Cramer on BloggingStocks: A slumping dollar will make earnings pop

This reminds me of what's his names - Oh-The Book writer in the tub's remarks about excessive Enthusiasm ; rem what happened? Get eady for the life boats Rich Schultz

Richard, I think it was excessive exuberance. LOL. But I agree with what you're saying.

Given the variations in currency Cramer's take will probably bear fruit - at least temporarily. Few realize that the economic ties between the U.S., U.K and Europe go way back. Investments by the Brits and Dutch started in the colonial period and are still with us today. While U.S. companies operating overseas should show profits from these locales it is doubtful that the domestic market will fare as well. The housing boom put all industries that supplied it into high gear. Now it has stopped and will systematic layoffs be next? This is likely as there have been no major storms causing widespread damage to pick up the slack. Lumber; concrete, windows, wire, appliances, carpet, tile, and lighting are just some. Contractors, building tools and equipment - most of all jobs, are all potential casualties.

When you read Jim Cramer's comments on the good things to come for corporate profits from a weak dollar, you would never guess that the United States is a net importer rather than an exporter. We're running 60 to 70 billion dollar trade deficits in a typical month, with absolutely no sign of that gap narrowing in any significant degree. A weak dollar is very good for exports such as agricultural products and those industrial companies based in the US that make a lot of sales abroad such as Caterpillar or Boeing. But it's going to heavily impact all of the importers such as Wal-Mart or Target that have to sell goods that will gradually become more expensive for their customers. And if the dollar becomes any weaker, as it is very likely, it's only a matter of time before those selling us vital goods, such as the 60%+ plus of the oil we consume, demand payment in a hard currency rather than a soft American dollar.

Richard, I think it was excessive exuberance ...
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It is irrational exuberance. It is dangerous to have talking head Cramer here giving stock advice. He is no different that those infamous analysts stock pushers during the dot com era.

It is irrational exuberance. It is dangerous to have talking Cramer giving stock advice here. He is no different than the infamous analyst that push stocks for their brokerage during the bubble dot-com era. The housing bubble will be a lot worse and more pervasive.

A weak dollar is very bad for a country that run a perennial trade deficit. This will come back to haunt us big time. We cannot run deficits forever. The debt will have to be paid plus interest that will enslave future generations of Americans.

Jim,

I love your show, but as a Home Builder in the Chicago Area, your statements on Real Estate are not as bad as your comments suggested on NBC the other morning. Your out of your element with the Real Estate Stuff. Between you and Greenspan trying to sell yourselves, products, books, etc., these types of comments are hurting many people. I guess for all your avid watchers, they should wait 5 days and then buy some Real Estate. Keep in mind, people are living in this Stuff which is far different than dealing with Stock Certificates. You get no Buhya (Sp) from me this week. Keep it up and your Wide World of Stocks will be falling flat on their faces .




Ron Laatz
A Small Chicagoland Builder

America is the apple of every multinational corporation's eye. No, while China and India may be witnessing explosive (and probably damaging) rates of growth currently, it is still the good old U.S.A. that matters most to big business. That is why I am at least a little bit skeptical about the prognosis that U.S. based businesses will report above average earnings...given the ridiculously weak dollar. The American consumer is what matters most to all profit-maximizing firms, and his or her spending habits are being closely scrutinized right now under this, currently, shaky ground.

Jim I also think that stocks like PG and CL belong, traditionally, in the blue-chip club in my book. But with, seemingly weekly, news about "Made in China" products gone awry, I would stray from unbelievably unknown PG and from CL for the time being. And I like Citigroup over Goldman Sachs. I like C's diversified portfolio of services, the extent of its worldwide presence, its market cap., and most importantly its seemingly lower exposure to the very real subprime mess.

Jim said that realestate in many areas is in a free fall and now is not the time to buy a house ; in my book thats 100% true !

Okay FED, You lowered rates and now the stock market is going to break more records, heck, lower away and we could see 20,000 by the 18th. The dollar isn't worth the paper it is printed on anymore. Look at milk, it has doubled in price in one year. Oh well, I was going to quit drinking it anyway. Watch; by next year milk will be over $5.00 a gallon, along with the $ 5.00 dollars a gallon for gas! I realize now that the stock market runs the FED and tells them what to do. Greenspan was a cracker sometimes, but he made a lot of right decisions, not like the NEW guy. The Stock Market is overbought by at least 20%, maybe even 30%, scaring the hell out of me this last year. What goes up too fast is bound to crash.......

Several replies to the comments posted herein . . .

1. Concerning "good things to come for corporate profits from a weak dollar", the problem is as such: are overall corporate profits adjusted for inflation / strength of the dollar?

This is similar people who are currently buying and then flipping houses in Real Estate (especially those who are buying only to flip 2 years later *sigh*). The money they make might actually make up for the amount they lose due to inflation / value of the dollar decreasing.

2."And if the dollar becomes any weaker, as it is very likely, it's only a matter of time before those selling us vital goods, such as the 60%+ plus of the oil we consume, demand payment in a hard currency rather than a soft American dollar."

&

"A weak dollar is very bad for a country that run a perennial trade deficit. This will come back to haunt us big time. We cannot run deficits forever. The debt will have to be paid plus interest that will enslave future generations of Americans."

Yes unfortunately most people are not very well educated about money and finance. I am in favor of the U.S. reverting back to a money backed by gold and silver. Currently we operate with a fiat currency and some of you history buffs know fiat currencies have had a 100% failure rate ever since their inception.
Unfortunately future generations will have to carry the burdens of our recklessnes . . . as is already happening already right now.

3. With respect to real estate . . . the time is getting better and better to buy real estate for investing purposes - as oppossed to flipping. Flipping is a capital gains strategy and considering the falling rate of the dollar and the fact that many markets may now face depreciation some in part due to the subprime debacle, to simply buy and sell (flipping) is really a way to lose your money.
I know a couple that is building a home just to sell it two years from now chanting the party line "real estate always goes up in value" as their "raison d'operation" to build the house in the first place. I don't have the heart to tell them real estate in their market could depreciate in value (remember how in many parts of Florida the markets were super hot with major double digit appreciation and now some of those same markets in Florida now have DOUBLE DIGIT DEPRECIATION!) and any money they do make back should real estate continue to appreciate in their market including the capital gains the rake in might be worth the same or less than the amount they originally invested (meaning they broke even or lost money) due to the dollar crashing in value (our government injecting more money into the market place to cool the markets down this summer really didn't help either - it only diluted our money supply even more). So now may be a horrible time to flip, however it is a good time to invest in real estate using a variety of different investment strategies which might be appropriate for your market, including buying and renting it out (a cash flow strategy), lease options, wholesaling (a capital gains strategy whereby you control the contract i.e. you sell the house without ever having owned it - nice huh?), pre-foreclosure deals, etc, etc. And the worse this gets, the better of a time it will be for the savvy and knowledgeable investor to come in and find the deals as there will be more and more bargains to be found due to lower prices.

Otherwise chances the public will remain stuck panicking about the markets instead of looking for workable solutions . . . or for the bargains in real estate.