed Martin (LMT), General Dynamics (GD) and Northrop Grumman (NOC) to follow suit.Why should investors expect these estimate cuts? Because no one will increase spending ahead of what is becoming a total calamity in Washington. Congress needs to create far more pain and suffering in order to make its point, he continued, which is why the analysts will start getting ahead of the situation shortly. Then there's the "Mickey Mouse" factor, Cramer explained, where the longer the shutdown goes on the more international investors will view U.S. bonds and investments as a joke and move on to more stable and predictable investments. The Mickey Mouse factor used to refer to the rest of the world in decades past, said Cramer, but now we're the ones being laughed at by the rest of the world. Cramer said it will likely take another week before the investing public and the analysts begin to realize just how bad things could become, which is why he expects a lot more pain ahead before the time to get back in will be upon us.