- financials vs. tech; and
- disruption in tech.
The Market Is Bigger than Tech Posted at 12:48 a.m. EDT on Friday, July 19 The market is bigger than Microsoft ( MSFT), Google ( GOOG), Intel ( INTC) and eBay ( EBAY). This market is about General Electric ( GE) and Schlumberger ( SLB) and Bank of America ( BAC) and UnitedHealth ( UNH). We have so many OTHER ways to win away from tech that we don't want to be blinded by the high-profile disappointments. Remember, financials are almost as big as tech in the S&P 500 and that's fabulous news for the market. I am dazzled by literally every single bank and broker. Regional, national whatever and they are, even after these terrific earnings they can still go higher. My favorite remains Wells Fargo ( WFC), which won't get expensive until it's $50. But Bank of America can go back to $16 without much of an effort.
The industrials? Take a look at Eaton ( ETN) if you like what you heard from Honeywell ( HON) and General Electric and Ingersoll Rand ( IR). That's the analogue. UnitedHealth and Johnson & Johnson ( JNJ) are the best proxies for how well health care's doing in this market and it is fantastic. These stocks, while expensive now, don't make sense to sell. How are you going to get back in? Then how about that Schlumberger? International drilling is finally being spurred by the inexorable price of oil. I think that bodes well for tons of companies including BP ( BP), which I interviewed last night, and Occidental ( OXY), as well as one that I am shocked isn't higher, Ensco ( ESV).
Finally there's the commentary from Union Pacific ( UNP). You think this country's not coming back? Go listen to that call. Autos? Oh my, they are strong. Chemicals -- including oil -- are amazing. Materials all good. Most terrific, I think, was coal. You need to watch coal. It's not going down. That's why I like Joy Global ( JOY), but it is so hated after Jim Chanos talked about how you must bet against the commodity supercycle by shorting Caterpillar ( CAT). Joy is regarded as CAT without the infrastructure diversity. I think it's just too cheap to avoid. At the time of publication, Action Alerts PLUS, which Cramer co-manages as a charitable trust, is long EBAY, ESV, ETN, GE, HON, JOY, OXY and WFC.
Competition Is Bruising Tech Companies Posted at 6:44 p.m. EDT on Thursday, July 18 Maybe there's just too much competition, too much disruption -- even for the disrupters -- and too little worldwide growth for tech to thrive right now? That's how I feel after interviewing Bill McDermott, the co-CEO of SAP ( SAP), after the company disappointed, in large part because of a slowdown in the Asia Pacific market but also because of the difficulty of switching to a more cloud-like model. That's how I feel after hearing from Microsoft ( MSFT) and Google ( GOOG), where the competition has really stung and the disruption has got even the most disruptive company in the universe, Google, which disappointed on the mobile line. I think this competitive thesis doesn't get talked about enough. If you go on the conference calls of SAP and Oracle ( ORCL), you hear about how dog-eat-dog things have become. These companies aren't even collegial any more. They are just going at each other. Oracle may have declared a truce with new partner Salesforce.com ( CRM), but that's because Oracle simply didn't have enough of a cloud business, in part because that undercuts its lucrative enterprise software business. We know that Intel ( INTC) has got problems with its missing of the mobile move, but I think that it may even be surprised by a resurgent Advanced Micro Devices ( AMD).
Meanwhile, what's winning this market? Companies that have little competition, such as the healthcare maintenance organizations. UnitedHealth Group ( UNH) just isn't duking it out with anyone significant that I can tell. The rails? They don't seriously compete anywhere. The defense stocks? They've pretty much carved out their areas of expertise. The airlines? They used to go at it, but the government has sanctioned a host of mergers that take out the competition pretty much for good. Yep, when companies compete, I mean really compete, like they do in cellphones and tablets and personal computers, it can be brutal out there. And the brutality can hurt the best, as we found out with Apple ( AAPL) in the last few quarters and now with Google tonight. Strength in the worldwide economy can mask the problems that stem from competition for those that do compete globally, but not in this environment, where Europe, Asia and Latin America are weak and can't be counted on for upside. Yep, competition is the common thread of the losers, without the economy to bail them out. Things can change -- new innovations, improving economies. But for the moment, the competition has gotten the better of the tech companies that have reported so far. At the time of publication, Action Alerts PLUS, which Cramer co-manages as a charitable trust, is long AAPL.