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:
- How corporate bashing and presidential campaigns go together
- How the stock market may be more important than the Fed
Click here for information on RealMoney, where you can see all the blogs, including Jim Cramer's -- and reader comments -- in real time.
Cramer: It's a Presidential Campaign, So Let the Corporate Bashing Begin
Posted on Aug. 24 at 6:29 p.m. EDT
Oh, that's right. It's an election year. It's almost like we forgot what it looks like. We forgot that there's going to have to be some corporate bashing somewhere.
Sure enough, thanks to some outsized price increases by Mylan (MYL - Get Report) of the EpiPen, a necessity for those who need to stop a reaction in its tracks, we were reminded of what lurks as we get to November: promised interference by someone needing to make headlines to win the presidency.
Mylan provided Hillary Clinton with a perfect moment to exclaim that this was "the latest troubling example of a company taking advantage of consumers."
Hmmm, didn't even restrict it to drug companies.
Capitalism needs to be restrained!
I am not saying Mylan should or shouldn't have done what it did. I am saying that from the point of view of the stock market, anything that provokes that kind of knee-jerk reaction is going to have to be recognized as a negative force and not be dismissed on day one.
Which is why I felt that stepping up to buy any pharma into the bell, when they were really getting clobbered, seemed just too glib. Sure, maybe they can bounce in a couple of days, but if Clinton got good press response on this, and it is a way to dodge email discussions, then it is game on for corporate bashing, and stock prices in this rarefied moment can't handle it.
The cross-currents here are huge, though. Pharma both big and little had been tremendous places to be until the EpiPen imbroglio gave Clinton something to soapbox about. I suspect we will have the rally frozen and the whole game of who is Sanofi (SNY - Get Report) going to buy or what drug approval is about to burst on the scene is just too risky right now.
So watch the higher-dividend drug plays for the first bounce, but more important, watch politics. That's what's in charge for the group -- and perhaps for a few days, the overall market -- for now.
Cramer: The Stock Market Is Helping the Consumer This Year
Posted on Aug. 25 at 7:35 a.m. EDT
Is a placid market helping the American consumer more than we realize?
I have made it no secret that I think the endless obsession of so many on the Fed has caused the millions and millions of people to miss this amazing run from the bottom.
That's because many have been conditioned that once the Fed starts raising rates the stock market can only go down, because it should never have been up here in the first place.
Under this Fed-centric view, everything that could cause a stock to go up, whether it be the yield, the shrunken share count or takeovers, are all Fed and central bank fueled developments.
I have never chosen to make investments based on the Fed, because the Fed that I have known over my life of investing is fickle, often wrong, and certainly a huge waste of time if you are trying to pick the stocks of companies that end up dominating in our and the world's economies.
Take Action Alerts PLUS portfolio name Facebook (FB - Get Report) . If you had made up your mind that all that mattered was the Fed would you have even considered the stock of this company? Would it have meant anything to you at all? How about Growth Seeker name Amazon (AMZN - Get Report) ? Fed a factor? Sure, you could argue that a company like Johnson & Johnson (JNJ - Get Report) or General Mills (GIS - Get Report) might have seen their stocks go up as bond market equivalents, but I would contend they would have been doing next to nothing if it weren't for managements cashing in on good opportunities and avoiding bad ones.
But how about the stock market as a whole? If you have a Fed that's actually not fickle, with a grown-up at the helm, and you have relatively stable business conditions -- even if they aren't barnburner -- and, most important, no shocks or surprises to the economy, it may mean more for the overall economy than we think.
It may mean more because that regime produces very little stock movement overall, and I am thinking that very little stock movement is exactly what we need.
Think of it like this. Last year, I had Manny Chirico, CEO of PVH (PVH - Get Report) come on Mad Money and basically lay out what, in retrospect, would be called the "disaster" of retail. We had more inventory, more promotion, more red ink, more negative comparable store sales than could be recalled in ages.
What was going on at the time? I scanned the headlines. The only really salient stories that came up involved stock market declines. Notice I didn't see volatility. I am talking about out and out declines. Back-to-school season, so important for retail, was just crushed by the collapse of the U.S. stock market in the face of Chinese -- not American, but Chinese -- weakness.
The spillover was quite frightening, as we know from the back-to-back 500 Dow point declines at this time last year, extending to down 1,000 at one point before a sharp reversal. I think it put a ton of fear into a consumer who otherwise would have been doing fairly well. Sure, job growth is better right now, but not so much better than it was last year to explain the horrendous retail environment.
It was last year at this time that we put the mall on the critical list and decided to not resuscitate it.
In retrospect, I think a noisy Fed not speaking as one -- many Fed officials were calling for a rate rise -- coupled with the Chinese stock market crash produced weaker retail sales, not Amazon and not a weary consumer.
That's right, I think the stock market hurt the consumer economy and this year, with its placidity, it's doing the opposite. Is there really a better explanation, all other things being pretty much equal, why this back-to-school season is so strong?
Now we are on the eve of Yellen's talk in Jackson Hole and many are bracing for market turmoil. We had a tweet from a presidential candidate calling for a rollback in drug prices, something that hurt Mylan (MYL - Get Report) but could crush, say, new market darling Valeant (VRX) . We had the kind of late-afternoon decline that has historically caused a real hiccup in stocks in the ensuing sessions.
So we have to watch for the end of what can only be considered some pretty halcyon days. But be mindful of the contrast between the back-to-school seasons and remember that the stock market itself, not the Fed, may be a more important conductor to the orchestra that is the U.S. service and retail-based economy than we think.