Don't overlook these 3 drivers

A trio of unheralded cycles are working even in this horrendous environment.

By Jim Cramer Jul 20, 2012 11:05AM

This economy has three drivers, and I'm talking about them, even if no one else wants to. These drivers are so stark that I think you ignore them at our own pocketbook's peril. But they go unheralded because of weak employment numbers and fiscal cliffs and unsustainably high Spanish bond yields. Why is that? I think people like to talk negatives either because positives seem like they aren't rigorous or because people are ignorant of the so-called big issue.

 

I want to stipulate that I am not ignorant of the big issues. I'm constantly checking out every European bond auction, and I am well aware that our taxes are going up -- and maybe, for some of us, up big.

 

But I keep going over these quarters from about one-fifth of the companies that have already reported, and I hear three things.

 

1. Automobile builds remain strong. Thursday's affirmation? Union Pacific (UNP) talked about cars as being a huge driver of rail traffic, enough to help offset the decline in coal. I think this driver is obscured because General Motors (GM) and Ford (F) are so international (and their international businesses are such disasters right now) that you can't determine their strength. We don't want Ford or GM to pull back from Europe or Latin America. That would be stupid. But I have to tell you that shares of Ford (U.S. Ford) would be at $15 by now. General Motors? Call it $25.

 

2. Housing. How strong is housing? It is now in the phase where even the most wildly inconsistent plays are working. Witness the 3-point run in Whirlpool (WHR) -- remarkable. It's tough to recommend Lennar (LEN), Toll Bros. (TOL), Pulte Group (PHM) and Standard Pacific (SPF) right now after these runs. But that doesn't mean you can't pounce at the right moment. And, as the charts show, the right moments are coming up over and over again. Toll dropped from $28 to $23 in a heartbeat. Pulte sold off by 25% in six weeks. When we see pullbacks, you have to pull the trigger. We have a developing house shortage, and these are the guys with the homes.

 

3. Aerospace. It's so easy to dismiss these stocks on worries about the finances of the airlines and the slowdown in China. But take a look at Textron (TXT) and the amazing numbers from Cessna. Go listen to what Dave Cote told us Wednesday night on Mad Money. He made it clear that the aerospace cycle has its fits and starts, but it is in a long-term ascendance. Anyway, is it really possible that in the first year of the delivery of Boeing's (BA) Dreamliner that the cycle is now over? That's a little ridiculous.

 

So we have three unheralded cycles that are working even in this horrendous environment. Who knows what will happen if things ever get better. In the interim, when we see pullbacks, these are the themes that have our backs and can be bought into any weakness -- provided you don't put too much emphasis on the international players and you stick with as much domestic security as you can muster.

 


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 the stocks mentioned.





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18Comments
Jul 20, 2012 12:42PM
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Three basic cycles driving this economy:  Fear, Uncertainty, and Doubt.
Jul 20, 2012 3:23PM
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 Three drivers of the Economy:

1. Misinformation (The Rating Agencies, Accounting firms, Economic Reports)

2. Disinformation (Banks, Brokerages, Hedge Funds)

3. Flat out lies (LIBOR)

Jul 20, 2012 11:41AM
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Are you nuts Cramer.  The economy runs on energy, human and otherwise, and in the last decade the cost of oil has quadrupled.  Obama's failed energy policy has assured a continued high cost for years to come.  Automobiles, home HVAC, and aircraft do not run well on algae.  Try it and see.
Jul 20, 2012 2:22PM
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Jim Cramer needs to go flip burgers........classic "Peter Principle" at work.
Jul 20, 2012 3:22PM
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this guy runs his scam like this:he "educates" you tHAT you can beat the market following his method which he glibly calls "buy and homework" . he claims that he is rigorous and only buys" best of breed" .he buys and sells for his trust with some picks going up and just as many others going down. sounds like any other inane mutual fund.........BUT WAIT..........occasionally he will

cackle about some super pick and these turn out to be gap down pump and dumpers. usually

he will have the CEO on his show. in addition he sells his picks via his worthless newsletter.

some of his nasty pumpers are:

gold at 1900 now 1600

nyx ...stock of the year for 2010 at 96 now 30

aa....best dow stock for 2011 at 18 now at 9

PUT THIS BABBLING CRIMINAL IN JAIL

 

Jul 20, 2012 2:00PM
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cooking the books on wall street is not good. no jobs, real estate down, pump and dump all over again.
Jul 20, 2012 3:50PM
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Kramer... One thing most forget here is with the ongoing drought situation. Seems no one is aware that prices in the grocery stores will climb dramatically !

Now someone explain how the middle class will be able to afford this increase ?

As a dairy farmer what will I feed the cows ..... ?   Seems there not many choices...... Government might help in payments or insurance payments but the cattle dont eat green money ! Only choice is to sell cattle ....then that puts me thinking about where my next meal will come from.

Consider what will happen if this drought continues into mid next year.   Beware farmers ..... keep an eye on your chicken coups !

Jul 20, 2012 2:35PM
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HE CACKLES ABOUT HOW GREAT HE IS WHILE HIS LEMMING IDIOT FOLLOWERS GO BROKE

HE WAS ON ONLY A FEW WEEKS AGO TELLING HIS FOLLOWERS HE DIDN'T MIND PAYING UP

FOR CHIPOTLE BECAUSE IT WAS "BEST OF BREED" TODAY CHIPOTLE GAPPED DOWN 90

WHICH IS TYPICAL OF HIS "RIGOROUS HOMEWORK" CRAPPY HACK PICKS

 

 

 

 

 

 

 

Jul 20, 2012 12:18PM
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another gap down" RIGOROUS " disaster.....cramer darling chipotle down 93 dollars..........

just another hack pick or another pump and dump?

 

today pumping GM..........don't forget his call on the IPO..........he said buy as much as you can at 34

 

THE SCAM CONTINUES

Jul 20, 2012 2:38PM
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of course to justify the 90 dollar gap down he will be apologizing or saying that the analysts know nothing or his best excuse etf's wrecked his pick.......this guy is as low as you can go

Jul 20, 2012 7:32PM
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 Just another talking head if he's so smart why didn't he see it coming. He's one pied piper I'll choose to ignore. Someone should inform him that Microsoft just reported their first loss , Is that an indicater I dunno but you'dbe wise to sit tight  on your investments at least till we know for certain how deep the water is.
Jul 20, 2012 3:12PM
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Not sure I agree with the automobile thing.  But housing will certainly lift the economy (eventually).

Jul 20, 2012 6:07PM
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Cramer just gives you idea's, it is your job as an investor to do your research before monetary commitment, if you don't you have only yourself to blame.

I've seen his shows, and have never once purchased anything he tries to sell, but I give the guy credit, he puts his thoughts out there, not many are willing to do that.

I am curious though, what do you all think of U.S. Steel Corp. (ticker "X") it's near the 52 week low. Has congress just passed some jobs bill about bridges, or did I dream that?

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