US market getting crushed from all sides

There's no way to insulate ourselves when the onslaught is from the outside as well as from within.

By Jim Cramer Jun 24, 2013 9:51AM

thestreet logoThere was no right time for the Federal Reserve to do what it did. It was always going to go wrong. That's why people shorted so heavily before every Fed meeting. It is why the market rallied when the Fed signaled in a definite manner, each time, that quantitative easing wouldn't be ending.

 

As usual, though, people had been shorting the wrong markets. I don't think the U.S. market is in good shape, and I believe it'll go lower -- and I see only a handful of groups that can withstand this onslaught for now. But it is the foreign markets that are really sustaining a drubbing, and we can't insulate ourselves from them any more now than we could when Europe was falling apart not that long ago.

We can't insulate ourselves because there have been so many knuckleheads, as always, reaching for yield, as they had done with collateralized debt obligations between 2004 and 2007. So we'll have to endure this whole painful unwind from all over the globe.

 

Does anyone really think, for example, that Brazil isn't falling apart? That's especially so with the putative world's richest man, Eike Batista, in some sort of unraveling that seems to impact every portion of that stock market. The decline in Mexico is breathtaking, an amazing fall from grace. Japan's now gone from being the greatest to one of the worst.

 

Then, of course, there is China. When Fed chief Ben Bernanke was planning this exit from QE, had he foreseen China's flash manufacturing purchasing managers index falling below 50? Did he realize that this country was in such a bad way?

 

Arrow Down (© ImageSource/PictureQuest)As a result, the U.S. market has ended up getting crushed from the outside as well as from within.


When I scrutinized the charts this weekend, I was struck by one thing in particular. Except for a scattering of insurers, a handful of regional banks and the health maintenance organizations, almost every single one of these shows is broken. Some are broken so badly that they look terminal -- namely the coal stocks and all other companies involved with coal.

 

That group, in particular, is so bad that I have to believe we are going to see some bankruptcies in the area. Makes sense when you consider that President Barack Obama is trying to phase out coal use in this country, and given that the environmentalists are trying to block the export to others. That's a recipe for wipeout.

 

So it plays out, Dutch Boy-like. Have you even heard a peep out of the Philippines yet? How about Indonesia? Can Thailand ever not be a source of financial stress? Could Brazil actually go communist or fascist? Will companies be nationalized?

All of these questions should be on your agenda right now. All of them. Because if that 10-year U.S. Treasury goes to 3%, investors will no longer have any reason to reach for yield in equities. Everyone, except for the people who just rode those bond prices down in their reaching-for-yield bond funds, will then be flocking to here in order to take advantage of these higher rates and the stronger dollar.

 

So even when U.S. bonds settle in to some much higher level, the turmoil should go on for a bit until people realize that the stocks of the companies in our indices represent value. In the meantime, though, brace yourself for a wild ride.

 

Cramer

 

Jim Cramer is a co-founder of TheStreet and contributes daily market commentary to the financial news network's sites. Follow his trades for Action Alerts PLUS, which Cramer co-manages as a charitable trust.

 

 

 

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350Comments
Jun 24, 2013 10:48AM
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The Smoke and mirrors are finally showing.  You can NOT spend your way out of DEBT! Abolish the Federal Reserve. Stop the madness with the FAT CATS on Wall Street.  Get THEM OUT of OUR GOVERNMENT.  The dow should really be at 7000 to 9000 for reality to be SEEN.  We should be in the STREETS protesting what these people have done to OUR country. 
Jun 24, 2013 10:51AM
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Just a bunch of rich, Wall St. brats throwing a tantrum because Daddy Ben took away their credit card, Boo-Hoo.
Jun 24, 2013 10:25AM
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This should not be a surprise to anyone.
Jun 24, 2013 10:26AM
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Its simple wall street investors ? Or at least so called investors ! 5-7% is NORMAL for a 30 yr fixed mortgage interest rates ! Part of sound investing principals that wall street used to run on ! 2-4% for a car loan is normal !So to all the socialized wall street investors wake up to sound investing principals once more ! You have been padded long enough. Time to wake up and smell the coffee.. What a bunch of whining little pukes on wall street! Investing used to be a risk ? But Ben and the idiots at the Feds gave you socialized wall street ! The party is truly coming to an end like BEN come Jan ... BYE BYE Ben ole boy . Thank God....
Jun 24, 2013 10:34AM
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Jim, a study at MIT looking at your success rate of predicting stock success showed only a 3 percent success rate. Your success rate at predicting market slides could be not be fairly evaluated because always wait until AFTER the market drops to predict a drop. It's amazing to me that you have a cable tv show. Please silence yourself until the day after the recovery begins.
Jun 24, 2013 10:48AM
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Cramer is a joke. He follows whatever has ALREADY happened and then makes it sound like he saw it coming. NO credibility!

Jun 24, 2013 10:41AM
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get off facebook and join the real world or when the electronic world ends you won't have a clue how to survive
Jun 24, 2013 10:34AM
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This is about the time we see if Bernnie has balls.
Jun 24, 2013 11:27AM
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Bankruptcy for the USA? Thanks Ben for the ride and free money for the banks and wall street!!!
Jun 24, 2013 11:34AM
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The FED has never been so hands on in the market before, it's dangerous and I think preplanned. Wall Street and the 1% like to have a major correction every now and then and come in and buy up what real wealth they don't already have for pennies on the dollar! Bernanke has had a short run as Fed Chief, retiring in January. He would like to have kept the market propped up on his watch but even the hint of taking the drug away from the junkies caused panic in the Market. QE3 was not even supposed to end until the middle of 2014 and when he even mentioned starting to wind down by the end of the year look what happened to market since the middle of last week.

 

World wide wet dream economy propped up by the central banks, it is starting to unravel and the Market or the Central Banks don't have a clue about what to do next. hold on to your hats boys and girls, it going to get rough!

 

Jun 24, 2013 11:50AM
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Markets go up, markets go down. If your near retirement watch your rear end, or the top players in the market will steal it....again.
Jun 24, 2013 10:45AM
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traders doing shorts are making money on the way down, is that really investing?

Jun 24, 2013 11:08AM
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Let's face it...Obama added 4 trillion to the national debt in the last 4 years and will add another 4 trillion by 2016 which will make a total of 20 trillion debt.  This US debt is more than all European countries combined. 

 

Soon will come a time even the interest can't be paid on the national debt and the dollar will NOT be the world reserve currency anymore.  This scenerio will make the 2008 depression look like a walk in the park.  I for one would not own stocks and keep very little money in the bank because when, not if, this happens there will a run on all US banks and most of them will lock the doors and americans will be screwed.

Jun 24, 2013 11:01AM
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V_L ....... wouldn't this be perfect timing for you and your army of "we" to attack wall street and eat all the rich people? ..........  Get a move on btch.
Jun 24, 2013 12:23PM
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Maybe Obama really believed all the recovery hype in the media........... Maybe it went to his head too and he called off Bernnie. I think the wise thing for Liberals and all flavors of democrats to do would be to put all their sidelined cash into the stock market so Obama won't be disappointed.
Jun 24, 2013 11:26AM
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I hope the market drops 20%. I have a lot of cash just looking for a home. Not so sure it's going to happen that I'm willing to bet on it but I'm ready if it does.
Jun 24, 2013 11:13AM
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A normal correction is 10%.That would bring the Dow down to 13868.As I tell my investors

club"Don`t panic,look for values to buy".

Jun 24, 2013 11:35AM
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The message just BLOCKED REPEATELY by The White House:

 

WHERE ARE YOU?

Re-pump these false markets and you get WWIII.

Free us or leave us.

Financial tyranny ends today.

What's the matter, Mr. President? Is it true? Are your friends- the banksters- destroying more of our future by printing us into Oblivion? LOOKS LIKE THE END OF THE WORLD TO ME. Maybe we need a Federal Government INTERVENTION.

Jun 24, 2013 12:44PM
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Problem is most folks are tired of the lies, inside trading, lies about gas prices (supply and demand?..don't make me laugh) the lack of economic fundamentals allowed to play out and those that contribute (even the small investors) sure go along for th ride but we need true value and growth to run our economy...NOT GAMBLERS!!
Jun 24, 2013 10:57AM
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With American interest rates rising, the dollar value increasing and low to no inflation, money is going to fly to America. Who needs the fed?

 

 

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