Don't take this auto action lightly. When people think of a slowdown in consumer spending, the most direct impact will be a slowing auto market.
If you are looking for clues about whether the
has to tighten or not, you have to be heartened by the action in
. You have to say, hey, maybe consumer spending is slowing. Maybe the Fed won't have to do anything but jawbone the market.
downgraded the autos this morning, I figured they would be down, but this rollover in GM speaks volumes. It says, hey, the growth we saw in this sector in the first quarter has ended.
Does that mean we should go out and buy the drug stocks? I think the market takes these steps one at a time. First it sells off the cyclicals and the autos and then it addresses the winners. (Thus I am selling my
because I think today's move is a false one.)
This is a market in transition. It is looking for heroes (see my earlier
piece about how
got it wrong). We don't have a replacement for the cyclicals yet. I think it is far more likely that it will be tech than the drugs and cosmetics, though, and ultimately, when the cyclicals give up a little more, they are an even better place to be.
That said, I am NOT putting my money down on that thesis yet. Too early. Still don't know what the Fed will do. And as much as I think that the auto action is an important indicator that things may be slowing, right now I care more about whether the Fed thinks things are slowing than whether I think things are slowing.
Why not wait a day?
James J. Cramer is manager of a hedge fund and co-founder of TheStreet.com. At time of publication, his fund had no positions in any stocks mentioned. 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