The entire market hinges on housing

Even stocks that have little to do with housing, like those of oil giants and drug companies, feel the impact of real-estate data.

By Jim Cramer Aug 24, 2010 8:32AM

jim cramerBy Jim Cramer, TheStreet


Since when did we become the United States of Housing? Housing has become pretty much the be all and end all of the market outside of employment claims. We literally dread these numbers because the estimates are way too high -- based on what? -- and when the figures come in, they are either horrible or really horrible.


Housing used to be supremely important in this country for Black & Decker (SWK) and Masco (MAS) and for Louisiana-Pacific (LPX), Georgia Pacific, Morgan Products, US Gypsum, U.S. Home and Republic Gypsum. We used to fret about what it would mean to Phelps Dodge and to some of the independent glass companies.


Most of those companies are now gone or have merged. We had some regional homebuilders, and they would have periodic cycles of good and bad. But they were regional, for heaven's sake, and often their regions would be strong when others would be weak.


Now housing controls everything from EMC (EMC) to Kellogg (K). Of course, every single bank's earnings hinges on every single house that is sold, right? It even affects Goldman Sachs (GS), which has nothing to do with housing, or is betting against housing if it is still allowed (nobody has gone through the new financial regulation laws well enough to be sure it is allowed).

The housing impact is felt immediately on Nucor (NUE), a steel company with no residential exposure, and on Merck (MRK), which is a drug company! Verizon (VZ) trades on it. The oils trade on it. Exxon (XOM) trades on it!


They are all linked, and they all go down on poor data, even the ones that should, historically, go up! On Monday, we sold off ahead of it.


And even if today's number isn't that bad, another housing number comes out tomorrow. It's a chance for a whole other round of disappointment for the market to lap up and digest.


So we have another couple of days of pain until we get to the jobless claims, which will be bad. And so then we will have even more pain, unless you have yield, which is the only shield to this miserable, horrible market.


Random musings: Shocking: Credit card rates going higher! Did anyone think they wouldn't? Did anyone think the banks are charities? Universities of higher lending?


At the time of publication, Cramer was long EMC, Nucor and Stanley Black & Decker.


Jim Cramer is co-founder and chairman of TheStreet. He contributes daily market commentary for TheStreet's sites and serves as an adviser to the company's CEO.


P.S. Click here to learn how to follow Jim Cramer's trades for his Charitable Trust.


Related Articles

Please help us to maintain a healthy and vibrant community by reporting any illegal or inappropriate behavior. If you believe a message violates theCode of Conductplease use this form to notify the moderators. They will investigate your report and take appropriate action. If necessary, they report all illegal activity to the proper authorities.
100 character limit
Are you sure you want to delete this comment?


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.


StockScouter rates stocks from 1 to 10, with 10 being the best, using a system of advanced mathematics to determine a stock's expected risk and return. Ratings are displayed on a bell curve, meaning there will be fewer ratings of 1 and 10 and far more of 4 through 7.

123 rated 1
262 rated 2
480 rated 3
651 rated 4
649 rated 5
629 rated 6
616 rated 7
496 rated 8
346 rated 9
111 rated 10

Top Picks

TAT&T Inc9



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.