The real killer of stocks isn't tariffs or interest rates, Jim Cramer told his Mad Money viewers Tuesday, it's unrealistic expectations. Many stocks have simply been unable to rally off of good news. But that's not the fault of the companies, it's a failure of the analysts.
Case in point: Apple (AAPL) - Get Report , a stock which Cramer owns for his charitable trust, Action Alerts PLUS. Apple shares soared 3.2% after the company reported that it sold more phones, including the iPhone X, and more services than anyone expected.
But Apple is the outlier, Cramer noted, as analysts have been cutting estimates and downgrading the stock for weeks going into earnings. For most stocks, the expectations only rise, which causes the actual news to be seen as a big disappointment.
That was certainly true of Caterpillar (CAT) - Get Report last week, when the company reported great earnings, but caught analysts off guard with a "high water mark" comment that sent shares plunging. Today, Cummins (CMI) - Get Report had similar strong earnings, but fell 4.1%. Likewise with United Technologies (UTX) - Get Report , a stock that's only been falling since it reported stellar results.
Whether it's Goldman Sachs (GS) - Get Report , IBM (IBM) - Get Report or Under Armour (UAA) - Get Report , it's the analysts that control the direction of a stock reporting earnings, not the company. If the analysts set expectations properly, a stock should rise on good news and only fall on bad news.
Over on Real Money, Cramer says he thinks that Apple is a huge part of the problem here. So's trade. So's raw costs. Get more of his insights with a free trial subscription to Real Money.
Off the Charts: Oil Refiners
In his "Off The Charts" segment, Cramer checked in with colleague Marc Chaikin to learn more about the oil refiners, which have been on a tear as of late. Chaikin liked what he saw.
Chaikin first looked at the daily chart of Marathon Petroleum (MPC) - Get Report , which is buying Andeavor (ANDV) for $23 billion. Outside of the acquisition however, Chaikin noted strong technical indicators, including his own Chaikin Power Gauge, Chaikin Relative Strength Indicator and Chaikin Money Flow oscillator.
Executive Decision: AGCO Corp.
For his "Executive Decision" segment, Cramer again spoke with Martin Richenhagen, chairman and CEO of AGCO Corp. (AGCO) - Get Report , the agriculture equipment maker which just posted a 23-cents-a-share earnings beat and a 7% boost in their dividend. Shares responded, as per the new normal, by falling 2.3% on the news.
Richenhagen said that North American agriculture is back, with sales up 30% year over year. He's also seeing strength in England, Germany and France. Perhaps the only region that's weak, he noted, is South America, but he felt that it was only a matter to time before that market picks up as well.
When asked about steel and tariffs, Richenhagen said that he's a big believer in free trade and thus doesn't like sanctions or tariffs. He said while retaliation from China is not a problem for AGCO, which hedges most of its steel costs and manufactures around the globe, it could be a problem for American famers. Protectionism doesn't solve anything, he concluded.
What About Tax Reform?
Believe it or not, the markets have repealed virtually all of their gains since Congress passed sweeping tax reforms last year. But when you look at the underlying economic data, you see a starkly different picture of the U.S. economy.
Cramer said nearly every CEO he talks to has a bullish story to tell. That was certainly the case with all of the utilities he's spoken to recently, all of which are seeing a pickup in energy usage, a sign of strong economic growth.
Speaking of pickups, perhaps the only bright spot in Ford's (F) - Get Report earnings this quarter was strength in F-Series pickups, the workhorse of American small business. The financials are also strong, with First Data (FDC) - Get Report and Visa (V) - Get Report both seeing strength in their earnings.
Even the homebuilders, who are contending with higher interest rates, are able to eek out strong earnings. Their stocks may not show it, but their earnings and revenue do.
Cramer and the AAP are buying more shares in Emerson Electric (EMR) - Get Report . Find out what they're telling their investment club members and get in on the conversation with a free trial subscription to Action Alerts PLUS.
Executive Decision: Cullen/Frost Bankers
In his second "Executive Decision" segment, Cramer spoke with Phil Green, chairman and CEO of Cullen/Frost Bankers (CFR) - Get Report , the Texas-based bank that posted a 13-cents-a-share earnings beat with rising net interest margins. Shares of Cullen/Frost are up 22% for the year.
Green said that Texas is one of the best economies in the world right now and the key to his bank's strength has been their excellent team that has taken advantage of the economic activity with stellar execution.
Green continued by noting that while tax cuts have helped Texas, so too has deregulation, which has given businesses more clarity which in turn, helps them move forward.
Cullen/Frost has also been benefiting from higher interest rates, Green said, which is aided by 10% loan growth.
Cramer added that when people get paid more and businesses expand, that's a good thing.
Search Jim Cramer's "Mad Money" trading recommendations using our exclusive "Mad Money" Stock Screener.
To watch replays of Cramer's video segments, visit the Mad Money page on CNBC.
To sign up for Jim Cramer's free Booyah! newsletter with all of his latest articles and videos please click here.
Join Jim Cramer on May 5 for TheStreet's Boot Camp for Investors
Meet Jim Cramer and more than a dozen top market experts on Saturday, May 5, in New York for How to Diversify Your Portfolio: A Boot Camp for Investors.
- An exclusive market update from Jim.
- A keynote interview between Jim and PayPal CEO Dan Schulman.
- Break-out panels with top market experts like Tony Dwyer, chief market strategist at Canaccord Genuity; Mike Hanson, senior vice president of research at Fisher Investments; and Peter Hug, global trading director with Kitco Metals.
- Roundtable discussions with TheStreet's Carley Garner, Stephen "Sarge" Guilfoyle, Bob Lang and other columnists.
All attendees will also receive a free one-year subscription to our newest premium Web site, Retirement Daily (a $99 value).
Where: The Convene Center, 117 W. 46th St., Manhattan, New York
When: Saturday, May 5, 8:55 a.m.-2:45 p.m.
Price: $149 for Real Money and Real Money Pro subscribers (normal price $250). Includes a free one-year subscription to Retirement Daily (a $99 value)
Get more details or buy tickets here.
At the time of publication, Cramer's Action Alerts PLUS had a position in EMR, AAPL, GS, NVDA.