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 bank stocks must be doing if even Wells Fargo is gaining
- How Donald Trump and fossil fuels mix
Click here for information on RealMoney, where you can see all the blogs, including Jim Cramer's -- and reader comments -- in real time.
Cramer: When Even Wells Fargo Gains, Bank Stock Must Be Roaring
Posted on Nov. 17 at 11:43 a.m. EDT
The banks are on fire again Thursday. They are growing off the notion of faster growth in 2017, the deregulation that's coming and the notion of multiple rate hikes.
I am just putting this note out ahead of our Action Alerts PLUS conference call to say this kind of shallow dip buying confirms what I wrote earlier, which is that we can't be penny-wise. You simply may not get that large dip the more that we realize that the out-of-control compliance costs could be going away at the same time the rate hikes may be coming.
Look no further than the 0.8% gain of Wells Fargo (WFC) on the day when it issues a release saying customer interactions with tellers year over year for the month of October were down 10% and new credit card applications "continued their downward trend with applications down 50% year over year," in part because of reduced marketing spend but also because, again quoting WFC, "a full-month impact of customer reaction to the sales practices settlement." (Wells Fargo is part of TheStreet's Action Alerts PLUS portfolio.)
If your stock can rally 0.8% on that news, then it's going to take an awful lot to bring it down.
There was a time when bank stocks would go down when a Fed chief spoke in front of the Hill. There was a time when the bank stocks went down when we had anything negative about capital requirements.
But now? They go up on any lift in rates like the one we got for the out-of-control-high housing starts--plus 25%--and the lowest jobless claims in four decades.
That's growth. Growth means higher rates. But natural higher rates.
And higher rates trump even a negative monthly group of metrics from the scandalized Wells Fargo.
Hmm, "trump"--now that's the correct verb.
Action Alerts PLUS, which Cramer co-manages as a charitable trust, is long WFC.
Cramer: What Lies Underneath? Buyers
Posted on Nov. 16 at 11:25 a.m. EDT
There are wacky bids underneath all over the place and they are making for a far more orderly market than one would expect.
Take Disney (DIS) . A week ago it was swooning on weaker ESPN numbers until CEO Bob Iger said on his conference call in answer to a Michael Nathanson question that he's feeling bullish about ESPN.
Today, Deutsche Bank (DB) pretty much signals an all-clear based on that call and says things are indeed getting better. So there are buyers all over the place.
Last week, people widely panned Starbucks' (SBUX) quarter, but look out as it is now nicely above where it reported. That's pretty monumental given that the company didn't do the U.S. comp number people were looking for.
TJX (TJX) , like Starbucks a big holding for Action Alerts PLUS, gave a totally bullish conference call Tuesday with its usually cautious guidance and somehow the guidance was viewed as gospel. Today it's viewed as nicely conservative and the stock rockets.
Target (TGT) had missed projections for the last couple of quarters and didn't have as strong growth online as some were looking for. Plus, when CVS (CVS) reported its miserable call, the stock got blasted because CVS said its drugstores in Target weren't anything to write home about. So Target didn't participate in the great retail rally that we had last week. Now it is front and center after that stronger-than-expected quarter. And make no mistake about it, that quarter was stronger than expected. (Disney and CVS are part of TheStreet's Trifecta Stocks portfolio.)
There are lots of stories like that out there these days. People were perplexed about the Illinois Tool Works (ITW) and Cummins Engine (CMI) and Caterpillar (CAT) quarters, but they turned out to be classic buying opportunities after years of being sell opportunities if the stocks had run. I can't explain to you how amazing that is. Here are three stocks that have spent months and months in purgatory when they have missed or guided down or slashed forecasts. Now they are up gigantically.
I can't believe how much CAT must be hurting the shorts. All they did was say China would be better next year but gave little hope for the U.S. But that was before Donald Trump's election. Now it is widely hailed to be the stock to own! Mind you, this is happening at a time when the dollar is in total blast-off mode, which means the competitive advantage of a CAT vs., say, a Komatsu (KMTUY) is going kerflooey. Does that mean Trump will try to get the dollar down vs. Japan? Or does it mean lost sales to the Japanese? Or will he simply say the Federal Highway Administration will have to use American equipment if it's going to get the money it needs after Trump issues the $500 billion 30-year Make American Highways Great Again bonds? Same with the states, of course.
How about this bid underneath for oil? That's something isn't it? We have a president who has spoken so negatively about OPEC for so many years and has encouraged the U.S. drillers as aggressively as possible, which just accentuates the glut, and oil takes off! Of course, so do the oils, helped by the futures, which are rallying even though the inventories and the strong dollar would say otherwise.
Action Alerts PLUS, which Cramer co-manages as a charitable trust, is long SBUX and TJX.
Cramer: Here Is Why the Post-Election Rally Continues to Have Legs
Posted on Nov. 16 at 6:48 a.m. EDT
Laissez faire? Big push to help? Getting out of the way?
We have ascribed all of the above characteristics to Donald Trump and his new presidency, and who knows if it will all happen.
Trump, and the rally itself, have been hard to quantify, in large part I think because investors are being tantalized with an oddity that we aren't used to. We have been conditioned to get either a Democrat who wants lots of government spending--helpful to the economy--but also lots of regulation and high taxes--unhelpful to the economy--or a Republican who wants tax cuts and deregulation--helpful--but also wants to take a hatchet to government spending--unhelpful.
We've just not seen this combination from either party. So the novelty is propelling the big-cap rally.
But how about the small-cap show, which is also on fire? This one's on Trump too, because there's another big change not talked enough about that's going on.
A central tenet of President Obama's thinking is that there is too much inequality between the rich and the poor. Hillary shared that thinking and wanted higher taxes on the rich to make up the difference.
But I think the American people turned out to not care all that much about inequality. They don't care about getting the greatest clean energy jobs and they aren't about to become computer science majors at Stanford just because the rich pay higher taxes.
They don't care about how much someone else makes.
They just want to work and put food on the table and were just sick of Washington getting in the way. They tired of new rules that they couldn't understand and changes in health care and taxes that were too hard, and how employers didn't like the rules, either, so they moved to Mexico if they got bigger, where they can produce things for one tenth the price--or they just didn't bother to expand.
The stocks of small capitalization companies are rallying because these companies are the ones that can least afford all of the endless, surprising rules and regulations that the Obama administration put out.
I don't like talking politics. My mom taught me it was impolite. But I have founded many businesses besides being a writer and TV host and I can tell you that you fear the government constantly as a small business person. You can't think of a thing it does for you, but you know dozens of things it's ready to do against you.
The complaints are correct: there are too many rules and regulations and to many people you have to pay to figure them out for you, too many lawyers and accountants you have to hire and too many upfront learning costs expended simply so you don't screw up.
I think that these small-cap companies as a whole are much closer to the kind of situation I find myself in both at The Street as a director and as an owner of an inn and a bar. You just don't want to do anything wrong, to the point that you don't want to do anything, including expand. It's easier and less risky not to.
Now, I am no simpleton and I know that the president doesn't write the rules that keep popping up that I try to follow.
And some of them are probably in way too deep to uproot. Others are good and need to stay.
But small business is about trying to get bigger and the federal government has been uniquely focused on the worker getting his or her protections, even if it means fewer jobs down the road.
I totally respect that world. There were so many things that went wrong during the Great Recession that business did and there are so many things that the government wanted to rectify that many rules made sense.
But they also made it hard to grow, and growth is what makes capitalism work better for everyone than the government ever can. That's why the rally, as odd as it seems, continues to have legs. A business person in the White House who has built his career on expanding isn't going to change his stripes and start worrying about curing inequality by law.So the market has lapped up the new ethos and the result is a small-cap rally that threatens to overtake the big-cap rally in a race to new highs. Judging from the rhetoric so far, it's a worthy footrace.
Cramer: Trump Is a Friend of Fossil Fuels
Posted on Nov. 15 at 6:40 p.m. EDT
Every day we discover some new nook and/or cranny in the Trump rally. Today it's energy. As the group started getting some lift off the usual OPEC story that floats--and always works--when oil goes to the low $40s, we started to hear about how much better fossil fuels will be under Trump.
I don't know exactly what that will entail. The drilling on federal lands or protected lands really means nothing. The states control most of this stuff.
But it does make you feel like it is safer to own then because, when you get some earthquake or fire or spill, you don't have to think, "He's going to shut the industry down."
One thing is certain: Trump doesn't impress people as a guy who is eager to shut down fossil fuels. He seems like a guy who is trying to figure out how to make more people have jobs, and that includes fossil-fuel jobs. He also isn't a slave to convention, like somehow if you block the safest way for oil to get from Point A to Point B--pipelines--nothing will happen or we will ship crude by rail. I think he gets that pipelines are the safest ways and we are underpiped and the federal government under Trump is not going to figure out ways to block these and the courts are not going to be filled with judges who hate them.
Once again I caution people: I am not saying we want to drill all over the place. I am saying the possibility that something could stop or shut down the drilling or pipeline industry is lessened, and that allows people to pay more for the stocks, provided there isn't a collapse in crude.
I'm just pointing out that this rally has legs because people are starting to figure out that maybe Trump means it when he says he wants to put people to work and he doesn't care if they aren't all high-skilled jobs, which was the predilection of the man in charge now.
If oil goes up again tomorrow, I suspect we will hear about upgrades based on a friendly ear in the White House.
Makes sense. There will be.
Action Alerts PLUS, which Cramer co-manages as a charitable trust, has no positions in the stocks mentioned.