Cramer Takes Cue from MMM

Publish date:

A third of the

S&P 500

hangs in the balance, and


votes to bring it down.

Wednesday, like


Tuesday, was an important day to those who toil in the front-line trenches of stock buying and selling. Oracle Tuesday engrained in us a tremendous fear of techs that ply business in East Asia, because while the percentage of revenues from East Asia wasn't that great, that region represented a ton of the marginal growth for the company.

But by Monday of this week, the front-lines people already stopped worrying about that region. Heck, we didn't even bother donning our helmets. Seemed like R&R up here. Peer into the minds of those who pull the triggers in the trenches and here is what you will see: "Hey, didn't Korea solve its problems with that won thing, and Japan stimulated its economy enough to get the yen going again?"

MMM brought us back to reality. Try as we may to limit this East Asian flu to just tech and construction stocks, it keeps roaring back in Captain Tripps fashion. (Oh no, not everyone is a

Stephen King

fan? In his best, "The Stand," a government-devised contagion, nicknamed Captain Tripps, spreads like wildfire, slaying as many of the people of the world as Ivory Soap is pure.)

MMM told us that if you are a company integrated into the world's economy, the first quarter could be crummy. Arggghhh. One of the incredible aspects of people on Wall Street is the speed with which they can isolate the businesses a company may be leveraged to. It is obvious that


is leveraged to oil and natural gas. We know that


is leveraged to chocolate.

But MMM has always defied description. Ask a couple of hedge fund guys what MMM does and they will always give you the same answer: "I don't know, but it is pretty much leveraged to worldwide GDP."

There's the crux of the problem. If MMM, a diverse, well-run mosaic of businesses integrated into the fabric of our lives, is blowing up, that means somewhere around the world things have gotten quite soft.

And you can't blame tech anymore. MMM already jettisoned its Imation division because it did not want to be hostage to the boom-bust cycles of personal computer storage.

The upshot? MMM's downturn will spill over to other non-tech companies. Hey, we even sold some drillers yesterday off the MMM news because a worldwide slowdown will bring oil down to levels that we don't care to see if we are betting on big day rates. We offloaded a bunch of industrial companies that told us not to worry about East Asia. Yes, again, we are shooting first and asking questions later.

MMM's was yesterday's tell. (Remember a couple of weeks ago when it was 3Com? Click

here for that column.) It was the stock that told you that we aren't getting out of this East Asian mess intact with the same stocks.

Meanwhile, the utility average goes up and up and up. And that end-of-the-year Dow


suddenly becomes that much tougher, if you took the Over of course.


Random musings:

Those of you thinking of participating in the


end-of-the-year Round Table this year, consider yourself warned: The virtual me will be there, asking questions, pointing out inconsistencies and keeping you honest. No more skating. Better subscribe to


if you want to know how you really did. Sorry Alan, but I don't think I can take another year of your total lack of accountability toward your buddies. (Oh there goes motor-mouth again!)

James J. Cramer is manager of a hedge fund and co-chairman of Under no circumstances does the information in this column represent a recommendation to buy or sell stocks. Mr. Cramer's writings provide insights into the dynamics of money management and are not a solicitation for transactions. While he cannot provide investment advice or recommendations, he welcomes your feedback, emailed to