Cramer on BloggingStocks: A troika of opportunity and trouble


TheStreet.com's Jim Cramer says the ECB, BOE and unemployment will determine whether we take out the November lows or not.

It's worldwide and it's deepening. We know that. It has transcended residential real estate, transcended commercial real estate. We know that too. The battlegrounds are now unemployment and rates that are too high worldwide because it is obvious we cannot pull ourselves out of this one.

That's why this week is unfortunately so crucial. It is going to be difficult to advance ahead of Thursday's European rate show and Friday's unemployment number, although the force of this market is to run ahead of these key numbers, not behind, as the dominant force remains short covering and these are events worth covering shorts for.

What do we need to see? We want full-point reductions in rates in England and Europe, something that seems pretty doubtful but are as necessary as they were in this country last year. We need to see China making a definitive plan to put millions of people to work in infrastructure projects that absorb gigantic surpluses in minerals. We need to see some risk-taking and some financing and some taking advantage of the, in some cases, absurd declines in stocks of companies like United Technologies (NYSE: UTX) (Cramer's Take) or Caterpillar (NYSE: CAT) (Cramer's Take) or General Electric (NYSE: GE) (Cramer's Take), companies that tell us they have financing and can do things. We need to see the consumer spend, but, alas, that will simply not happen on any level we need if unemployment creeps to 10%.


Finally, we need to see the new administration because the pathetic response of the markets to the speeches of Federal Reserve Chairman Ben Bernanke and Treasury Secretary Henry Paulson, albeit exacerbated by exchange-traded fund shorting of all major indices coupled with the disastrous magnification of moves by Pro Ultra ETFs, shows that there is no confidence in this team, save the sainted Tim Geithner, and they must be swiftly broomed.

So it all comes down to not just one big bad event but three of them: the European Central Bank, the Bank of England and unemployment, a troika of opportunity and trouble that will define whether we take out the lows of November or not. We strike out with small cuts and big unemployment and we will be there for certain, so there is no incentive to buy things unless, A). stocks fall hard ahead of the troika, or B). you want to go along with what could be a Wednesday short-covering rally. I prefer the former as a strategy: less risky but certainly less opportunity.

Random musings: I have been using a $2 billion loss figure now for some time, a $5 a share hit, for Goldman Sachs (NYSE: GS) (Cramer's Take). I do not know why the analyst community isn't there. From the looks of Tuesday's Wall Street Journal it is at last on the table.

Jim Cramer is co-founder and chairman 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 General Electric and Goldman Sachs.

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Last updated: February 13, 2012: 07:58 AM

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