Big down days add to confusion

Sure, there's plenty of bad -- but there is good afoot, too.

By Jim Cramer May 2, 2013 9:17AM

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Stock index © Image Source Getty ImagesNothing jives! Nothing dovetails. It is enough to drive you up a wall. On Wednesday I spoke to two top-notch executives, Rick Hamada, from Avnet (AVT), the company I call the supermarket of tech, and to Jim Griffith, the CEO of Timken (TKR), the steel company, and both said the same thing: Business is ticking up.


For Avnet, Asia's pretty strong, U.S. is OK and the company has actually had a good couple of months in Europe.


For Griffith, every month this year has been better than the previous and the stimulus in China's starting to work and orders are really kicking in.


Hamada's book-to-bill, the somewhat arcane barometer of his business, is above 1, which is a sign that he has a robust order book. Timken's holding at only about 55% of capacity, but Griffith could see that being the low for the year.


Now, let's put that on top of what Chuck Bunch said at PPG Industries (PPG) and Sandy Cutler at Eaton (ETN), namely that business has gotten stronger in China and is bottoming in Europe and you can see why this market has such a hard time figuring out what to do.


Of course, a lot depends on end markets. Timken, for example, has a huge business in steel for the Caterpillars (CAT) and the Joy Globals (JOY) and the National Oil Well Varcos (NOV) and you know those businesses are not strong. But its auto and aerospace businesses are. Hmmm, yep, mining and oil drilling and construction; they've all been weak.

However, Griffith, has reined in costs and recognizes that we are in a fits and starts economy, which is never good for a big, fixed cost steel company. Hamana, with more than 100,000 customers isn't feeling much pain. Still he is trying to take out another 40 million in costs and is looking for acquisitions to be able to grow revenue rather than wait for worldwide growth to come back.


All in all, they were bullish. You could say that they are always bullish, but that simply wouldn't be true. I caught up with Timken last year after they preannounced a tough quarter and they were anything but bullish and there are plenty of times Hamada has had to say, look, it's not that strong.


Neither is the case right now.


All this does, I bet, is add to the confusion.


Nevertheless, it's the truth and it makes it so every time you look at the tape in the big down days you have to recognize that, sure there is plenty of bad, but there is good afoot, too.


Random Musings: I know there are activists who want to break Timken into two, the old-line steel business and the precision instrument business, including bearings, that they are so good at making. This makes no sense at all to me and wouldn't to these activists if they were to go to the big Timken plant outside of Canton, Ohio, and take a look around. The old-line steel biz is adjunct to the precision biz and the old-line is not a standalone entity that could make it. So Timken would lose its source of perfect steel and lose shareholders fortunes. I would vote no on the proposition that Relational and Calstrs wants so badly to pass and we own the stock for ActionAlertsPlus.com.

 

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 ETN and TKR.

 


 

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58Comments
May 2, 2013 10:14AM
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Yesterday I heard that Buying Stocks on Margin just hit another Record. What happened the last time buying on Margin was hitting records. Exactly.

There is no confusion, Cheap Money is pushing stocks higher until Cheap Money becomes the Biggest problem known to the modern economy.

Ever heard of gravity Jimmy? Apparently, at some point it takes hold, and there is nothing you and your Pump and Dump scams can do to stop it.
May 2, 2013 10:16AM
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Alert Jim!  Alert Barack!  Alert Ben B!

 

No turnaround is possible until we again employ our workforce productively.

 

By the way, increasing the minimum wage may be counterproductive in that regard.

May 2, 2013 11:34AM
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Time to go see about Golf......Good luck to all of you in your endevours...

 

Regal... I don't give Credit to or takeaway from, for the likes of Obama nor Bush...

They are only Presidents and only men..

 

"I am the Capitan of our Ship and the Master of my Soul."

 

And BTW.....We dun't knead no stinkin' spelchek. !!

May 2, 2013 10:16AM
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That's pretty much what a lot of these Articles are....Steve.

Read 4 different Financial or Investing Sites....And get 3 differing opinions.

 

It's very un-nerving to get "Completely Opposite" veiwpoints on the same Equity/Company within a day or two, or even the same day...ON THE SAME SITE.

Not really sure about their Editor-in-Chief duties??

Or they just print blather, because it has been written and they think most readers or investors don't pay attention...?

I've seen it a few times on here the last 6 months...Credibility ??  Emptor Caveat (sp) ?? 

May 2, 2013 10:10AM
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The waters are just really muddy right now, and there's a lot of conflicting data coming out from seemingly everywhere.  First we hear Europe has bottomed and confidence is returning, then we hear their UE rate is the highest in decades and the ECB has decided to cut rates even further. 

Some CEOs are saying orders are up, but there are plenty of manufacturing and factory order surveys that indicate that production and orders are down.

Private sector job creation is way down, according to the ADP report.  But today initial claims dropped like a rock, and Challenger is reporting that the number of expected layoffs is down 20%+.

Q1 GDP is way better than Q4, but it still fell way short of expectations.

Ford is hiring 2k more people to ramp up production for F-150 trucks.  But there's a debate about if demand is because of an aging fleet (the average work truck is 11 years old now) or because there's signs of life in the construction industry.  Maybe a little bit of both.

Housing is supposed to be rebounding and we are getting articles about the shortage of supply, but much of the demand is from investors with cash, not individual families.  In fact, home ownership for families is hitting its lowest level in 17 years.

Energy costs are dropping, which indicates weak demand.  But the demand shrinkage may be more overseas than here at home.

In case you weren't paying attention, the RUT dropped more than 2.4% yesterday - more than twice the drop in the S&P or the Dow.  This is a fairly negative indicator for the outlook for small business, which drives our economy and creates the majority of the jobs.

Throw the uncertainties about Obamacare into the mix, along with the question marks concerning the timing of the end of QE, and you have the makings of a dirty mud bath - something that might stink really bad, or perhaps something very pleasant that my wife might like to soak in at a spa somewhere.

May 2, 2013 1:30PM
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so, if these ceo's who owns hundreds of thousands of share actual or via stock options tell you business is great, then you pass that on to the public, then the public buys the stock and the price rises, then the ceo's sell insider shares and exercise options/sell shares, then they retire and buy a private island and yacht in costa rica, and just who is left holding the bag when the entire house of cards built on empty anecdotal projections collapses?

 

have you zero memory of 2001-2002 and then 2008-2009?  you can shear a sheep many times .... but you can only skin him once .... one of these times you guys will put almost all investors on the sidelines for life.

May 2, 2013 9:46AM
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this is either another BUY THIS STOCK article or a "huh?" article.  i can't decide
May 2, 2013 10:24AM
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"Billionaire Warren Buffett says a key part of why he is optimistic about the nation's economic future is that America has begun to unleash the potential of women."

 

Wow Warren........ we have had Affirmative action and Reverse discrimination for over 4 decades now .......... and look how great the USA and middleclass are doing.

May 2, 2013 11:21AM
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Doda....That is a decent return on investment, for the way you are invested.

But if that is only the average for the last 4-5 years, it is not.

If you averaged in 2007-2009 then it might be as good as any...??

 

I kinda think or believe "stock picking" and "investing" are two different animals...?

Just like "day trading, or trading often" and "buy and hold til you die" are different...?

Somewhere in the middle, seems to work out better in the long run..

And having more knowledge about your investments is of utmost importance.

And of course, also who you are invested with....Track records. 

May 2, 2013 10:55AM
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First off........ONE WOMAN is enough in a life time.....It's cheaper too.

Unless maybe that ONE, understands the "Mistress Concept."

But then again it seldom works out, and two women cost twice as much or a lot more.

My wife, Miss Lilly; Has a lot of Jewelry....That's also another "collectible".

 

Don't ever make women, COLLECTIBLES. Bad investment, I've been told.

May 2, 2013 10:40AM
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Investing and Saving have many Facets, or Avenues..

Bank Accounts, Wall Street, Property (land & buildings) and Collectibles (property of varying degrees)

Precious Metals,coins,stamps,Artwork,books,guns,cars and different Antiques of value.

 

Those that make the effort, usually amass enough to make it through the tough times...

Those that don't....Oh, well.

And those that invest in themselves, fare well also.

Such things that have been pointed out, as spending for savings down the road; ROI items.

IE; Energy efficient homes, At least one vechicle that gets high MPG, like 35-45 mpg.

Savings on insurance and Medical bills, etc, etc.

Many Facets....many,many facets.

May 2, 2013 10:31AM
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You know.....I feel most of you guys are stock pickers....where as I've not been very good at that. So, I'm more of less a mutual fund investor....and I'm not bragging...but my return on my IRA in the last year using a 70/30 Stock to Bond ratio is 14.2%...and the wife, who's a few years older and is at a 50/50 ratio, her return is 9.6%.....so I'm feeling that's not too shabby. 
May 2, 2013 11:27AM
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VOX......Isn't that kinda like what Bernie Madeoff did....??

Maybe someday I can watch the movie ??

Met Bob Hope on a USO tour once...Actually I just saw him up close...We didn't talk or chat.

A Great American...One of the Best.

May 2, 2013 11:03AM
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Steve...A lot of Wealth, savings or otherwise are never counted..Unless individuals disclose that information..?

The Rich don't give that out easily, and some don't even know what they are WORTH...?

Without going through assets, with a fine-tooth comb...

Mostly it's ESTIMATED....And rounded off....IMO.

May 2, 2013 5:50PM
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Yesterday's selloff became another buying opportunity, we had money coming in from everywhere today, these scumbags tactic sort of backfired....Tomorrow is jobs day, that will have a lot to do with how these markets behave, but not just that, better believe that...Lets hope for the best.

May 2, 2013 11:01AM
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Let me make this crystal clear for everyone.  Fundamentals are all that really matter.  No I don't mean those fundamentals, I mean those you know in you own mind to be factual and realistic.  Once you experience the Wall Street "Party Line" you know that what you believe to be the fundamental direction for any issue is 90% of what you need to follow.  If you feel anything cloudy about the last 6 months then you have been reading and listening to way too much of the "Party Line".  Remember all those days with zero volitility?  Well here we are.  Trade well my friends.  My fundamentals say I don't see much risk at all of the bottom falling out of this market anytime soon.  As Bernanke has been outed for his concerns about doing something about unemployment "in my opinion" and given his word to keep his foot on the gas until 6.5% unemployment is reached,  I say  relax and feel confident for the time being.  And go Gold go!  JMHO
May 2, 2013 11:21AM
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Also note a chinese company BVD is openiing a manufacturing plant in CALIFORNIA ......

if AMerican corporations repatriated the trillions of dollars they have overseas our unemployment could drop substantially ......

but no  they are blackmailing the govt to give them ANOTHER one time tax waiver !!
May 2, 2013 11:18AM
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So I posted this before under my old handle wakeupnow07 (shut down my msn for some reason) and its worth posting again.

Watch the old Bob Hope movie "The Lemon Drop Kid" ......this is cramer and his peers in a nutshell ....look at cramers columns in the last 2 weeks and he has basically predicted every possible eventuality out there ....so he is always "right" to someone ...

Btw for those to lazy to watch the movie Bob Hope hangs out at a race track and tips every horse in the race to a different person and then trys to get a handout when "his" tip comes in !
May 2, 2013 10:19AM
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Yes, we opened up today, people buying after yesterday's manipulated aberration; however, be careful, scumbags still on the prowl and plenty of them on and off the floor...Do not take anything for granted, things can change here in a NY minute...Beware...More later.
May 2, 2013 11:25AM
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The market is up.Is it time to give Obama credit?The righties love to blame him for

everything from the weather to pms when things go wrong.

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