Longer shutdown means lower numbers

Analysts are reluctant to trim valuations as the deadlock on Capitol Hill continues.

By Jim Cramer Oct 4, 2013 9:29AM

Calculating numbers for income tax return with pen and calculator © Stockbrokerxtra Images, PhotolibraryWell, at least it's finally sinking in. The numbers have to come down. That's what happens inTheStreet logo these situations. You want to outrun the companies, get ahead of the cuts.

 

That's why the shutdown has been so Cinderella so far. The analysts haven't been willing to slash numbers.

 

I think United Technologies' (UTX) comments are making them think twice.

 

They've not been willing to downgrade, because if you downgrade, that says, "OK, I am betting it's a longer shutdown." Then you come in on Monday and the shutdown is over and you look like a real doofus.

 

But as the rhetoric gets worse and each side does nothing but badmouth the other side, you have to start thinking: What does October look like for my company?

 

I asked Dominion (D), maybe the best, most forward-thinking utility out there, with lots of business not far from the D.C. area, whether business could be hurt from the shutdown, and it was distinctly wait-and-see about it. It wasn't dismissive of the question.

 

To me, this is a moment when it is worth the gamble of betting that numbers are too high, especially after the rally we have had.

 

No, I am not saying "Cut numbers on Celgene (CELG) because of the FDA and the possibility of a slower review time." I am saying that it would be perfectly reasonable to cut numbers in any tech stock that does a lot of business with the federal government, because I have to believe that the longer the shutdown, the lower the numbers. 

 

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Action Alerts PLUS, which Cramer co-manages as a charitable trust, has no positions in the stocks mentioned.





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141Comments
Oct 4, 2013 10:02AM
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And today, there are 5 articles devoted to the shutdown on the MSN money home page. 

And yet, somehow, the US equities markets are doing OK.  People are still going to work and school.  Stores and businesses are still open.  Doctors are still seeing patients, cops are still catching bad guys and strippers are still getting pole burns.

The longer this shutdown goes on, the less problematic it becomes.

Oct 4, 2013 12:02PM
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I think we should all get together and elect a new government since this one has closed down.  Only this time we keep our Constitution from allowing the Federal government from levying taxes directly on individual's and be very clear that the States are responsible for making and passing laws and that the Federal government's only job is defense and regulation of trade between the states.  Then the power would fall back where it belongs (and where the founding fathers intended it to be) with the states.
Oct 4, 2013 11:37AM
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I gotta laugh a bit about those who think we will be lost without our Guberment.  What did we do 100 years ago?  And besides this is what happens when you are a broke country.  When you are broke you need to change your expectations and then your lifestyle. Da 

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Pretty much the US is in a Death Spiral of Lost Jobs and an ever weaker and weaker economy.

 

Nothing has changed and as $80,000 plus a year jobs are being replaced by $10,000 a year minimum wage (at 29 hours per week) we are still losing $70,000 per hired employee. Not good for running the world's largest military.

 

Right now the top 1 percent of Americans earn half the income of all Americans not a good sign as they are merely locking away our national gross product into foreign investments which further weakens the US economy.

 

I am surprised the IMF is calling on us to increase the US Debt this is laughable because just two weeks ago they were telling us we must decrease our debt and at a very fast pace.

 

OK IMF which one is it reduce the debt or increase the debt make up your minds.......

 

You do realize that the US is bankrupt don't you?? We have not paid back any of the W.W. II debt we incurred we have merely borrowed more money to pay it back which means we have not paid it back.

 

We are in a worse position now to pay back the W.W. II debt let alone the debt we are generating now.

 

THE DEBT WILL NEVER BE PAID BACK AND WE WILL ALWAYS HAVE TO BORROW MORE AND MORE MONEY> WE ARE BEYOND BANKRUPT we are hyper bankrupt and going to crash and burn before Sept 13 2015. THE END IS HERE FOLKS

Oct 4, 2013 9:45AM
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I think many thought we were overbought before the shutdown.  And I also think this will last longer than many think. We have been constantly under the influence of the "juice"  for some time now and perhaps an unintended consequence will be sobriety. The idea you can buy your way away from risk like we have been doing for some time now probably needs to stop.  Risk and reward should be the reality we accept.  Not all reward, reward, reward. But I would like to see us jump about 2% just to show them cats how much we don't need them.  JMHO
Oct 4, 2013 10:33AM
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Let's just shut the whole thing down and rebuild!!!

 

This is about the economy and our future with a unstable economy.  As one wrote the 1% owns half the wealth, they are going to get the other half if nothing is done.  Rergardless of which party you agree with, it will kill the economy.  The biggest spender in our economy is the government, no spending is called a slow down.  A fragile economy anyway getting steroid injections every month.  So everyone watch your favorite tv news program and follow their propaganda while free thinkers know whats about to happen unless it changes soon. 

 

In my opinion, 5 billion is going to S&P to keep us a AAA credit rating, what do you think? 

Oct 4, 2013 12:51PM
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This in tier argument about obamacare is only part of the problem. America spends $600 to $700 billion a year, more then it takes in. We cannot afford the government programs we already have and we cannot afford to add obamacare. We need to be cutting government programs not add programs.

 

First, stop all business subsides. If business cannot make a profit by providing goods and services to their consumers, we don't need them.

 

Second, put health care on the free market. No more government subsides.

 

Third, then start working to reduce social security.

Oct 4, 2013 3:14PM
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I hope we all live to see govt return to sensible proportions
and programs, but a lot of us are really old, so I worry...

Happy Friday and weekend all !!

Oct 4, 2013 10:41AM
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Is this Obama's new socialist utopia?

Drones to kill children.

DC Police with orders to shoot and kill unarmed, disruptive mothers.

 

Oct 4, 2013 10:21AM
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Brutus that is the "persona" this rag has taken on...

5 articles about Shutdown..

7 articles about Apple...

3 articles about GE

Wait for Twitter to go IPO...We will get 20 articles in 10 days..

This site has become very boring without much substance...And too much repetition.

Oct 4, 2013 10:07AM
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i'm betting the idiots will stall until we actually hit that date where we can no longer pay our bills.  THEN watch the fun times! 

 

that classic phrase "do unto others......." comes to mind.  does anyone think this sort of action will be forgotten?  we have party warfare going on.  who's the collateral damage? 

 

what's-his-name said/wrote "may you live in interesting times".......i think we're there now? 

Oct 4, 2013 10:30AM
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Obama is a dick !!!

I tried to write a more dignified comment but the inner, less evolved layers of my brain took precedence this time.

Oct 4, 2013 12:15PM
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Let's be crystal clear about this issue. The Republican Controlled House told us their number ONE Goal was to Repeal the ACA and get Rid of Obama, not negotiate delaying the ACA and or working with Obama. They voted 44 times and counting to repeal, not negotiate on the ACA.

Now the Republican Leadership is telling everyone that's not the case,  they just want to negotiate certain details concerning ACA while at the same time holding the Country Hostage. I understand now, you guys are freaking morons.
Oct 4, 2013 11:55AM
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Too true, ROME.

Its like what came from Obama's analysis yesterday.

Its One Faction of One Party in One branch of the legislature
among One of the branches of government, holding the
entire apparatus hostage.   Yet, somehow this is supposed
to hold water.

Similarly, Boehner and Cantor representing two podunk districts
in the Midwest are supposed to accurately guage what the
entire country needs or wants.   Amazing!

Oct 4, 2013 11:19AM
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If the shutdown goes on for a extended enough time, the fools that think it doesn't matters will be in for a huge shock. As will the Stock Markets. This isn't some freaking game folks if it stays in effect for too long. Be careful what you ask for because sometimes what you expect isn't what you actually get.
Oct 4, 2013 11:48AM
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Last night-- our Detroit Area Investigative Reporter (we at least have one) illuminated the FACT that our Governor has a paid GOON named "Baird" making $100,000 from a non-profit named Nerd Inc. Obviously, since our Governor ran calling himself a "nerd" (he started Gateway Computer, then sold it to Asians and terminated 30,000 US employees, nice, huh?!)... he uses the non-profit to launder pay for his GOON. Does it surprise anyone in Michigan? NOPE. Should it get EVERY OTHER GOP STATE investigating non-profits that launder pay for Republican and Tea Party GOONS? YEP. There is a tie-in... Karl (Goon) Rove used 501(c)4 quasi-non-profits to launder the cost of mudslinging ads in the last election.

I AM ALL FOR FLUSHING EVERY BASTION OUT WHERE LOWLIFE GOP CONGREGATE. THESE TERRORISTS NEED TO BE FULLY EXPOSED AND PUBLICLY DEALT WITH.
Oct 4, 2013 2:25PM
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Old Toggy has been livin'; I don't feel like dying...This ain't the day.

 

Lost 4 Friends, 1 Cousin, and younger kid(48) we knew, all in about 10-14 days.

 

WW2 Vet, 3-Korean War Vets.(One a POW).1st. Cousin in Family to die(67) Four of us older then him.

Died from too many ailments, too many legal drugs, The Kid(48) too many illegal drugs and booze.

 

Yup it's time to start living and not dying..

Oct 4, 2013 1:49PM
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This shut down has truly brought out the worst in America, as an outsider the behavior of both sides makes me sick watch, and i don't just mean those in office, the posts and sentiment on the street is both scary and sad;

The Right: Some of these people are truly hateful people, hating the poor, cheering the fact that poor children won't have enough to eat, you people have proven yourself worthless.  The fact that you would basically subvert demacrosy because you don't like the results proves everything you preach about the constituion means nothing to you, or your too dumb to understand it.

The Left: people like Harry Reid calling the right anarchists on CNN interview, are you trying to see blood in the streets?  The fact that you would egg them on and risk violence because you think it will help your parties election chance makes me hope you go hunting with Dick Cheney.

The Media: you might be the worst of them all, with all the stories and articles that are clearly designed to inflame one side or the other, you have no journalistic credibility and I hope you enjoy hell. 
Oct 4, 2013 12:57PM
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Re-TOG... thought I'd be nice today and actually mention stocks in my post--- Twitter... you judge the value of every virtual stock with a song... nothin' from nothin' leaves nothin' you gotta have somethin' (or you're kidding yourself). Potbelly-- you know 800,000 furloughed Federal workers went home to analyze their situations and... 800,000 furloughed Federal workers determined that if the brew their own coffee at home, they save several dollars a day. Those same furloughed Federal workers just decided that if they want a deli sandwich, it tastes the same coming from Potbelly or packages of lunch meat bought at the grocer. IPO's used to be companies that had legs. 
Oct 4, 2013 2:31PM
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Funny I write on here about Twit IPO and V_L mentions it...

 

And an old stock called Tweeter Home goes up 1000% today, because some investors thought it was the "new" IPO....of Twitter..

 

Jesus Christ, now I'm starting to realize what kind of "investors" are trading nowadays.

As far as the TWIT IPO, I wouldn't touch it with a (your) 10 foot pole...

Don't care what it does..

But good luck to anyone that does..

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