China's tightening spells trouble across the board

All the linkage plays -- metals, oil, tech -- will likely feel the pinch today.

By Jim Cramer Feb 12, 2010 8:05AM
Jim Cramer

By Jim Cramer, TheStreet

 

Why did we hold Freeport (FCX) through the night? What were we thinking when we bought Vale (VALE) on a disappointing quarter? Shouldn't we now be worried about the Bucyrus (BUCY) we took up three or the Caterpillar (CAT) up the same amount?

 

That's what happens when you think the Chinese are going to be like our country's government and let the bubbles roll. The Chinese are not like us. There is no Nancy Pelosi pushing pet products in a stimulus plan that probably only had half of the money creating jobs with a multiplier effect -- as opposed to giving raises and stabilizing unionized civil service employment.

 

The Chinese mean business. They are not going to let expansion run amok. So when you have 3-point gains on the backs of the shorts who got caught leaning the wrong way for a day, you have to take them.

 

So let's take the case of Freeport. Great company up a lot in a short time almost entirely related to China with no yield support. Now contrast that to Southern Copper (PCU), nowhere near as big a run with yield support. Which is better right now? I think as long as China's tightening, you go with PCU. You need the floor.

 

Of course today could be the day when the linkage is broken and we rally on everything from oil to mining to tech.

 

Bing: More on China

 

But that means we would break the pattern that has gripped us and that I have complained endlessly defines 2010.

 

I don't think it will happen. Expect a clobbering.

 

At the time of publication, Cramer had no positions in the stocks mentioned.

 

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.

 

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