Are Europe and China finally reversing?
With positive PMIs from both, this could lift many companies that do business there. Yet many are dramatically underweighted these companies.
Take Thursday morning. Before the market even opened for trading, you knew it was going to be a good one because of the number 50.3. That's what the industrial purchasing managers index was for China last month. It's also, by sheer coincidence, the same PMI number Europe gave us.
These two numbers come at the perfect time. The world seems to be short China shares because this has been such a horrendous market for so long. Stocks like Caterpillar (CAT), Cummins (CMI), Joy Global (JOY), Rio Tinto (RIO) and Vale (VALE) were all awful -- just worst in show. But then comes the 50.3 in China and you get some of the most amazing pin action possible. Suddenly the reversal is in place. Everything that has been sold or, more likely, shorted, gets reversed. The momentum switches and many people are caught looking dramatically underweighted in companies that do business in China.
Europe's been such a disappointment, but when you see an expanding purchasing managers report, you can buy everything from the European banks to the manufacturers, including those American companies with big exposure.
Think autos. In many ways, the two PMI numbers were more important than the U.S.'s own PMI, which came in at a very solid 55.4 because China and Europe are so important, say, for a company like Ford (F). How important? Well, for Ford, the foreign markets were able to trump what had previously looked to be a disappointing July, going by domestic sales. Of course, the swing here is trucks, and Ford makes a ton of money on trucks.
The global strength pulls up oil and the other stocks that would most likely be down otherwise, given the terrible numbers from Shell (RDS.A) and Exxon Mobil (XOM). Again, it's pin action, this time off of a rising commodity.
It will lift aerospace from its momentary doldrums, too. That's because China and Europe are huge sources of growth for the airline business, and both had become suspect.
Until Thursday I would have put both China and Europe in the category of headwinds. But the bears now have to be worried that we'll get more positive numbers from overseas, and that these will proceed to become tailwinds. Very few managers are set up for that. I know this because Action Alerts PLUS pretty much is set up for it, and it has cost us a couple of percentage points of performance as we've waited.
I keep talking about a lot of ways to win. But I didn't think that Europe could be a source of strength, and no way did I think I think that about China. Nevertheless, the pin action off 50.3 is driving a lot of these gains, and they are gains that most hedge funds can't grab without radically switching their positions. That is exactly what I think is happening right here, right now.
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 and is long F, VALE and JOY.
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Gee Cramer the US economy is still on life support more so than it was in 2008
zero percent interest rates
$85 billion a month being thrown into the economy from the Federal Reserve
a bump of 1 percent for GDP thru a recalculation of the GDP numbers adding nothing to the real GDP but bumping the numbers
that means the GDP only grew at 0.7 percent instead of 1.7 percent and then add in the werid math of adding 162,000 jobs dropping the unemployment rate to 7.4 means that 162,000 is 0.2 percent of the work force which means the work force is only 81 million Americans working
We are in deep trouble Cramer and you believe the BS they are putting out about the economy
Take out the $1.5 trillion US deficit numbers from GDP and we are negative about 9 percent still in a recession
Too many of the jobs boomers are retiring from are disappearing through attrition. Productivity through technology takes many of those jobs and other times the lousy managers just pile the work on who ever is left and hire a temp part time to take up the slack.
You Canadians, get too many Holidays, eh....Provincial Day my azz; What is that ??
Today is our National Beep Baseball day(World Series)....What the hell is that...??
I never knew they had a Day for it.
I actually have help coached and umped(twice) in a Beeper Ball Tournament...
If they get mad at you and start kicking sand in your face; You step away and move sideways quietly.
Because the players are all Blind, they don't know where you are at...We used to have a lot of Fun.
My Favorite Team, was one that had a Rally-Recording of "3 Blind Mice", they were a hoot.
And can they ever drink beer....THEY DON'T HAVE TO WORRY ABOUT DRIVING.
Yes with "boomers" retiring at roughly 10,000 per day and many others dying;
There will be jobs for the up and coming...
Sadly it's the way it has always been; The way it will always be.
But with Capitalism and Corporations functioning as they are, and with their projections; They have turned Americans into "wanting individuals" willing to accept what is offered.
And the once great "Middle Class" will suffer for it....And tend to dwindle in numbers.
I only hope the "boomers" fair well in their retirements as hoping we do also..
But many made mistakes in the "downturn" or got bad advice, others did well...And should do fine in their final years...They have given all to make the Country what it is.
Jubak and Mirhaydari don't post articles as much as they used to. I think we upset them. At least Cramer has the nards to show up.
I'm not sure if this is a bull market. I'm not sure if the markets will ever retreat. More and more I feel that oversold securities are just a function of inflation, which means the per share prices will always go up. Forever. Unless, maybe, like the United States files for bankruptcy or something.
This makes finding an entry point for buying a security almost impossible.
Yes with "boomers" retiring at roughly 10,000 per day and many others dying;
There will be jobs for the up and coming... Sadly it's the way it has always been; The way it will always be. ---------- REALLY? Would that be 10,000 + x 30 or 300,000 a month? - And we only added 160,000 this month with 3 million out of work and all the college grads looking. Hum...
Yes a nice little rally in the last couple hours, could make us well and we might have a respectable week, without much worry. But I'm sure next week will more than cover our butts.
Having said that, all remains to be seen; But our confidence has not drained, and we still consider there is more upside to this somewhat languishing bull market..
We are not Greece nor Italy and others...
We are willing to work and earn our own way, at least a great percentage are; And when the "freebies" run out; Others will be made to, or have to contribute to the greater good.
Albeit in a much lesser way then what they expect, because the ambitious have already taken the initiative to make their lives better...Those that hesitated, may deserve what they get.
They are our Grecians....
Well CGT...You may be somewhat right, but I don't think there is anything drastically wrong with the Jobs Report...It's slowly falling in line as expected...And we have been forewarned for years about it.
The Lagging Indicator..
But Administrations don't create Jobs and Recoveries....Congress does, with urgings from the top.
We have a sorry bunch off assets, sitting on their azzes, while America burns.
It's getting and going to get better; The timeframe is the true question...We know HOW, we want to know WHEN.
The Markets may be up a little this week, but our FMV of assets across the board, maybe not quite the same...?? Coalminers, Pipeliners and Goldminers have been a little drag on the overall.
Maybe we should consider getting rid of all the "INERS"....??
Thank you Classic Lady. Interesting stuff.
I don't know TOG. I've got $8,500 in the Schwab account to invest, but cannot find the right price. COP is too high, PSE is too high, PNW is too high, LUV is too high, SDT is too high, GAIN is too high.
I'd go as far as per share price at 10 times earnings per share, but not more. I think Veteran Lender's rule was always 7 times.
If CD's will crawl back to 4%, I'll drop the money there and then go fishing (or casino). But the last CD I picked up was one month ago at 3.7%. Guess I'll just have to wait for the government to stop the bond buying.
Classic....I hope you are okay ??? I wanted to send new coordinates for the money drop...
We live on a major flyway between two large hubs...
So they will have to practice a few drops for windage and drift to hit our targets...
Most fly over us at 20-25,000 feet, smaller craft lower; And crop dusters buzz the barns.
But we can direct them in, when we know they are on the way.
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Lending was up in the first quarter, but that jump has hidden the fact that individuals are still having a tough time getting loans.
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