Once again, Europe's turnaround is real
The region's markets have been runaways since the bottom in the S&P 500.
Europe and China: Where are they? Are they done going down? Can they be counted on for tailwinds in the third and fourth quarters? Or will they remain headwinds? Isn't that how you feel on days like Friday? The market got hammered that day, and then buyers came in, in part because of a sense of worldwide optimism.
One thing is for certain: The European markets have been runaways since the S&P 500's ($INX) bottom. Markets in Spain, Greece, Italy, France, the Netherlands, Ireland, Portugal and Switzerland are all up double digits since summer began. That's pretty amazing. I simply do not believe you can get this kind of recovery in these stock markets without something positive and lasting going on.
Now we have ample evidence that Europe has been bottoming. We have no evidence of Europe's actually improving in a sustainable fashion. We mostly have a cessation of job loss.
But was it any different when the U.S. market bottomed? Our stock market took off while the skeptics whined on and on that it wasn't for real, that it was all made with job cuts and flat revenue, particularly for the international companies. That said, you could argue that the European snap-back will be bigger than ours for the bottom line, because our companies made huge jobs cuts worldwide -- so any cessation of revenue loss is a big deal.
Four groups could benefit dramatically: international banks, techs, industrials and autos. Secondarily, beverages, discretionary health care plays and even the packaged-goods outfits would see some year-over-year benefit.
I think the turn is real. When we hear from companies next time around, the tone will be much different. How amazing would that be for U.S. companies like Ford (F), General Motors (GM), Citigroup (C), PPG (PPG), Eaton (ETN), Avnet (AVT), Hewlett-Packard (HPQ) and General Electric (GE) of the country? You might even be tempted to buy McDonald's (MCD) and Coca-Cola (KO) off that trade.
China is harder. For more than a year we have seen numbers out of that country that have been worse than expected. Just as with earnings estimates, it took a year before the estimates and expectations were so low that they could be beaten. I think that's all that is happening in China. I would feel a lot different if I saw the Baltic Freight Index resume its climb from the spring. That's just not happening. I expect that China will remain a headwind to earnings expectations in the third quarter. But if Europe picks up this quarter, then I think China could switch to a more neutral position.
Of course, you have the alienating backdrop of Russia, India and Brazil, which are not doing well at all. Call them the Sick BRICs. But a turn of the 600 million in Europe would more than make up for those.
No matter what, there's still pervasive bearishness among portfolio managers about both. But here's an interesting perspective that I share with Stephanie Link, co-portfolio manager of the Action Alerts PLUS charitable trust. We have been waiting patiently to buy some more Vanguard MSCI Europe ETF (VGK) for the portfolio, and the darned thing never comes in. Meanwhile, as much as I remain skeptical about China, Joy Global (JOY), Cummins (CMI), Emerson (EMR), Vale (VALE) and Caterpillar (CAT) say otherwise. Remember, Caterpillar still hasn't fallen much since that last so-called horrendous quarter. Oh, yeah, it was bad -- but, alas, not bad enough. It's kind of the exact situation we have in China itself.
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, ETN, GE, VGK, JOY, CMI, EMR, VALE, and CAT.
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In the US, Bernanke is essentially buying $35 billion in monthly GDP growth with $85 billion/month in freshly printed currency. The same thing is happening in Europe. That's not "positive" or "lasting".
The European Central bank is pumping fake monies into it's economy like Japan and the USA
expect total collaspe by sept 2015
The turnaround is the same fallacy there as it is here. Cheap central bank money infusing the markets, that's it. The principle fundamentals aren't there, Jim. The real economy is suffering big time. This isn't quantum physics. Unemployment across Europe is still in double digits. Costs are rising, The monetary system is being debased at record levels. GDP in all the Southern European countries stink of high heaven. None of them can meet their debt obligations and they are all barely making their bail-out payments. Banks are still in trouble. The toxic derivatives are all still there, they haven't magically gone away.Where are you getting this delusional recovery from?
Soo you think Europa is turning around?, hardly possible. I read someone saying the GOP has done a good job of prohibiting the Dems. from getting anything done. How effen naive. Nothing is getting done because both parties are getting done exactly what they want done. This latest sick political theater of Obama playing on poor working folks suggesting a minimum wage increase? If any wage increase for poor worker folk was even imaginable those responsible would be gone. Just like this entire phoney immigration ploy. Immigration is right where the New World Order wants it. You think Tyson didn't know that 500 of its employees were illegal. Illegals are allowing small business as well as many large business to break the minimum wage. Illegals; those without cards, are making up to 25% less than those with cards. Construction companies, restaurants, and lawn care businesses couldn't exist on minimum wage pay. The illegals will work for something that justifies moving here and nothing more. And Europe is turning the corner. What a sad sick joke.
i didn't do anything!
but it looks like cramer's shot gun approach of dropping stock names means at least some of these listed ones will go up, while others go down.
Since when has Europe solved anything yet ? Just this morning, the news media was clamming Greece was going through another round of painful justifications of why the EU needs to continue with it's infusion of money to prop up it's banks. And they still have high unemployment- what is it now- 25 %? Oh yea- I can hear the 'snap back' alright - with all that debt - How on Earth do you think that Europe will have some grandiose recovery ?
As far as Caterpillar, did anyone remember the President authorizing 50 billion in infrastructure this year? That must have slipped your minds.
I think he was an old, evil, whitey, mutha, fluffer..? Uncle Mikey...
Then there is V_L, but he's just a dumb azz...with an agenda.
57 States is an imbecile.
MG may not be on the blog but I felt like this was a good spot to include that information.
Yup we use to play with China Mobile, called it Chili for short..
Miss Lilly doesn't understand all this symbol stuff.
Also had Baidu in the early days.....Fantastic...!!...Just called that Bydoo and bid it good-bye.
Several Solar Companies...Stayed too long, not great when we got out...Moved on.
Taiwanese and Japanese, semis and such..
Don't think we have anything left in Orient...??
But invest in Companies(multi-nationals) that have presence in those locations..
Taxes are easier to figure, results close to the same.
Let's see we have a new persona for "Little Beav"?
And Fatty Cakes is calling out what he does best...
Fatty, see that old truck coming down the road at about 80...That be me.
And you had better get back under the bridge where you belong...
I have been tracking your limited usage wireless and GPS signal...Yeah that's me coming for you.
Protect your model collection while you can.
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As geopolitical tensions threaten to spin out of control, investors are wondering how best to position their portfolios for the global turmoil.
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