Election results in both Greece and France may not bode well for ending Europe’s sovereign debt crisis, but nevertheless, U.S. stocks were able to finished mixed Monday. Speaking on CNBC’s “Mad Money,” Jim Cramer reminded his viewers of what a difference a year makes.
“This isn’t 2011 where Europe could kill us,” Cramer said. “It’s 2012 and things are very different.”
An anti-austerity backlash by voters in Greece and France shook the Eurozone on Monday, causing jitters for the euro currency and stock markets amid deepening doubts about whether Greece has a future in the single currency.
Yet U.S. stocks recovered from session lows to finish mixed, as investors shrugged off worries over Europe’s ongoing debt crisis.
“If you take a step back, there’s a lot of logic at the level of individual stocks and sectors even as the overall market seems to confound people continually,” Cramer said. “The key to this moment is that you just have to recognize what’s working and what isn’t.”
The commodities are in a severe downturn right now, as best represented by the falling
In turn, stocks of companies that use oil or other commodities are doing well. But stocks of companies that involve commodities, or those that are thought to need strong commodity prices, are falling.
So instead of talking about “risk on, risk off,” Cramer thinks it’s a better idea to view stocks through the prism of commodities. After all, companies that take or pay for commodities are going higher while shares of companies that rely on growth in demand for commodities are struggling.
Take the packaged goods companies, for example. In its latest earnings report, Procter & Gamble blew the quarter. The personal products maker has caught several downgrades, too. But Cramer said its stock has failed to go down because it’s a huge user of commodities.
Engine maker Cummins , on the other hand, recently reported strong quarterly results. Its stock has been going down, though, because people think CMI goes down when the commodities go down. The thinking goes that if there is less demand for commodities, there is less demand for trucks on the road.
So what’s the bottom line? Right now, companies that buy commodities are winning while companies that sell commodities are losing, Cramer said.
Read on for Cramer’s Ultimate Growth Stocks
—Reuters contributed to this report
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