Cramer: What Wall Street Is Missing
Web Editor, "Mad Money"
A major winter storm was ready to pummel Washington, D.C. on Friday, cutting the day short for government employees. Cramer during Stop Trading! joked that it could be a good thing for the markets.
“Can you imagine how high the Dow could go if they were shut down for, like, two weeks?” Cramer asked.
The Mad Money host said that he is hearing two kinds of complaints from Wall Street these days, and Washington’s meddling is one of them. President Obama’s attitude has turned so punitive that stocks are taking a huge hit, critics say, as evidenced by a 268-point decline on Thursday and what could be another loss on Friday.
But there’s another school of thought at work, namely a throw-your-hands-up sense of futility in the face of oil andgold futures, whose declines have also weighed on Wall Street. Cramer said this action, too, has scared many traders he knows out of stocks.
But what no one seems to be recognizing, Cramer continued, is that “companies are doing incredibly well.” In the face of the previously mentioned negatives, Pitney Bowes raised its dividend, Marriott reinstated its own, and Cisco Systems delivered a stellar earnings report. But still investors refuse to take notice.
“My experience is that nobody cares for about three months,” Cramer said, “and then the people who did care made a fortune.”
He implored viewers to worry less about the futures and the dollar, which hasn’t changed dramatically over the past few weeks, and focus instead on these companies that are growing in strength and paying dividends.
“Because there’s a lot of opportunity here,” Cramer said.
He pointed to three other earnings upside surprises: Covidien , Parker Hannifin and Clorox. The market shrugged off this good news and took the stocks right back down, though Clorox had returned to positive territory late on Friday. And even McDonald’s – an addition to Goldman Sachs’ much-vaunted conviction-buy list – is in the red today. But again, investors are occupied with the downside risk instead.
Cramer likened the action to what we saw in early March 2008, when a pullback gave way to a rally and people made money “if they just had some courage.”
“I see no courage out there whatsoever,” Cramer said. “None.”
He also took time to discredit the two biggest reasons that investors are bailing on stocks: falling oil and the rising dollar. Declining crude in fact benefits about 90% of the company’s Cramer follows, he said. So reduced prices as a result of selling hedge funds is a good thing. He went so far as to say that oil at $65 is a reason to raise earnings estimates on some companies, such as Procter & Gamble, which uses the commodity in its manufacturing process for diapers and other products.
And, lastly, concern over the rising dollar is overblown as well. The currency has changed little over the past few weeks, Cramer said, and even then the greenback seems to have had little affect on earnings.
“It doesn’t matter to 95% of the companies that we’re selling right now,” Cramer said.
If JPMorgan’s Jamie Dimon can get a $16.1 million pay package, what does Goldman’s Lloyd Blankfein deserve? Watch the video for Cramer’s opinion.
Cramer's charitable trust owns Cisco System, Goldman Sachs, JPMorgan Chase and Procter & Gamble.
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