These bond buyers are hopping into Treasurys with a near zero yield just to try to stay safe. And the financials are practically being given away at any price. Why? Because many on Wall Street believe the credit crisis is far from over, especially with banks so unwilling to lend. And since an economy without free-flowing credit isn’t bankable, bond buyers aren’t willing to make a bet on it.
Traders, though, have been buying up oil, technology and agriculture stocks, even those that reported less-than-stellar earnings like National Semiconductor , Texas Instruments and Broadcom. Apparently, they’re anticipating a near-term turnaround. But if this recession’s going to last, then traders should have been going after defensive names like Colgate-Palmolive, Kimberly-Clark and Clorox. All of those stocks were down Tuesday.
What does Cramer think? He’s siding with the bond buyers. His advice is to sell the accidental high-yielders that he’s been pushing lately, names like Nucor and Caterpillar , because they’ve increased in price so much. Take the money and wait for a better entry point. If you feel compelled to buy stocks in the meantime, then look to pick up those defensive names. Otherwise the sidelines are looking really good right now.
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