NEW YORK (Real Money) -- 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:
- Why what's good for Europe is not good for the U.S.;
- Why same-store sales are sometimes the only number that counts;
- The market's strange reaction to the Time Warner Entertainment earnings report.
Click here for information on RealMoney, where you can see all the blogs, including Jim Cramer's -- and reader comments -- in real time.
Fool Me Once, Shame on You; Fool Me Twice...
Posted on Aug. 3 at 6:55 p.m. EDT
The setup was so bad. It happened again. As I discussed with my friend and colleague Matt Horween, when you see the minerals complex down and the dollar stronger and oil selling off, you almost always get a pasting. But somehow the futures have a whole new wrong pattern: They think what's good for Europe is good for the U.S.
Yet lots of the good earnings I see from Europe are at the expense of American companies.
Compare Procter & Gamble (PG - Get Report) to Unilever (UN) if you want to know what I mean. Unilever has a fabulous emerging-market business that's doing amazingly well. Paul Polman is a terrific chief executive. However, what Unilever really has going for it is that it's denominated in euros and PG's in dollars. That accounts for a big part of the winning comparison.
The chemical companies in Europe are doing fabulously. Ours are doing terribly. We are being priced out of a lot of that business.
And, of course, our retailers that need foreign dollars to come over to make the quarter have stumbled.
So when you see Germany up big in the pre-market, don't presume good things. We go down on big oil drop days. We go down when the dollar's too strong.
It's what happens.
I think the fakeouts are so horrendous that they take people's breath away. Does anyone doubt, for example, that fortunes were lost betting that Apple (AAPL - Get Report) would run today when it opened higher and you thought you had a good day coming? As much as I like Apple the company -- it's an Action Alerts PLUS pick -- it's trading like an oil stock these days: broken chart, linked to China. Thanks for nothing.
So be careful at the opening. It's just tiresome to be fooled over and over again.
Sears and the Tyranny of Same-Store Sales
Posted on Aug. 3 at 3:41 p.m. EDT
The tyranny of same-store sales is endless. This morning, Sears (SHLD) came out with its new liquidity figures and they were incredible. The company now has $1.8 billion in cash because of a spinoff of the proceeds from its Seritage Growth Properties (SRG - Get Report), a considerable boost from the paltry amount it had in cash before this deal.
When you went through the release you realized that the Sears' balance sheet is much improved. In fact, it seems downright bountiful when you consider that the entire market cap of the company is $2 billion. That's right, $1.8 billion in cash with a market cap of $2 billion.
But just like Whole Foods (WFM) had to learn that the amount of money a store makes isn't as important as its comparable store sales, Sears had to learn that its liquidity isn't as important as the same-store sales: minus 6.9% for Kmart and minus 13.9% for Sears.
Now I hesitate to even put these two companies in the same paragraph. Whole Foods is immensely profitable. If you owned it all and you weren't public you would be making fortunes.
Sears, on the other hand, is just a black hole because of those same-store sales, regardless of the verbiage in the Sears release that tried to portray the capital raise as all important.
If Sears were doing as well as the company contends then it would just take itself private. But does management really want to own all of a company that has those kind of horrendous same-store sales?
But I don't think so.
How About Some Numbers, Entertainment Companies?
Posted on Aug. 5 at 7:38 p.m. EDT
So, now all subscription declines in the entertainment business are material declines, right? Isn't that how Time Warner (TWX) could go down almost as much as Disney (DIS - Get Report) on a very good quarter, one where they mentioned that they had immaterial, glacial declines? I can't recall a time when a seasoned, mature, savvy management was simply not taken at its word whatsoever as the Time Warner management was today on its conference call.
And, if this company had reported, say, a week ago, it might see its stock go higher, not lower, given all the positives.
That's what was so nutty about the decline in this group today. If you go over the whole panoply of companies, we really don't have any idea how many customers aren't being customers any more. We can draw some broad generalizations about how cable's not much of a growth business, but then again there are plenty of not-much-growth businesses that, when aligned with other aspects like, say, advertising and motion pictures that are excellent businesses.
But these stocks today traded like oil companies, many of which are losing money on every barrel they extract right now. These stocks are trading as if we are going to see double-digit declines in usage.
I think it's absurd.
But it also shows, at least to me, how inflated these stocks got that they could just lose billions of dollars of market cap on what might turn out to be a very small number of subs relative to the entire pie.
Now, obviously, no one ever wants to have to cut the price of a product. But that's what we are really speaking about with these companies. The cable companies and the providers of programming -- everyone -- will have to take a haircut if the nightmares come true.
One thing's for certain, after a day like today if companies had been candid and just give us the exact numbers, we wouldn't have had this hideous reaction.
It would have been bad, but not oil and gas bad.
Maybe they will learn next time they report.
Or maybe they should just cut prices to see if people come back. It's better than the purgatory they find themselves in now.