This market tizzy is all about Russia

What does the country have to do with the price-to-earnings ratio of the S&P industrials? From here on in, everything.

By Jim Cramer Jul 31, 2014 11:51AM

A armored vehicle manned by pro Russian rebels leaves Donetsk, Ukraine © Hollandse Hoogte/CorbisIt must have just dawned on people after work last night that Russia is bad news for the market.


I guess investors needed to hear it from companies as diverse as SiemensAdidas, and Shell (RDS.A) all at once to drive the point home. Yes, Russia, Ukraine, Russian impact on Europe, strong dollar -- it's all coming together in one ugly morning.


There's a grudging recognition that not only are the sanctions not working but they are making Putin dig in his heels. Digging in his heels means he's going to cut the natural gas spigot to Europe when it gets cold. I think that's how a company like Siemens could withhold an outlook for 2015. I think it's how Shell last night said it could be a game changer. Adidas didn't even have to wait until winter to lower the boom. It did so now.


TheStreet.com logoI think the chasm is growing here not just with Russia and the West with but the West and the president. The Germans, who we think are very much in control of the negotiating stance, want things to be solved diplomatically.


President Barack Obama wants it to be solved.


The Germans want things to be solved before it gets cold.


Obama is not worried about warmth -- he's got no ties to Gazprom.


The Germans have huge business interests in Russia, and many of its businesses run on that natural gas.


Obama could not care less about business. Never has, never will. In fact, I think he doesn't believe he is accomplishing anything until actual earnings per share are hurt. I sometimes wonder whether he thinks the stock market is this bizarre abstraction that should be going down because of the things he is doing and if it hasn't he's not being tough enough. I think many of us felt that way about the banks in the early Obama administration days and are now feeling it about the industrials.


Regardless, it is all about Russia today and a recognition that we are, at this pace, only a few weeks from cutting numbers (Russia-Europe-strong dollar), and that's going to tar pretty much every major international industrial company that's headquartered in the United States.


Of course the money's going to go somewhere, most likely biotech and the cloud, the same refuges as always when an economy slows and the dollar is strong. Sure, in the old days it went to Procter (PG), Kellogg (K), Colgate (CL) and the like. But they, too, have too much dollar exposure, so they don't get bought either.


Until someone capitulates, this one is going to get worse, not better.


What does Russia have to do with the price-to-earnings ratio of the S&P industrials? From here on in, everything. 


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Jim Cramer's Action Alerts Plus: Check out this charitable trust portfolio for the stocks Cramer thinks could be winners.





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165Comments
Jul 31, 2014 12:06PM
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Wait! Didn't you say yesterday that things had turned after the "huge sell off" ....Even for someone that predicts something every day you are almost always wrong !!
Jul 31, 2014 1:03PM
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It is not just Russia.  Although Putin looks like a genius compared to our dear leader.  The market has been propped up artificially for years.  Now that it is slowly being taken off the government tete, we are seeing that this is really a 11,000 to 12,000 market.  Let the Dow stand on its own based ONLY on market fundamentals.
Jul 31, 2014 2:07PM
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only when americans quit believing they are exceptional and join the rest of the world will we conquer  the poverty and gang rule we have in ALL our major cities. we spend money on troops in other countries trying to ram our ideals down their throats and then wonder why they hate us. then the troops come home and we fail to take care of them .meanwhile we subsidize cheap labor with food stamps so that CEO'S can make obscene MULTI MILLION dollar salaries. exceptionalism my a$$
Jul 31, 2014 12:29PM
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Good thing I've got all that money in Argentinean bonds.

 

 

Jul 31, 2014 1:41PM
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Sheesh, why is this Cramer moron still allowed in the news? **** has been wrong every single time he ran his head since I can remember.

If it wasn't for his Insider status and the fact that the SEC are a bunch of paid patsies that couldn't investigate a lemonade stand hold up, he'd be as broke as the rest of us.

This whole credit bubble is directly and unarguably the result of the Fed's idiot credit pumping and money printing... no more, no less.

Cramer..... (phbbbbttttttt) 

Jul 31, 2014 1:26PM
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"We're playing checkers against a foe who is playing chess and he brought his own board. Russia is also moving to decouple itself from the dollar. This is a game the U.S. should not be engaged in."
$$$
Correct. We need to flush lawyers, accountants, financiers, administrators and career politicians out of control over our own economy and resort to old-fashioned Free Enterprise. Russia isn't our enemy, arrogant fools with degrees and Kool Aid cash are our enemies. And the i-phone. Get back to our core Capitalist values and make World Peace. 
Jul 31, 2014 12:59PM
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Russia is just part of the Problem but not nearly the biggest one. Global Debt is the important crisis we face and events like Russia are the Trigger. The GDP report wasn't the worst possible news yesterday, what was, rolling Defaults because of Too Big To Fail and Too Big to Jail. Eventually, soaring Debt will cause Great Recession Part II.
Jul 31, 2014 12:53PM
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This is what you get when you have a President that doesn't believe in American exceptionalism and doesn't believe that America should be the greatest world power. 

 

A new world power takes our place.  THe leader of the free world is no longer considered the most powerful man in the world, Putin is. 

 

Good job Mr. President.

Jul 31, 2014 12:43PM
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Someday the sanctions will be on us.... Rome fell.
Jul 31, 2014 2:06PM
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No Cramer, this tizzy is about the reality that the fed can't print money forever, the economy still sucks for the average person, The price of just about everything has doubled the last 6 years and the Fed is keeping interest rates artificially low along with flat out lying about inflation. Not to mention the real unemployment rate is 12-14% and everyone knows it. Cramer still selling the snake oil?
Jul 31, 2014 12:16PM
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The Russia problem is just one component of many, and not the sole cause of the "market tizzy".

Yesterday's GDP report was almost the worst possible news for Wall Street - not sure why more people didn't take advantage of that play.
Jul 31, 2014 12:20PM
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The German market is crashing and brings down the US market despite a big 4% GDP fake growth. Earnings are peaking and layoffs will soon start in earnest. If you are unemployed it will be much harder to find a job. There is only 1 thing that can turn the tide - Yellen starts another QE big time. What chance is it? 25% correction in the blink of an eye.
Jul 31, 2014 12:06PM
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The aberration continues folks....Just call it as we see it and many times as it is happening; at 1145 scumbags called to accelerate the selling so like we said earlier, they have reached the 200 point plateau just as they had planned, now, they will try to keep going...Oh well, now we are mirroring the awful economy of ours and the leadership of the inept community organizer sadly....More later.
Jul 31, 2014 1:15PM
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"We're playing checkers against a foe who is playing chess and he brought his own board. Russia is also moving to decouple itself from the dollar. This is a game the U.S. should not be engaged in."

We certainly shouldn't be telling Russia Right or Wrong after Iraq and setting up some many Dictators across the Globe. Russia is hardly playing Chess with it's own board, anyone thinking so is out of touch with Reality. I would agree that Obama and his Republican Counterparts are barking up the wrong Tree as this can potentially spiral out of Control. Western Nations have been waging Economic Wars against Russia for Decades so it's not that much an surprise what has happen thus far.

Bottom line, Jimmy is clueless about this as are many others. This is a dangerous Game of Chicken and Mouse played in someone's own Backyard.  Western Nations are famous for setting up Horrific Dictators then claiming innocence. This Holier then thou attitude will eventually Doom us All. For all intent, this is the Pot calling the Kettle Black.
Jul 31, 2014 1:22PM
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Ready for the bottom, Jim? Once earnings are regulated to actual street sales to consumers, the price to earnings ratio for every business platform drops like lead turds. You invested in rackets that cannot sustain. And won't.  
Jul 31, 2014 2:01PM
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he called for a turn around yesterday and of course the market proves him wrong again..................next he will be saying he was all cash today........beware of this carnival barker
Jul 31, 2014 1:09PM
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jim cramer's so full of sh*t, it's coming out of his mouth !

The STOCK MARKET BUBBLE IS BREAKING !! KABOOM, KABOOM !

This time these MONEY MONGERS ARE COMIN' DOWN WITH US !!!

Their PAST & PRESENT out of control, uncontrolled CRIMINAL CAPITALISTIC GREED & CORRUPTION has DESTROYED the USA !!

Jul 31, 2014 12:58PM
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Why is it that anything in our national interest, especially security is untouchable, but when corporate earnings go down, it's the President who doesn't get it. Hey, if business goes down for a while, too bad. In the meantime, chart your future profits  with Russia out of the world economy.
Anything is better than more war, which means more American deaths and more national debt.

Jul 31, 2014 1:32PM
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It used to be capitalism in reference to business had several components. Capital in regards to people, capital in regards to community involvement, capital in regards to profit. Now it just seems all profit focused.
Jul 31, 2014 12:34PM
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Well I think you finally got something right. I commented yesterday as much, this is going to be a cold winter for sure.
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