Cramer’s ‘Game Plan’ Depends on Spain
Before “Mad Money” host Jim Cramer laid out his “Game Plan” Friday, he noted that “the week ahead will be determined largely by what occurs this weekend,” especially as it relates to Europe’s debt crisis.
As it stands, Cramer noted Spain’s economy is teetering not on the brink of a recession, but of a depression. Spain is not rich enough to stem the declines in both employment and production, as well as the bank runs, that are a result of a depression. So Cramer thinks someone needs to come to Spain’s rescue, otherwise the troubled country could become “the destroyer of the euro and European Union.”
To prevent such an event, Cramer thinks Spain and the EU must release a joint statement Sunday, which announces an agreement on federal deposit insurance that guarantees savings deposits in euros, effectively ending security risk for banks. Such a statement could cause the markets to rally, Cramer said, but he worries a lack of an agreement could cause stocks to fall, too.
Looking forward to Monday, Cramer hopes to get a read on telecom spending when Ciena holds an analyst meeting and Finisar reports earnings. Cramer suspects Ciena could say spending is coming back, but questions whether Finisar will say the same. Either way, he said both companies need to say something positive for the telecom stocks to push higher.
After Monday’s close, Texas Instruments will provide a mid-quarter update. The company needs to reiterate its bullishness, Cramer said. Believed to be a supplier to Apple , Cramer will use Texas Instrument’s comments as a read on how the iPhone and iPad maker is doing.
On Tuesday, Juniper Networks will host an analyst meeting. Lately, there have been a lot of bottom callers in this stock, Cramer said. It has become cheap versus historical valuations, but Cramer isn’t sure those valuations should be used anymore. After all, Juniper is facing tough competition from rival Cisco Systems . Cramer fears the company could guide down.
Elsewhere in the market, Michael Kors will report earnings Tuesday. The apparel maker’s stock had been on fire after the company went public, but it’s cooled down a bit lately. Cramer looks forward to hearing about the company’s performance and prospects.
“You want to immunize yourself against a possible global slowdown, then take a listen to the Biogen analyst meeting,” Cramer said. “This biotech stock is one of our favorites, with a terrific pipeline of drugs and a consistent track record of higher sales, hence why this economically insensitive name is only a few points off its 52-week high.”
Dell will report on Wednesday. Despite CEO Michael Dell’s efforts to turn this personal computer maker into a solutions business for technology needs of major enterprises, the bears continue to growl at this stock. The tech company’s problem has nothing to do with execution, but that its customers are tapped out. After all, Dell has many government clients, which are cutting back. In addition, there is a lot of competition in the solutions business, so pricing is not robust.
Cramer also looks forward to testimony from JPMorgan Chase CEO Jamie Dimon, who will appear before Congress. The banking executive will answer questions about how trading practices led to billions in losses.
On Thursday, Cramer will look for earnings from Kroger . The supermarket chain operator benefits from commodity deflation, but for anyone looking to play the grocery space, Cramer still prefers Whole Foods Market .
Pier 1 Imports will also deliver earnings on Thursday. To Cramer, CEO Alex Smith performed one of the best turnarounds in history. He looks forward to hearing about the next leg of the turn.
Apache has scheduled an analyst meeting for Thursday. No matter what this oil and gas company does, its stock continues to struggle right along with the rest of the energy space.
Finally, VF Corp will hold an analyst meeting Thursday.
“Despite having an intense wind at its back from the steep decline in cotton, a raw material that's held earnings back for several years, the company's stuck having to defend what has amounted to a brilliant foray into Europe,” Cramer said, adding he thinks VF will be rather upbeat.
So what’s the bottom line?
“If Europe's leaders come up with a solution to the Spanish prisoner on Sunday, then nothing else on this board matters and we're going to rally no matter what,” Cramer said. “But with no solution, we're in for a real nail-biter of a week, one that just might give back a lot of this week's glorious gains.”
When this story was published, Cramer's charitable trust owned Apple.
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