No love for companies that stumble in this market
We will continue to have a treacherous tape until no fiscal cliff deal becomes consensus.
Tibco (TIBX), Darden (DRI) and, to a lesser extent, Gap (GPS) worry me.
Tibco's one of those companies with software that allows data to be recalled with lightning speed, so when you are shopping for a Tommy tie at Macy's (M) they can quickly match it with a deal on a Tommy shirt. This is the company that allows casinos to manage comping real time. It's always had a reputation as doing better and better each quarter.
Until Tuesday night when it hit the wall. Seventeen consecutive quarters of beating the Street and then, suddenly, it tells people it can no longer keep the streak going. I have interviewed CEO Vivek Ranadive many times and this is pretty shocking.
It can't happen when things are getting better, only when things are getting worse.
Darden's terrible. I can't tell you how much I want to say that management's at fault because I am tired of hearing from management that their advertising didn't resonate. It's incredible the excuses this company keeps offering for its myriad disappointments.
- Also see: 'Mad Money' recap: a divided market
But I just fear that there's a pullback in spending. You get 2% declines in Red Lobster and Olive Garden same-store sales again and you know things are getting worse, not better.
Finally there's Gap. This was many a gadfly's expectation for the next special dividend play. Instead we got the worst of all possible worlds, a rumor from an investment firm that Gaps' same-store sales are weak, coupled with a statement from management that no special dividend's coming.
The issue is all three of these stocks had been fairly hot of late. Tibco traded at $32 a little more than two months ago, now it is at $21. Gap hit its 52-week high at $37 in October, but was at $35 just last week. Bingo, it's at $30. Darden's down $5 Tuesday, stopped maybe only by its 4.22% yield, which may be too flimsy in the post-cliff world.
Tibco and Darden will probably catch downgrades Wednesday. Gap's being defended.
But the bottom line is that there are no bidders for those who screw up or are rumored to be doing badly. This reminds us, again, that we have a treacherous tape until the disappointment of no fiscal cliff deal becomes the consensus view for all to see.
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 has no positions in stocks mentioned.
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of course there is a pull back in spending! people re-learned the old Great Depression concept of saving and being <more> frugal. now, with the fiscal cliff coming people are gearling up for a messy new year.
it's in BOTH party's best interest to see the "cliff" occur. the democrats get their tax increases (or repeal the decrease if it sounds better). the GOP gets their cutbacks ~ especially the beloved DOD that is an over grown and over fed beast.
AFTER the cliff they can discuss tax relief and spending increases.
this will be interesting!
No fiscal cliff deal isn't that bad unless you work in the defense industry. What will hurt will be because our elected officials act like children, Fitch's will downgrade the U.S. before the end of February.
Moody's gave many reasons for their downgrade of the U.S., but one of the more driving reasons was that our elected officials act like children.
Rating agencies want to see governments with maturity and the power to get the right thing done quickly. They don't want to see The Little Rascals.
Our second downgrade is really going to hurt. Big time.
To take 1.5 trillion from the private sector 'investment menatality' and give it to the goverment to spend 'entitlments'....are we crazy?????????
I read and truly believe Al Sharpton, Rangle and Schumer will help direct the presidents hand in what needs to be done, OUCH......
Entitlment ( ALL spending) is simply OUT OF CONTROL...
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