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 first you get the big selloff, then another
- How a rate hike is coming
Click here for information on RealMoney, where you can see all the blogs, including Jim Cramer's -- and reader comments -- in real time.
Cramer: A Little Buying Now, a Lot More Later
Posted on Sept. 9 at 2:49 p.m. EDT
Building the hike in. This is what it looks like. You get the big selloff and then you get another big one as we grow closer to the Sept. 21 meeting.
I think volatility begets volatility here. As people realize that the market can still get hammered -- it's been ages since it has -- they will want to sell, not buy, given the proximity of a potential rate hike.
I see no reason to try to catch a falling knife here. A better time to buy may be ahead. We have so much cash for Action Alerts PLUS that we just did a small buy as we were waiting for a decline of this magnitude. We are finding stocks, though, that have already taken it on the chin and, while they can fall more, already represent bargains.
That said, the buys are so puny I would not confuse them with enthusiasm. We have simply waited for some stocks to come in. Now that they have gotten to our levels, we have to put some money to work in them, as we like to do on the way down. When I say "some," I mean small, as members of the club know when they see the bulletins accept that we do some buying, however meager, as our favorite stocks that we've waited for at last come in. Click here to find out our actions.
Action Alerts PLUS, which Cramer co-manages as a charitable trust, has no positions in the stocks mentioned.
Cramer: Are You Prepped for a Rate Hike? It's Coming
Posted on Sept. 9 at 11:20 a.m. EDT
Prepping for a rate hike is very important. This market is not prepped. You need to be prepped. As I said earlier this week, we have raised cash for the charitable trust and told club members of Action Alerts PLUS we are concerned that this could be a replay of December when people weren't concerned enough and the market was prepped back then.
Comments by Eric Rosengren, the president of the influential Boston Federal Reserve, made it very clear that a hike is coming. This is on top of some very firm talk from Fed Chair Janet Yellen that we are ready for a rate hike and then the really stern points made by Vice Chair Stanley Fischer that we should be ready for more than one rate hike.
What is it that people aren't hearing?
Even when I said that a hike was coming I took heat on Twitter for being ignorant for not realizing the Fed won't raise because some poll of investors said they wouldn't. I also heard that the 10-year bond was signaling there would not be a rate hike.
I really don't care when twitter followers say I am wrong. I almost feel like not reading the mentions column because while there are so many respectful people the haters always surface to lecture you in 140 characters about what an idiot you are. The stuff I talk about is subtle and doesn't lend itself to 140 characters. That's why I write here. That's why I have a show. That's why Twitter is just a "heads up" on my view, not the full view itself.
I do care about telling it as I see it and, as I said here, I am willing to sit out a couple of percentage points of upside to be prepped correctly if the Fed does move. You have to be willing to give up some performance if it does nothing. I accept that.
Now, it is true that recent data do not support a rate hike. What I have been saying, to be clear, is that the Fed believes the rates are still at emergency levels and we are no longer in an emergency moment.
That's why I think it wants to move. There's no exogenous events standing in its way and the resilience over Brexit emboldens the Fed even more so.
Once again. Get ready. Look at what happened in December, a quick down move, a stabilization and then a big leg down, and recall that most of that stemmed from the hike coupled with a collapse in oil.
The market recovered but now the Fed is ready to do it again. You need to be ready, too.
We can't keep losing retail and expect that we can have a solid advance.
The sudden decline, though, in almost every cohort of retail is undeniable and unless you think the sector is resting for its next move -- something that I think may be wishful thinking -- you should be concerned, too.
Let's break it down.
First, the pure momentum retailers have stalled or found themselves with headwinds that are pretty unbeatable. The fastest growing retailer I follow, Ulta Salon (ULTA - Get Report) , tripped up by not tripping up. That's not oxymoronic: ULTA did the number. But when you are at 42x earnings, don't talk to me about doing the number. Talk to me about blowing away the number.
The number two and three momentum names, Dollar Tree (DLTR - Get Report) and Dollar General (DG - Get Report) , faltered and faltered really badly. They missed by miles, and Dollar General took its numbers down because of competition. It point-blank cut prices on 400 goods to stay ahead of a newly energized Walmart (WMT - Get Report) . That's disastrous.
Then there's the specialty players. While I was impressed with L Brands (LB - Get Report) and Urban Outfitters (URBN - Get Report) , Footlocker (FL - Get Report) and Dick's (DKS - Get Report) , the first two nailed fashion and the second two profited from the end of the Sports Authority debacle. I still like all four, but I am wary because they can be pulled down by the entire group.
We had thought that the safest sector for retail was housing related. But HD Supply (HDS - Get Report) and Tractor Supply (TSCO - Get Report) botched their quarters badly and that's taken down Home Depot (HD - Get Report) hard. The Fill or Kill team had an excellent piece yesterday how there shouldn't be a read-through to Home Depot from HD Supply's terrible execution because the company confirmed end market demand.
But HD Supply was spun out by Home Depot and it has more than 500,000 customers, so no one believes. Tractor Supply, at one time an amazing momentum story, was felled by both a bad ag market and a weak market in Texas because of a decline in oil. No one seemed to believe those reasons and just slammed the thing down hard anyway.
How about the discounters and close-outs? Here's a group I still believe in, and we are buying TJX Companies (TJX - Get Report) for ActionAlertsPLUS.com. It's a solid play into the holidays and then into the disposal of merchandise from 100 Macy's (M - Get Report) and probably untold Sears (SHLD) , although, even with the stock at $12 they don't seem to know it. HomeGoods is still strong. However, a phony read-through from the pathetic Pier 1 (PIR - Get Report) nailed TJX. Ross (ROST - Get Report) is still very good, but TJ can pull down the stock of its competitor pretty easily.
The big boxers? Costco (COST) is simply "ouch" and trades down on food consistently. It ran too much off the change in credit cards, we sold a bunch for ActionAlertsPLUS.com, but are itching to get back at $50. I think the itch will be scratched.
You want nasty? Check back into the department stores: Macy's is wallowing. Kohl's (KSS - Get Report) has slipped back. Nordstrom (JWN - Get Report) seems to have lost the momentum from that last quarter. And, most shocking, J C Penney (JCP - Get Report) , which had a great quarter, is totally in reverse, even though I want to buy it.
Which leaves two that are doing well: Walmart and Amazon (AMZN - Get Report) . The problem is that both are zero sum. Walmart's delivering in part because it has cut prices and in part because under Doug McMillon it's just doing better. Improved merchandising, less workforce turnover because of higher wages, they are working. Amazon? Just zero sum. Period.
This group, while not as important as health care, technology or finance, punches above its weight in terms of mindshare. The stocks are so visible. The numbers so disturbing. The price action so horrendous. I'd be kidding you if I weren't so worried.
All I can say is, this group needs to snap out of its funk, or the stocks will just get worse. If we hear some positives about back to school, it could reverse. But right now all I can hear when I think about this group is King Midas in reverse. That's not the direction you want if you believe that this market can go much higher without first having a more pronounced decline.
Action Alerts PLUS, which Cramer co-manages as a charitable trust, is long COST, TJX.