If Monday's bank rally confused you, how about if we get a consumer products rally today off the Merrill Lynch conference that is starting? Wouldn't that throw you at a time when the bond market is gripped with rip-roaring economitis?
Yet, it is what I think will happen. This market loves a great rotation, and any good news from the once-beloved consumer sector will cause three or four days of reckless kitchen-and-bath buying. Especially with the likes of
blowing up -- although they sure tried to blame everything on the Pentium-III transition during last night's conference call (except what they could blame on
aggressive pricing, of course).
How sure am I of this new rotation? Well, the analogue is that if I like
Procter & Gamble
then I must like ... the bonds. And sure enough, I bought some 30-year paper at 93 and change yesterday.
I think we are setting up for a bond rally into Friday's number, because by the time we get to Friday's report, a gigunda 400,000 job creation head slam will be priced into the bonds. The only thing painful about the number will be the media's inane scramble to explain why bonds go up in price (down in yield) on such a strong number! Lord, get me the mute button, as the notion of being "priced in" always eludes those guys.
In the bad old Treasury auction days, when the government used to destroy the market quarterly with supply, I whipped around the long bond market with reckless abandon. Nothing feels better than beating the bond market; nothing. My first tranche, or buy, was almost always wrong, almost always too early. I suspect this one will be, too. But that comes with the territory. I simply don't believe that the economy is gaining speed from the last quarter. If that is the case, I want to be a buyer of the type of stuff that Merrill Lynch is showcasing, as well as another round of bonds if they break to 5.75%.
Again, for those of you in the lottery ticket mode, a dollop of P&G must seem like an S&H green stamps of an investment or maybe a coupon from the Sunday inserts. But for me, it's a trade, and I want to take it for a couple of days.
If you join me, be aware that these stocks rarely can sustain momentum for more than a week. It is not like the old days, when they would go up for weeks at a time. Yet, it sure beats losing money in MUEI!
James J. Cramer is manager of a hedge fund and co-founder of TheStreet.com. Under no circumstances does the information in this column represent a recommendation to buy or sell stocks. 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 invites you to comment on his column by sending an email to email@example.com.