Jim Cramer shares his views every day on RealMoney. Click here for a real-time look at his insights and musings.
Cramer: I Want to Take the Other Side of the Strong Yen Trade
Posted at 6:38 a.m. EDT on Thursday, April 28, 2016Look, I totally get why a pajama trader -- my nickname for those who trade futures globally, not stocks, but futures -- would sell our S&P futures down off of Japanese turmoil.
Anything that could cause the Japanese stock market to fall by more than 3% is a wake-up call. Anything that shows the yen advancing 3% vs. the dollar is cause for concern. You can only imagine how many bets have gone awry, this time because many currency and fixed income traders were betting that the Japanese central bank would continue its aggressive policies to stimulate growth, especially initiatives that keep the yen down vs. the dollar.
For several years now, that's been the central bank's key weapon. A stronger dollar makes many of the big Japanese trading companies more competitive, chiefly vs. their American foes.
But here's the issue I have. I deal with individual companies, not countries. I deal with managers who are selling products, not with central bankers who are manipulating currencies.
That means I hear their complaints, and I know what drives them to distraction, what's fair and what's unfair. And for the past several years, many of these CEOs in all different industries have had nonstop complaints about one thing in particular: the unfair advantage that the weak yen has given Japan in all things that we compete against them, especially heavy machinery, cars and computer equipment.
In fact, you can't go more than a few minutes with an auto executive without learning about lost sales to Japanese auto manufacturers. And why not? Toyota and Honda sold 2.5 million and 1.59 million cars here, all of those sales presumably added to by the weak yen.
Caterpillar (CAT - Get Report) has routinely complained offline about how much business Komatsu has taken from it because of the weak yen. Go look at all of the business Hitachi does against our major manufacturers and think about the lost sales there.
Take it a step further: you think they let us sell much in their country? This U.S.-Japan relationship has been about as one-sided as anyone could ever imagine, in some ways worse than China and Korea, which are the benchmarks of currency abuse.
So am I supposed to wake up and say "we have to sell Caterpillar's stock on this yen shift?" Should we furiously dump the stocks of the automakers here? How about HP (HPQ - Get Report) , which has vocally criticized the weak yen policies as a main reason for weaker sales? Is that a better short, or a long this morning?
Oh, and let's not forget that what we do sell here -- drugs and consumer goods -- have suffered mightily from the translation impact of the weaker yen. Should we sell the stocks of companies that we can actually raise numbers for this morning? Does that make sense? Raising numbers for Coca Cola (KO - Get Report) and Johnson& Johnson (JNJ - Get Report) but cutting price targets? Sound good? Taking up estimates for IBM (IBM - Get Report) off a weaker dollar, but downgrading it because the futures suggest its stock could go lower?
I have always felt that in the extremely short term, my knowledge of companies is of no use whatsoever against the dark forces of the pajama traders who take selling in Japan and then turn it into selling in the U.S.
In the end, though, I am stuck with the four walls of the spreadsheet and I say, if you want to sell United Technologies (UTX - Get Report) or Caterpillar or Manitowoc (MTW - Get Report) because of a stronger yen, be my guest. I want to buy the stocks of companies with rising estimates and sell the ones of those with estimates that are being slashed.
In other words, I want to take the other side of the trade.
Action Alerts PLUS, which Cramer co-manages as a charitable trust, has no positions in the stocks mentioned.
Cramer: The Market Needs New Leadership
Posted at 2:47 p.m. EDT on Friday, April 29, 2016
Limping into the close. Just a terrible feel, one of those moments where the market has become universally hated.
I think there's a sense that we are in no man's land. We have leadership but it is eviscerating leadership: The better Facebook (FB - Get Report) is, the worse the rest of media might be, the stronger Amazon (AMZN - Get Report) is, the better it is to short bricks-and-mortar stores. (Amazon is part of TheStreet's Growth Seeker portfolio.)
Plus, we have started taking our cue from disappointments after taking it from positives: Witness the pummeling of Gilead (GILD - Get Report) off its price discounting for its anti-hepatitis C drug that has brought the company's shares down 9%.
Look, I get the sluggish-consumer story. We can't figure out if they have stopped going out, or stopped shopping, or stopped buying iPhones. Whatever is going on seems dreadful.
My take? I think we need to see some new leadership. We have gone about as far as we can go with this current crop of oil and gas and banks and industrials. Now we need to see the airlines or the techs or the soft goods do some rallying. You can't just be following companies like Freeport (FCX - Get Report) or Altria (MO - Get Report) .
Oh, and did you notice what a lousy leader gold is? With the precious metal, you've got a general without a following.
It's tough to muster a rally when Apple (AAPL - Get Report) can't find footing, and a Western Digital (WDC - Get Report) or a Skyworks Solutions (SWKS - Get Report) just gets blasted as if they will never come back. (Facebook and Apple are part of TheStreet's Action Alerts PLUS portfolio.)
Anyway, we will get a dose of optimism on Monday, when Becky Quick interviews Warren Buffett. It's hard to imagine the market just free-falling like it's doing now.
But as Carleton English told us in an excellent article about how the market fares in the wake of the Oracle's confab, don't overstay your welcome if you are a trader and wait until later in the week if you are an investor.
And if you are tired of watching Valeant (VRX) get pummeled (it may have to issue a ton of equity, which is why the stock's weak today), don't forget that hedge fund manager Bill Ackman will be cheerleader-in-chief for the stock when he's on Halftime Report with my pal Scott Wapner. If you hate it, you'll get a chance to drill it on Monday afternoon. I think Valeant will have to raise cash either through some sort of joint venture or a sale of some divisions. That $30 billion in debt is just too steep for new CEO Joe Papa, late of Perrigo (PRGO - Get Report) , to do nothing about. Don't like it but don't see the unlimited downside I did for so long. No, I am not recommending it. I just don't think it is as good a short as it once was.
I think the selling squall will pass. But not before we rebuild some genuine negativity chiefly in the form of some downgrades of high-profile stocks like Apple that can't find their footing.
Downgrades, negativity, right now they are the friends of the bears. But at this pace, they will be the ally of the bulls. Not yet, though. Too soon.
Action Alerts PLUS, which Cramer co-manages as a charitable trust, is long FB and AAPL.