Pessimism is far too easy
The 2 big trends that brought us here -- autos and housing -- are not going away so readily.
This is the theme of the hour, and when we're faced with smoking hot numbers that might be cooling -- and I acknowledge that fact -- I like to go back to why they might be good in the first place.
Right now there are plenty of projections that the U.S. might be building as many as 1 million homes a year. Weyerhaeuser (WY) said that the other day on Scott Wapner's "Fast Money Halftime Report." This number is considered to be a big deal. But we could probably use another 50% more homes, given the dearth of inventory in California, Florida and Arizona -- and that's especially if immigration reforms are made and the birthrate keeps coming back.
Simply put, 1 million new homes isn't a stretch goal. Despite the National Association of Home Builders' newfound cautious outlook, and because of the Toll (TOL) conference call -- which was actually positive -- I don't think the country will have a problem topping that number. That's good news for this economy that keeps getting factored out.
We're also betting that the U.S. could produce as many as 15 million cars this year. Again, this is regarded as a goodly amount. It's the "over," so to speak. But similar to housing -- for which a few years ago we built a fraction of what used to be built -- we're still trying to catch up with demand. We built only about 9 million cars a few years ago. Now the fleet is aging. There are more people. Gasoline costs more, too. So you need to buy a new car that guzzles less.
In other words, yes, we may see a temporary impact from the end of the payroll tax holiday and higher taxes for the wealthy. But these two trends, autos and housing, aren't running out of long-term steam, even if some think the market is taking a breather.
During days like Wednesday and Thursday, it's very easy to pronounce that every good trend is in jeopardy. I couldn't believe how many execs said that the looming sequestration is going to hurt them. It was almost as if they broke out the fiscal cliff memo. Would they have said this if the market had been flat? I don't know. A lot of self-fulfilling political thinking has been part and parcel to this market ever since President Obama was first elected.
But I come back to saying there's innate pent-up demand, and it's not going to be put on hold because of the changes in taxes or because of sequestration.
It's always right to worry about trends when the stocks are toppy. You get gun-shy. You might have wanted to buy Toll at $28 going to $38, but you never seem to want to buy Toll at $33 after it's already been to $38, right? Plus, given that so many people are chartists, our reaction to any stock that has gone up and then come down is that a head-and-shoulders pattern is upon us. They hit up the chart, it's hideous and they back down.
So, the stock loses its always-skittish defenders in no time. I didn't like some genuine pieces of the Toll quarter, like average price of homes sold. The company has been a numbers-beater ever since things started to get better, so it's logical to question whether that string is over.
But as I wrote the other day, we have seen so much forgiveness in this market. So, why should we think that, in a few days, it won't be forgiven again, especially as Toll approaches -- say -- $30 to $31?
Or do you mean to tell me that the only opportunity in this stock market comes from companies that report perfect quarters and are on an endless northern trajectory, and that everything else is inedible? Would you say the market is a perpetual-motion machine and that now the motion can only be down? If a stock is down, it must stay down?
That certainly hasn't been the case until Wednesday.
I just don't think you can presume that two down days means the end of the rally -- and I'm presuming a bad day today, or even one or two more down sessions. I certainly don't think the big theses that have brought the market here -- autos and housing -- are now dead because Owens Corning (OC) and Toll Brothers missed Wednesday, or because Ford (F) missed not that long ago.
It just seems way too pat to me. I'm from the school that said we ran too much, that the declines are always sharper than the advances and that the market is shaking people out. We're now going to hear sequestration horror stories into the end of the month. Then the market could be ready for another advance, because the trends that brought us here aren't going away that easily, even though some of the points the market just put on sure are.
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 WY.
More from TheStreet.com
If you`re not a lot better off than you were 4 years ago you need to blame yourself.My
business is growing by leaps and bounds.I got taxes done and I`m getting $5000 back
and future looks bright.The market is way up and the wars are winding down.Bin Ladin
is gone and many other terrorist have beeen killed.Our far right press doesn`t tell us the
good things.We have a good family man in the WH who makes me proud to say
"I`m an American."The sour puss Republicans just say "no" to peace and prosperity
and only want war to try to unite us on phony hate.We need to improve our infastructure
not start wars we have rebuild.we should rebuild our own.
Believe only what Obuma and his media henchman tell you !
Arab Spring !
Bin Laden Dead /GM (unions) Alive !
The economy is actually recovering ! (uhh JOE- Does gas pricing factor in, schmuck ?)
I will go through the budget with a scalpel !
You will not pay one dime more in ----
a) Health Care
b) QE5 !
The attack was caused by students protesting a video (armed with rockets !)
We really need to pass QE 1 and 2 and 3 or else the world stops turning !
REALITY CHECK TIME FOR LEFTY CRETINS
16 Million on food stamps
45 million unemployed (STILL AT ALMOST 8% - 4 YEARS of NEAR OR OVER 8% = PATHETIC)
Home Prices STILL down 40%
STILL NO jobs out there
Growth - None !
The Deficit - STILL AT 16 TRILLION AND GROWING !
Budgets passed in 4 years = ZERO !
Budgets proposed in 4 years = ZERO !
Gas is DOUBLE what it was on day one of Obuma reign !
HOWEVER - for the sake of fair play
WE DO HAVE :
Free Condom !!
Amnesty to parasites , I mean illegal's , I mean "Undocumented" people
Gay Marriage !!
Aren't we lucky ?
CGT!:What are you smoking?Housing market is up,auto sales are up, the market is up 70%,
6 million jobs have been added.Rush and the far right constantly lie about Obama and the economy.
Most people are doing fine.I`m much better off than I was 4 years ago.Don`t forget
the far racist far right is never going to say anything good about Obama.If you want
wars and recessions you have to get Republican in the WH.
Nice BUY call on monday cramer ......I am sure you made your paymasters happy with that one --- they get out and the little guy gets hosed again .....
"I have really been wondering how J. Cramer would look in a Dress and a Wig...
Maybe Active has a great idea, for a new Market/investing reality show.."
I think this is how he spends his weekends so there must be pics somewhere.
Personal opinion: Just believe the Bull is taking a breather..?? Or a coffee break..Hmmm.
Gotta go check the pot..
Looks like by the end of the day...All or much of the gains since the beginning of the year are going to be down to about 2% instead of climbing onward to 10%....Oh, well.
This gets very tiring..
I have really been wondering how J. Cramer would look in a Dress and a Wig...
Maybe Active has a great idea, for a new Market/investing reality show..
We can just call it "The Biotches from Westwick."
There is NO MANIPULATION....Traders are booking Pofits....Because of the FED, Europe(again) and the rest of the World is spooked, from reports coming from America...?
Seems pretty simple to me...BUT in Reality, it is not.?
I probably should have cut some issues along with the Big Boys...But am not that worried yet..
Goes around, comes around.
Yes, I believe there has been a sale on Gold, but don't think it will really last much longer...?
Just a GUT feeling...Who knows??....Too many pros and cons.
ACTIVE...You worrying me a little,corrections maybe? But I still have Home improvement and Autos.
Maybe I should have booked some cash, eh ?
I believe this new rise in acquisitions signals the beginning of the final stage of the bull market. This reminds me a lot of 2007/2008. Gas prices rising and a market being pushed up with help from corporate mergers and acquisitions. I believe we have 6 to 12 months before the next big decline. We might be starting a minor correction now but a 1- 3% only presents a buying opportunity as stocks will continue to rise for the next 6 to 12 months. After that......
Well Brazil is hosting the next World Cup of Soccer and the 2016 Olympic summer games, this means heavy infrastructure spending and at least temporary boom in the country, so a possible safe haven for your money.
Another is Canada with the eastern Canada pipeline almost a sure thing this will create some jobs but it will allow oil sands companies to have new customers which they desperately need. Right now their oil is land locked and they can only sell to the surrounding provinces and to north west USA refineries. As a consequence they are paid the least on earth for their oil, this pipeline gives them the ability to charge more which will be reflected on the TSX. The west coast pipe line and Keystone are less likely to go a head, but are really gravy if the east one goes through.
Copyright © 2013 Microsoft. All rights reserved.
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.