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.

 

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