The bears have overreacted to Cyprus
Like it or not, the market was resilient Monday. The doomsayers should acknowledge that reality.
It's not that the market won't go down. It will. It's not that the market isn't treacherous. It can be. It's the lack of recognition that something different is happening -- something different and better than what's been before -- at least when it comes to Europe.
Look, I have no doubt that, when the banks open in Cyprus, it's going to be ugly. I am sure some people will pull money out of Spanish or Italian banks. But what bothered me Monday was that, of the people I heard or read, no one who had feared a big collapse off the Cyprus news was "impressed" by the action. It was almost as if people were disappointed by the lack of panic -- as if, somehow, they hadn't learned their lesson about how bad things can be.
The problem is, maybe they have learned. As has been written most eloquently by friend Peggy Noonan, The Wall Street Journal columnist, we are all tired of being scared. She was referring to President Barack Obama as scaremonger-in-chief, which he most certainly has been about all things Congress and the budget. By the way, the liberal New York Times columnist Paul Krugman agrees with Noonan about this -- the scaring, albeit not anything else that I can tell.
I think that, as investors, we aren't just tired of being scared by U.S. politicians here. We are tired of being scared by the ministers overseas, particularly given that our companies have done much to break the linkages by which they used to be hamstrung. U.S. banks have pulled back dramatically from their European exposure. Sure, Citigroup (C) and JPMorgan Chase (JPM) maintain a presence, and Goldman Sachs (GS) is active in the capital markets. But none of these firms can swing around the capital they used to be able to do, courtesy of Dodd Frank.
JPMorgan is chastised by the "London whale" and has cut back exposure. Michael Corbatt, the new CEO of Citigroup, has point-blank said he's backing away from unprofitable markets, which no doubt includes some of these obscure places that are nonetheless potential trouble spots. Yes, Morgan Stanley (MS) has some exposure, but the new Morgan Stanley is largely a brokerage house.
While we all want to spot weak links in the system, do you think AIG (AIG) is still insuring financial instruments over there? Do you think our insurers are buying big chunks of European bank debt? Maybe some, but it used to be the staple, and I think they have learned by now, much as I believe the money funds have learned. Again, though, there are outliers.
We neither need to fear as much as we used to, nor should we fear as much as we used to.
- Also see: Debunking 5 retirement myths
Now, the story's not going to go away, because the incompetent European bureaucrats aren't going away. They still haven't rolled back the second interest-rate hike that was put through by former European Central Bank President Jean-Claude Trichet. The Europeans also haven't really addressed their banks in any systematic way, unlike what our Federal Reserve and Treasury have done. They let this Cypriot banking travesty happen right before their eyes, in slow motion, over many years. I mean, they do have regulators, don't they?
But, in the end, after the money's pulled out and the panic runs its course, do you think rich people will want to be in euros? Or will they want to be in dollars and benefit from the rise in the greenback?
Again, as I keep pointing out, I do not like the tape. I can't believe how many stocks have gone straight up. I do believe interest rates are going to surprise to the upside. I know the media will make the most of the riots I expect Thursday in Cyprus. I know that, if there is a line at a Spanish ATM, it will be filmed and broadcast around the world.
But, as I have often liked to point out, on Monday the market did not do what the negative people said it would. It was not crushed. It was resilient. Heck, it was even up nicely at one point, as nutty as that is.
Nevertheless, to the bears I talk to, that strength meant nothing. Nothing at all. Every negative person I saw or read simply said, "Just you wait." I don't know a soul who foresaw a market plunge who said, "Gee, that was impressive. Didn't see that coming." It was as if the rally from the lows never happened and the lack of a "promised" 2%-to-3% decline meant nothing at all.
That's just plain wrong, especially considering how much was done to scare people out of their wits for the last 24 hours. Calm is one man's victory, but it's another man's defeat. Either way, one should own it -- not shrug it off or ignore it as if it never happened.
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 GS.
More from TheStreet.com
On March 14, 2008, Bear Stearns went under.
This is all going to come crashing down folks.
And don't think the US government has not been stealing your money all this time like the Europeans have been stealing the Cyprus depositor's money.
The dollar is losing value and has lost almost 50 percent vs the Euro since the Euro began back in 1999. You just never realized it because inflation due to printing money out of thin air was eroding the value of the dollar.
That is a much bigger hit than the 10 percent hair cut Euro is giving Cyprus.
Soon the US will not be able to print monies to infinity. That time is fast approaching.
Exactly the way what Wall Street wants it(and makes it).
1999 Eurozone inaugurated. Greece after some 'due diligence' on the
part of the EU members, is allowed to join because their finances 'look good'.
2010; We finally learn their finances seemed so wonderful thanks (again)
to the creative accounting practices of GOLDMAN SACHS (other peoples
2013: The latest in crises out of Europe is Cyprus. What did banks in Cyprus
heavily invest in? GREEK BONDS!
Join me in dispatching yet another "thank you" to Goldman Sachs for all their
genuine efforts to bring down the world economy, the better to do "Gods Work"
and pick up the pieces at the fire sale.
Letters can be dropped with Cramer, who worked for Goldman Sachs.
Crises are manufactured every other week in the finance world. The semi
collapse itself was an engineered event.
But sorry to tell you, JEYPDN, but the world is not coming to an end; simply,
there are some that want everyone else to feel that way, and react accordingly.
This depends on how much you really want to be chasing people down out of state for rent money? Also depends on if you can pay cash or not (as your friend did)? Which camp are you in, the next big crash is imminent one or there is a slow recovery one? If you can't pay cash I would say avoid it as even a slight increase in interest payments messes up the entire equation. While it is a big discount you have to ask yourself is it a discount off a price that was heavily inflated to begin with? Tough market to invest in these days, seems like no matter what asset class there are those screaming do and don't.
Cyprus is a Piss Ant.....Floating in a Sea of shidt....Their own.
Still trying to figure out any Entanglements with the European Union...Maybe in name only.??
Or the Banks that are holding the Deposits..??
Many of the Rich Aristocracy, Russians involved...Wonder if the Russkis will blow the fkn place off the map?....
The only comparison or parallels I can draw, would be the the Caymans..South of us...
Nothing but a Deposit Vault for our Elite, Rich and European front organizations that want to do business with our "chosen ones."
Well I'm glad you are "Super Sleuthing" today ABS....It makes life interesting...
I hadn't connected Sgt. (without an "A") to Patty yet....But previously, it was Arizona Blond dufus.
I'm not really sure what all the "me ex-Military, you are a pussy) stuff was all about yet..???
I don't get too excited about multiple names or schizo personalities.."Just walk on by,stand on the.."
Anyway "good job", "number one" and all that nice shidt...
Keep exposing and "ferreting" them out, of their woodpiles...
Copyright © 2014 Microsoft. All rights reserved.
Fundamental company data and historical chart data provided by Morningstar Inc. Real-time index quotes and delayed quotes supplied by Morningstar Inc. Quotes delayed by up to 15 minutes, except where indicated otherwise. Fund summary, fund performance and dividend data provided by Morningstar Inc. Analyst recommendations provided by Zacks Investment Research. StockScouter data provided by Verus Analytics. IPO data provided by Hoover's Inc. Index membership data provided by Morningstar Inc.
Tighter regulations and the end of a lengthy bull market in bonds have changed the landscape forever.
VIDEO ON MSN MONEY
Top Stocks provides analysis about the most noteworthy stocks in the market each day, combining some of the best content from around the MSN Money site and the rest of the Web.
Contributors include professional investors and journalists affiliated with MSN Money.
Follow us on Twitter @topstocksmsn.