Editor's note: This is a bonus story from James Cramer, whose commentary usually appears only on
. We're offering it today to
readers. To read Jim's commentary every day, please click here for information about a free trial to
When will good news matter again? I am looking at a bunch of stocks that reported terrific numbers and now are noticeably lower than when they reported the numbers. People want to say that's multiple contraction. I think some of it is. But there's something else going on. We are in sell mode, vicious sell mode, because of macro events, war and
problems that still haven't been discounted in the market.
When those negatives are factored in, wherever the market is, I think it will return to the companies with the best earnings, provided that they won't be super-affected by interest rates (in other words, housing excluded!).
The question, therefore, is not so much what price the information is discounted into, but whether there is a date out there on which we can start focusing on the fundamentals again,
regardless of the contraction.
Oddly enough, there very well may be a day, a real
fulcrum day, that will determine when we will start focusing on fundamentals again, plus or minus a week: June 30.
June 30 is a
day, as big a
Big, Bad Event as I can ever recall. It is the Fed meeting where the Fed must hike -- 25, 50, 100 basis points? And it is the handoff day in Iraq -- to who, to what, to where?
Believe it or not, both of these events, once past, afford us the chance to
get fundamental again. Here's why: Those who are holding off because they're waiting for the Fed to show its muscle will be appeased that day. They will buy. Those who think that Iraq is a total fiasco will have to feel, on that day, that it is less of a fiasco if only because the U.S. no longer will have its name on the door of the joint.
Now, we know how this game works; if I say that June 30 is the day and nothing happens that day, you can't say that day is important. The market will have effectively factored in whatever happens on that day in both worlds, perhaps as early as a week before.
Frankly, as a long-side-only player, I am thrilled that there is a day out there that can minimize the macro factors that are swirling around. I can take multiple contraction because, once the multiples are contracted -- 18 times earnings now vs. 27 times earnings last year at this time -- you don't get continual and endless contraction. In fact, you begin to get defensive actions, buybacks like the big one announced this morning by
. You start examining cash flows and you decide that
are too cheap and can stand there and buy back stock. You begin to get the sense that there
something out there worth buying, with the Big, Bad Event out of the way.
So keep that date in mind. That could be the date on which the fortunes of the companies and the fortunes of the stocks begin to align themselves again. Whether it occurs at
9500 or Dow 10,500 or SPX 1000 or 1100 may not be as important as
it occurs, if you can afford to be patient.
General Electric owns CNBC, for which Cramer is a featured commentator.
James J. Cramer is a director and co-founder of TheStreet.com. He contributes daily market commentary for TheStreet.com's sites and serves as an adviser to the company's CEO. Outside contributing columnists for TheStreet.com and RealMoney.com, including Cramer, may, from time to time, write about stocks in which they have a position. In such cases, appropriate disclosure is made.
To see his personal portfolio and find out what trades Cramer will make before he makes them, sign up for Action Alerts PLUS by
clicking here. While he cannot provide personalized investment advice or recommendations, he invites you to send comments on his column to
firstname.lastname@example.org. Listen to Cramer's RealMoney Radio show on your computer; just click
here to buy Cramer's latest book, "You Got Screwed!" Click
here to order Cramer's autobiography, "Confessions of a Street Addict."