Jim Cramer fills his blog on RealMoney every day with his up-to-the-minute reactions to what's happening in the market and his legendary ahead-of-the-crowd ideas. This week he blogged on:
- the beating financial stocks are taking;
- the innovation of U.S. CEOs; and
- how the extension of unemployment benefits will help retailers.
Owning Financials Just Got Even Harder
Posted at 12:50 p.m. EDT, July 23 How much harder can they punish these financials? How much worse can they make owning this group? It is almost as if they have become worldwide pariahs, stocks that simply can't be touched, that have to be written off and written off worldwide. As I see the stress tests unfold in Europe, you have the worst of all worlds: Half the people think they are phony and not tough enough, and half the people want to sell them because they are too tough and are going to force capital raises left and right. We know from when that happened in U.S. that you get hammered quickly, and who wants to get hammered? I don't know if they are tough enough or not; they don't seem so to me. But it doesn't matter. There's a split, and that's negative. > > Bull or Bear? Vote in Our Poll There are certain stocks that you need to have go higher in order to have a sustained move. You need tech, you need health care, and you need financials. Why? Simply because they account for too much of the S&P and are considered too important to the capital formation that the world needs. Anyone who owns a financial right now is taking his or her life in their hands unless they own a couple of regionals that are deemed "safe," like Comerica ( CMA), even if, if I might add, they aren't any good. Plus, as Tim Collins showed in my "Off the Charts" segment on Mad Money, nobody's bothering to discern now anyway. Credit loss declines should matter; they always have. But the investment banks with appreciable declines are trading like the bank index because of financial regulation, but it isn't like the market loves the others too; it just hates them less. Yes, Wells Fargo ( WFC) is up from when it reported, but the market was up huge yesterday, and on a make-or-break performance day it did nothing for you. So the lesson is, unless you own nothing but multinational stocks, especially with business in Asia, nothing is forgiven. The inverse is true, too: We forgive a Bucyrus ( BUCY) for missing because of China. Owning something that can't be forgiven is totally treacherous. Hence the financials. You own them, they will take the money away. Or at least it feels like it. At the time of publication, Cramer had no positions in stocks mentioned.
Innovative CEOs Created Today's Market Winners
Posted at 11:25 a.m. EDT, July 22 The world is collapsing, and the U.S. is leading the way. So go buy multinational U.S.-based companies to profit off of it. The counterintuitive nature of this market, the disconnect not between the macro and the micro but between what some companies are doing to trump the gravitational pull of an uncertain economy and what others are doing, looms large today. In other words, today's rally has less to do with improving trends in Asia, Europe or North America, and more to do with CEOs taking matters into their own hands and profiting from innovation ( 3M ( MMM)), from a switch from straightforward shipping to logistics ( United Parcel Service ( UPS)), from being a domestic jeans company to being an international sportswear powerhouse ( V.F. Corp. ( VFC)), and from being a mediocre railroad into a well-run transport company ( Union Pacific ( UNP)). A company goes from being a provider of machines to build roads and homes in the U.S. to being the leading machinery company for infrastructure worldwide, especially emerging markets, even if today it's not loved as it should be ( Caterpillar ( CAT)). That reinvention has actually been the theme all earnings season. Eaton ( ETN) goes from being a domestic truck drive-train supplier to an international engineered products company for aerospace and fluid controls, and it blows away the earnings. Pepsi ( PEP) doesn't tolerate the slowdown in the domestic soft drink market and hits the ball out of the park in emerging markets. Stanley Black & Decker ( SWK) shifts from being an also-ran domestic tool company to being the dominant tool suppler to contractors and do-it-yourselfers. United Technologies ( UTX) realizes that there's not a lot of growth in its domestic elevator or heating ventilation and air conditioning domestically, so it swings rather radically to being an international company -- ahead of most others -- with an emphasis on China, where construction and infrastructure are booming and adds a non-cyclical fire and safety business. PPG ( PPG) goes from being Pittsburgh Plate and Glass to a company that might as well be called Worldwide Coatings and Value-Added Chemical and Plastic Solutions. It might as well be located in Hong Kong, not the town of the Pirates, Steelers and Penguins. As for Airgas ( ARG), CEO Peter McCausland takes a local cyclical gas company -- local for me, I am from Philadelphia -- into one of the largest secular industrial gas companies in the world and outperforms just about every company in the S&P 500 by doing so.
Unemployment Extension Is a Boon for Retailers
Posted at 7:39 a.m. EDT, July 23 Looks like 2.5 million people just got $34 billion more than they had to go spend money at Macy's ( M) or Home Depot ( HD) and go buy VF Corp. ( VFC) jeans and Stanley Black & Decker ( SWK) hammers. That's how you have to view this unemployment legislation, as a gift to the retailers. It comes at an interesting time. My contacts in retail are indicating that June, unlike April or May, was a decent month, and that it got better as it went along. The possibility of better numbers from outfits like Macy's or Williams-Sonoma ( WSM) or Kohl's ( KSS) should not be overlooked. Of course, we have to consider the idea of just going with Wal-Mart ( WMT) and Dollar General ( DG) and to a lesser extent Family Dollar ( FDO) as ways to play it. I always shudder at Wal-Mart because I know the president and labor organizer in chief wants it unionized through easy Card Check recruiting. But the idea of doing a high/low Williams-Sonoma/Dollar General trade may be the single best way to play the benefits bonanza and the better consumer feel (Williams-Sonoma will not get a dime of the unemployment benefits, believe me). Retail's been crushed here for a while -- in fact, ever since Bed Bath & Beyond got annihilated on a not-all-that-bad quarter. It has been giving up points left and right until VF Corp. said things are better yesterday and we got the short squeeze. Now, though, I am thinking -- with the benefits, with what looks like to be the end of the malaise-inducing BP ( BP) spill, we could very well be in a situation where estimates for the autumn could be too low.
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