- the current enthusiasm for retail names;
- the media's misinterpretation of what's happening in housing; and
- the unheralded bank rally.
Ride the Retail Wave?
Posted at 9:45 a.m. EST, Friday, Dec. 23 The oscillator is too high. The sentiment is very bullish. The animal spirits may be ahead of themselves. And Jo-Ann Stores ( JAS), an undistinguished operator of craft stores, gets a humongous, $61 bid from a private equity outfit, up $16 from the day before. Isn't that the real issue in a nutshell? When we think that the optimism gets too unbridled, particularly in retail, which isn't aided by a lot of job growth -- today's number showing just a little positive bump -- when we want to ratchet back or take profits in a segment that seems overextended like the Retail HOLDRs ( RTH), we get a bid that has us scratching our heads. Jo-Ann Stores isn't anything terrific. In fact it's a lot like Michael's, another P/E takeover that I always thought was doing badly! Looks like it can't be. And I haven't see that Toys''R''Us deal, so I figure that, too, can't be doing all that great. > > Bull or Bear? Vote in Our Poll Yet Jo-Ann Stores is now worth a ton more than yesterday, and I want those points, just like I wanted the points you got from J. Crew ( JCG). Plus, last night Bed Bath & Beyond ( BBBY) delivered a terrific quarter, so it's not just takeout that has me hunting through the group. ( Good article on the free site about retail takeovers running rampant.) The Bed Bath & Beyond was so good -- and consider that it was the second excellent quarter in a row after a quarter earlier in the year when the company had been quite bearish -- that I am thinking, Wait a second, darned the retail torpedoes, full speed ahead. That was a magnificent quarter from Bed Bath & Beyond, with excellent expansion of non-Bed Bath & Beyond stores -- particularly the Harmon discount drug stores, a better operator than the skyrocketing Walgreen ( WAG) -- and a nice accumulation of cash to do another couple billion dollar buyback. So, what are we supposed to do? Play the antisentiment, antioscillator game and boycott the market? Or find more Jo-Ann's and Bed Bath & Beyonds. I think the latter. At the time of publication, Cramer had no positions in the stocks mentioned.
The Housing Story Cries Out to Be Told
Posted at 1:27 p.m. EST, Thursday, Dec. 22 The just-plain-embarrassing coverage of the housing industry continues. This morning's existing-home sales trend, which resumed its upward trend with pricing stable, is already being portrayed as a disappointment. The press, to steal a quote from my friend and adviser Matt Horween, is dumb as rocks. From the point of view of someone who has been glued to these numbers, calling them a disappointment is just a plain lie. Every month these numbers come out, and every month we then get projections that it is the last good month and that pricing trends are about to get hammered. Then the numbers come out, and they are not awful, they are better, and the pricing is stable, and then the numbers are quickly pronounced bad, and the forecast is that they are going to get worse. This is nonsense, something that the surging housing index (HGX) tells you is just a plain wrong and biased view. Here's the deal: If home prices were like stocks, they would be pretty much unchanged year over year. Unchanged! Do you believe that if you read the coverage? Sales are going up, not down. They are supposed to be going down right now, this month, if you look at last month's coverage. There is no accountability whatsoever on the reportage of housing. Nothing. Housing is fine. Mortgage money remains hard to come by as manifested by a huge percentage of cash purchases. A lot of homes are being taken off the market by the foreclosure stalling. But in the end, this is a "better than expected from last month" number. That's all that matters to me. It is why the homebuilders are up, and it is a part of why the homebuilders keep going higher. The fools who keep saying that housing is worse and getting much worse need to explain themselves. But they won't. Because I am the only one calling them out, and that's simply not enough to make them question their views and their biases, which, amazingly, after a year of stable pricing, refuse to change. What an extraordinary deviation from the truth. Outrageous, wrong and unquestioned. I'm from the print world. I have seen people get fired for bias and inaccuracy. I guess those days are now long gone. Too bad. It was nice to know that the truth had no deadline. I guess that's just plain over.
Banks Are Rallying Right Under Your Nose
Posted at 11:36 a.m. EST, Thursday, Dec. 22 Call it the great December bank rally. The big bank breakout. Call it something, but definitely take notice of it. Here's why: No one is championing it. The only research we see on it is negative. We keep hearing number cuts. We keep hearing about attorneys general blasts. We keep hearing about departures of CEOs and a strong belief that next year will bring nothing good. We keep hearing that home prices are going down -- more on that in a later posting. And what is the group doing? It is going higher. Onward and upward higher. I could see the banking index (BKX) going to 58 on this move. I have been pushing the banks everywhere, and I see very few believers. People have all been burned so often that no one can blame them for not wanting to talk about them, let alone buy them. But when you see moves based on nothing, no sponsorship, no good news, endless carping about QE2 -- heard a ton of that just today again! -- and Bank of America ( BAC)/ Wells Fargo ( WFC)/ JPMorgan ( JPM) are going up in giant gulps and taking out levels that were supposed to stop them, you have to ask yourself can you afford to miss PNC ( PNC) or JPMorgan? You want to stay in the defensives, which act awfully? I like the materials stocks, but let's understand that it would be nice to own something that's got momentum in earnings -- the materials -- but something that's cheap vs. where it could be next year and, by comparison with Europe, in sterling shape.