Sick of the Cyclicals

Plus, a look at the <I>Phantom Menace</I> hype.
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Coke (KO) - Get Report, Gillette (G) - Get Report and other consumer nondurable stocks are rallying and the cyclicals are getting hit? What's this all about?

Whenever I see this pattern it tells me that somone big in the market is betting that these new, higher rates have already slowed down the economy. The bond market is self-correcting. The stock market reacts off the bond market. That's one of the reasons retail acts so badly. It is also why a

Morgan Stanley

downgrade of the autos has clout.

And it is the reason my Morgan Stanley cyclical index today is taking gas. You can't own these stocks if the economy is truly cooling.

I know, I know, rising rates shouldn't change things that swiftly. But the market thinks six months in advance. Today's market is saying that you are going to lose the reckless consumer and corporate spending. I think that's too harsh a judgment, but I can't buck it for now.

Random musings

: Maybe the Fed has seen the

Star Wars

prequel,

Phantom Menace

, and knows its a bomb? Maybe that's why the Fed might take a benign look at the CPI?

I have never seen such hype for one movie in my life. You would think that second-quarter GDP may hinge on the darned thing. It can't possibly measure up.

I know I thought about shorting

Toys R Us

(TOY)

ahead of the

eToys

road show, but everybody tells me you can't short TOY ahead of

Phantom Menace

. I think that

Fox

(FOX) - Get Report

, which really doesn't get much from

Phantom

, also makes sense to sell, but the glow has seemingly overpowered the fundamentals.

I say enough already. The expectations are way too high here and the hype simply can't be met.

James J. Cramer is manager of a hedge fund and co-founder of TheStreet.com. At time of publication, his fund was long the Morgan Stanley cyclicals index. His fund often buys and sells securities that are the subject of his columns, both before and after the columns are published, and the positions that his fund takes may change at any time. 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 at

letters@thestreet.com.