How Government Trumps Companies' Good News
US markets are being held down by bad news from governments around the world, Cramer said Wednesday.
Any good news a company reports is overshadowed by some government action, as the "skepticism and pessimism continue to build." But while Europe has provided "legitimate reasons to be extremely concerned," Cramer said, US markets would be higher without those fears. And investors seem just as worried about financial regulation here in the States and China’s intention to cool down its hot economy, so their effect on stocks can’t be ignored either.
To explain how the fear is stifling the good news coming from well-performing companies, Cramer took a look at these 10 stocks and sectors:
Deere : Cramer likes the "incredible numbers" reported today, including a "huge" guidance boost. The farm and construction machinery company, however, sells a lot of tractors overseas. Germany is not yet in support of the European rescue plan and is looking forward to key elections, both of which could impact Deere's performance across the pond.
Hewlett-Packard : While this Palo Alto, Calif.-based company delivered good results last night and was strong in Europe, Cramer notes that European sales typically slow in the summer.
Occidental Petroleum : Healthy growth helped this company report strong numbers, and Cramer thinks the summer driving season will stabilize demand for oil. But hedge funds are dumping because "they know how to sell commodities when the dollar is strong."
JPMorgan Chase : This financial institution might be talking increased earnings and trading at up to seven times normalized earnings with $40 billion in reserves, but Cramer said there is too much unrest over financial-regulatory reform. The debate over reform continues in the Senate, but one proposed amendment could strip JPM of its "lucrative swaps business," Cramer said.
Banco Santander : Cramer said this Spanish bank was in talks to purchase M&T Bank , but its stock has been hammered. "You have to wonder if maybe it's in trouble and can't buy anything because it is based in Spain," Cramer said of STD.
Target : The Minneapolis-based retailer reported a "terrific number" and a large reduction in credit-card defaults, but with a tax hike that could change.
Home Improvement: Home Depot might have performed better than Lowe's , but Cramer thinks yesterday's naked short-selling ban news out of Germany and "the inability of the Europeans to focus their plan" proved more important.
Northrop Grumman : This diversified company boosted its dividend by 9%, but what if Obama recommends that dividends are taxed as regular income?
The Drillers: Considering the global demand for oil, Cramer thinks these stocks are "incredibly cheap." The fear is if the US and other governments ban off-shore drilling following the Gulf of Mexico oil spill.
Asia's Influence: Major corporations, like 3M and United Technologies , are more involved in Asia. But with China's government seeking to slow its economy, Cramer doesn't think things look good.
Cramer's charitable trust owns Home Depot and JPMorgan Chase.
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