Two days' worth of muted inflation readings have made cyclical stocks like
far more attractive, Jim Cramer said on
"Stop Trading!" segment Wednesday.
After the consumer and producer price indexes came in with moderate readings Tuesday and Wednesday, "people are willing to pay more for earnings, particularly cyclical earnings," Cramer said, referring to companies like big materials and equipment names whose growth is closely linked with economic expansion.
Cramer said strong comments by management on Deere's third-quarter earnings call Tuesday should cause bearish Wall Street analysts to reassess the company's prospects. "I love the fact that they said housing is good," Cramer said of Deere execs. But he added that news reports on the company continue to ignore the good news and focus on the bad. "That's the last homework I'll ever do," Cramer joked.
Cramer said this week's runup in retail shares exposes another case of media handwringing. Newspapers and magazines claim the consumer is being crushed by the decline in housing prices, Cramer said. But strong numbers at
, as well as rallies in
, put the lie to that notion, Cramer said.
"These stocks are on fire because the consumer is on fire," Cramer said, adding that retail spending depends less on gas prices and housing trends than on employment, which continues to be strong. The retail sector has the makings of a "bear rout," Cramer said.
Moreover, Cramer said, inventories are low across the board, which means the current quarter isn't likely to be slammed by a wave of markdowns. The really good news, he added, is that "consumers are spending on big-screen TVs again," which is good news for flat-panel-display supplier
. "They are spending on
Cramer also noted the action in casino stocks, saying that
has been unfairly hit and could easily double to trade comparably with
Los Vegas Sands
At the time of publication, Cramer was long Alcan.
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