The bears have overreacted to Cyprus

Like it or not, the market was resilient Monday. The doomsayers should acknowledge that reality.

By Jim Cramer Mar 19, 2013 8:55AM

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Europe CorbisIt's not that the market won't go down. It will. It's not that the market isn't treacherous. It can be. It's the lack of recognition that something different is happening -- something different and better than what's been before -- at least when it comes to Europe.


Look, I have no doubt that, when the banks open in Cyprus, it's going to be ugly. I am sure some people will pull money out of Spanish or Italian banks. But what bothered me Monday was that, of the people I heard or read, no one who had feared a big collapse off the Cyprus news was "impressed" by the action. It was almost as if people were disappointed by the lack of panic -- as if, somehow, they hadn't learned their lesson about how bad things can be.


The problem is, maybe they have learned. As has been written most eloquently by friend Peggy Noonan, The Wall Street Journal columnist, we are all tired of being scared. She was referring to President Barack Obama as scaremonger-in-chief, which he most certainly has been about all things Congress and the budget. By the way, the liberal New York Times columnist Paul Krugman agrees with Noonan about this -- the scaring, albeit not anything else that I can tell.


I think that, as investors, we aren't just tired of being scared by U.S. politicians here. We are tired of being scared by the ministers overseas, particularly given that our companies have done much to break the linkages by which they used to be hamstrung. U.S. banks have pulled back dramatically from their European exposure. Sure, Citigroup (C) and JPMorgan Chase (JPM) maintain a presence, and Goldman Sachs (GS) is active in the capital markets. But none of these firms can swing around the capital they used to be able to do, courtesy of Dodd Frank.


JPMorgan is chastised by the "London whale" and has cut back exposure. Michael Corbatt, the new CEO of Citigroup, has point-blank said he's backing away from unprofitable markets, which no doubt includes some of these obscure places that are nonetheless potential trouble spots. Yes, Morgan Stanley (MS) has some exposure, but the new Morgan Stanley is largely a brokerage house.


While we all want to spot weak links in the system, do you think AIG (AIG) is still insuring financial instruments over there? Do you think our insurers are buying big chunks of European bank debt? Maybe some, but it used to be the staple, and I think they have learned by now, much as I believe the money funds have learned. Again, though, there are outliers.


We neither need to fear as much as we used to, nor should we fear as much as we used to.

Now, the story's not going to go away, because the incompetent European bureaucrats aren't going away. They still haven't rolled back the second interest-rate hike that was put through by former European Central Bank President Jean-Claude Trichet. The Europeans also haven't really addressed their banks in any systematic way, unlike what our Federal Reserve and Treasury have done. They let this Cypriot banking travesty happen right before their eyes, in slow motion, over many years. I mean, they do have regulators, don't they?


But, in the end, after the money's pulled out and the panic runs its course, do you think rich people will want to be in euros? Or will they want to be in dollars and benefit from the rise in the greenback?


Again, as I keep pointing out, I do not like the tape. I can't believe how many stocks have gone straight up. I do believe interest rates are going to surprise to the upside. I know the media will make the most of the riots I expect Thursday in Cyprus. I know that, if there is a line at a Spanish ATM, it will be filmed and broadcast around the world.


But, as I have often liked to point out, on Monday the market did not do what the negative people said it would. It was not crushed. It was resilient. Heck, it was even up nicely at one point, as nutty as that is.


Nevertheless, to the bears I talk to, that strength meant nothing. Nothing at all. Every negative person I saw or read simply said, "Just you wait." I don't know a soul who foresaw a market plunge who said, "Gee, that was impressive. Didn't see that coming." It was as if the rally from the lows never happened and the lack of a "promised" 2%-to-3% decline meant nothing at all.


That's just plain wrong, especially considering how much was done to scare people out of their wits for the last 24 hours. Calm is one man's victory, but it's another man's defeat. Either way, one should own it -- not shrug it off or ignore it as if it never happened.

 

Cramer

 

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 GS.   

 

 

 

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117Comments
Mar 19, 2013 9:44AM
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"No. No. No.  Bear Stearns is fine.  Bear Sterns is not in trouble.  Don't move your money from there.  That's just being silly.  Don't be silly." - Cramer, March 11, 2008

On March 14, 2008, Bear Stearns went under.


Mar 19, 2013 9:40AM
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"You cannot create wealth by printing money."
Mar 19, 2013 10:46AM
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I believe this market will slowly be bled down.  Just a little day to day as not to cause alarm. Those who bid it up with free money are most likely out now.  They probably have a gazzilion naked shorts.  Put contracts are slowly being amassed.  Did anyone over 14 really believe that Wall Street had changed their ways?  Same game different day.  Milk the cow. Squirt Squirt into the pail.
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Pretty much the US economy is still toast and only trillions of dollars flowing from the printing presses of Ben Bernanke "print monies to infinity and beyond" is pushing the stock market up.

This is all going to come crashing down folks.

And don't think the US government has not been stealing your money all this time like the Europeans have been stealing the Cyprus depositor's money.

The dollar is losing value and has lost almost 50 percent vs the Euro since the Euro began back in 1999. You just never realized it because inflation due to printing money out of thin air was eroding the value of the dollar.

That is a much bigger hit than the 10 percent hair cut Euro is giving Cyprus.

Soon the US will not be able to print monies to infinity. That time is fast approaching.

Mar 19, 2013 9:56AM
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Bobo thinks people can't remember from one day to the next......... WRONG CLOWN BOY!!
Mar 19, 2013 9:51AM
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To me it seems scary that the European democracies are going along with Cyprus stealing money from it's citizens.  If I were Italian, Spanish or Greek I would have no faith in my government or banks now and be very worried.  Lets hope that Cyprus's parliament tells the EU to F off and exists the Euro Zone, perhaps they would be better off in the long run.
Mar 19, 2013 10:03AM
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.   This is the article listed in front of yours Jim.   World markets on edge as traders watch Cyprus.
Mar 19, 2013 11:31AM
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Duh, market mega-overreaction down from Cyprus, another overreaction up due to housing report. Yawn.

Exactly the way what Wall Street wants it(and makes it).
Mar 19, 2013 12:26PM
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Lets be clear about the future and this Cyprus thing.  The New World Order or One World Economy if you want has in many ways already been agreed upon.  Ink has been put to paper and all the major actors are in.  Clinton agreed and signed off on many of these last year.  And how anyone can think there will not be a world tax is totally Naive.  Put your thinking hats on folks.  Why has the world banking Industry been protected for this long?  Because nothing can be accomplished internationally without their involvement.  Somethings you need to think out on your own.  It is completely and totally politically stupid and  suicidal to come out and actually admit the game plan until it is so far along it will be too late for arguments .  You need to read between the lines and see how the chairs get moved around.  But you need to do this on your own.  Do you think those in DC don't understand the damage being done to this generation.  Many young people have now lived for 5 years of dumber employment.  To many of these kids this is now America.  And the sad part is it is the New America.
Mar 19, 2013 9:31AM
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the "fears" - when handled correctly  - cause the fun up's and down's that enable the instituions to gather all their nickles and dimes by the reactive small investers. 
Mar 19, 2013 12:14PM
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There are rumors that the Cyprus bank account confiscation will be cancelled. Even if it happens, there is no way to avoid that their banks go under. Once they reopen, with or without confiscation it is obvious that there will be a bank run.
Mar 19, 2013 10:56AM
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WRONG, Jim. Any time the static formula for Central Bank collusion is disrupted, we have ripples just like these. It lets everyone know how precarious the whole scam is. Three areas worth leaving sooner than later-- stocks, bonds, metals. All three are cancer-ridden with fake money and alternative currency with higher priority than your interest or security. Who in their right mind is trusting Central Banks? 
Mar 19, 2013 11:56AM
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There was underreaction, not overreaction at all. What´s happening in Cyprus is very grave. Cyprus itself is close to nothing, but when time comes to deal with the broken banks in Spain and Italy, why is that that one would believe no confiscation would be involved? And in the US, the Fed´s money printing scam is already being put in check by a surging inflation. PPI and CPI at 0.7% in a month? Bernanke is still likely to insist on printing money during this meeting that ends tomorrow, but some more decent and respectable Fed governors are likely to consolidate their opposition. In a few more weeks the whole scam may blow up.
Mar 19, 2013 11:48AM
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For those with short memories, here is an easy-to-understand graph:

1999 Eurozone inaugurated. Greece after some 'due diligence' on the
part of the EU members, is allowed to join because their finances 'look good'.

2010;  We finally learn their finances seemed so wonderful thanks (again)
to the creative accounting practices of GOLDMAN SACHS (other peoples
monies).

2013: The latest in crises out of Europe is Cyprus.  What did banks in Cyprus
heavily invest in?   GREEK BONDS! 

Join me in dispatching yet another "thank you" to Goldman Sachs for all their
genuine efforts to bring down the world economy, the better to do "Gods Work"
and pick up the pieces at the fire sale. 

Letters can be dropped with Cramer, who worked for Goldman Sachs.

Crises are manufactured every other week in the finance world.  The semi
collapse itself was an engineered event. 

But sorry to tell you, JEYPDN, but the world is not coming to an end; simply,
there are some that want everyone else to feel that way, and react accordingly.

 

Mar 19, 2013 11:23AM
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Well mr cramer --- were you not bearish because of cyprus yesterday ?
Mar 19, 2013 11:29AM
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ABS

This depends on how much you really want to be chasing people down out of state for rent money?  Also depends on if you can pay cash or not (as your friend did)?  Which camp are you in, the next big crash is imminent one or there is a slow recovery one?  If you can't pay cash I would say avoid it as even a slight increase in interest payments messes up the entire equation.  While it is a big discount you have to ask yourself is it a discount off a price that was heavily inflated to begin with?  Tough market to invest in these days, seems like no matter what asset class there are those screaming do and don't.

Mar 19, 2013 11:43AM
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Cyprus is a Piss Ant.....Floating in a Sea of shidt....Their own.

Still trying to figure out any Entanglements with the European Union...Maybe in name only.??

Or the Banks that are holding the Deposits..??

Many of the Rich Aristocracy, Russians involved...Wonder if the Russkis will blow the fkn place off the map?....

 

The only comparison or parallels I can draw, would be the the Caymans..South of us...

Nothing but a Deposit Vault for our Elite, Rich and European front organizations that want to do business with our "chosen ones."

Mar 19, 2013 12:44PM
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Well I'm glad you are "Super Sleuthing" today ABS....It makes life interesting...

 

I hadn't connected Sgt. (without an "A") to Patty yet....But previously, it was Arizona Blond dufus.

I'm not really sure what all the "me ex-Military, you are a pussy) stuff was all about yet..???

 

I don't get too excited about multiple names or schizo personalities.."Just walk on by,stand on the.."

Anyway "good job", "number one" and all that nice shidt...

Keep exposing and "ferreting" them out, of their woodpiles...

 

Mar 19, 2013 10:28AM
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Be cautious once again this morning...Things do not look right down here so far....We were up over 60 points until 1020 hrs that these scumbags started doing their thing so we are deteriorating rapidly...Still early of course...Be careful though...More later.
Mar 19, 2013 2:12PM
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I think Tog has had enough CAD liver oil.
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