TheStreet.com's Jim Cramer this is one of the rare moments in time when every investor camp has reason to be pleased. It's one of those moments where all camps are happy.
The camp that owns and buys defensive stocks got plenty of reports that indicate the defensive stocks are coping with raw costs. Whether it be Procter & Gamble (NYSE: PG) (Cramer's Take) with tremendous sourcing and leaner manufacturing, or Colgate (NYSE: CL) (Cramer's Take) making so much more money than we thought, the case can be made that what looked like an overstretched group on a price-to-earnings multiple may turn out to be worth a few more points of multiple expansion in a lowering interest-rate environment. (Either Coke (NYSE: KO) (Cramer's Take) or Pepsi (NYSE: PEP) (Cramer's Take) could kibosh that this week, but you got it in spades last week.) Given that we had weak data -- employment report -- signaling recession, the thesis had gravitas.
Those who bought the industrials were rewarded because international was so strong and because there is hope that domestic turn in housing could be at hand. The commercial construction numbers, while slowing, aren't slowing so hard that numbers are an issue.
The financials roared because no matter how bad the losses are, with fed funds rates being slashed and with employment weakness needing more cuts, you could buy Washington Mutual (NYSE: WM) (Cramer's Take) or Citigroup (NYSE: C) (Cramer's Take) and make money. Plus, everyone who put in money to save these companies is now above water, which makes more financing an easy task.
The homebuilders could go up because they are at last shrinking the number of new homes while at the same time mortgage money is becoming more plentiful and refinancing is allowing more people to KEEP their homes. Hovnanian's (NYSE: HOV) (Cramer's Take) move was joyous and has others ignited.
Retail's seeing the benefits of lean inventories, $600 rebates coming, and refinancing, which puts more in peoples' pockets than any fiscal stimulus.
Metals and mining benefited from takeover activity.
Oil-and-gas could be bought because despite wide projections of declining oil futures, it never happened. That allowed those oils that replaced their reserves to ramp higher.
When you have a recession camp and a recovering camp appearing simultaneously that's a great time to buy, which is what we had last week. If all of these circumstances continue, we are going much higher.
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Jim Cramer is a director and co-founder of TheStreet.com. He contributes daily market commentary for TheStreet.com's sites and serves as an adviser to the company's CEO. At the time of publication, Cramer was long Citigroup.
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Reader Comments (Page 1 of 1)
2-04-2008 @ 1:03PM
GEORGE said...
A VOTE FOR CLINTON IS A VOTE FOR THE DEVIL
2-04-2008 @ 1:54PM
Americas Watchdog said...
Hi Mr. Cramer;
We have the National Mortgage Complaint Center & we think your advise about buying financials is a "pipe deam". US Financials, Banks, Investment Bankers, Homebuilders, Mortgage Insurance Companies will all have a crushing first quarter (2008).
Why not tell people to run out and buy a house that will be worth 10% less in December of 2008?
2-07-2008 @ 12:34AM
RBB said...
Curious to know what is in that 'pipe' leading you to believe that JC'c advice is a 'dream'. Not only did our school system fail our society with an individual not knowing the difference between 'advice' and 'advise' but also unleashed an individual into the work force without verifying the accuracy of false claims presented: The financials, homeowners and mortgage companies ARE currently reflecting an upward trend that presents a trading opportunity to make a profit . . . regardless of what the P&L statements for the first quarter may reflect.
2-04-2008 @ 3:57PM
Patrick said...
Looks like if investors got into Wamu, it might take a while to make back that 12% loss today...
2-04-2008 @ 5:07PM
Boards0000000 said...
I don't know how you manage it but the market seems to often do the opposite of what you suggest it will. It's almost funny.
2-06-2008 @ 3:56PM
jonee said...
hi jim iam a 62 yr old vet who thinks alot of
your advice and treachings. i have an online
acct now (not retirement money) and i listen
to all that is spoken and try to make my
own decsions. i just purch your book, mad money
watch tv. my question is i know you want us to
do our homework. iam confused to what this
involves? could you sometime focus one of your
mad money shows to teach us the 5 most important things for to do in our homework
and show us how to do it perhaps examples.
thank you very much jim.