A clear indicator of what I think is happening is the
dichotomy. Notice right now that Merrill is down. I think that -- for the moment -- that makes sense.
Merrill is considered to be a proxy for short-term interest rates -- I don't make the rules, but it does tend to trade with them. (In English, when the
raises short-term rates, Merrill gets hurt.) Goldman, on the other hand, has become more of a proxy for the
IPO underwriting market, particularly the tech IPO market. Goldman is marginally higher. (In English, Goldman is a techy financial.)
This dichotomy captures the market's sentiment right now: Inflation is bad, which will cause the Fed to raise rates, which hammers financials -- but tech trumps inflation because it grows fast even in a higher rate environment. This debate is reminiscent of the rise off the bottom last year in
vs. the stalling of the real economy stocks.
IT IS NOT COINCIDENTAL THAT IF YOU WERE LONG
HERE YOU GOT YOUR HEAD SLAMMED AS HARD AS IF YOU WERE LONG
But Ariba has much more upside than P&G. If you are going to get beat up in both, you might as well get into the ones that can run higher and faster when the running is good. Another reason to be bullish on tech even if you are bearish on the market.
James J. Cramer is manager of a hedge fund and co-founder of TheStreet.com. At time of publication, his fund was long Goldman Sachs. 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