DJIA 8763 +12.89 SPX 940.09 -2.37 VIX 29.62 -.56 Gold 956.70 -25.60 Oil 68.38 -.43Dollar Index 80.73 +1.25 TLT (Long Term Gov Bonds) 89.84 -.69 IEF (7-10 Yr Gov Bonds)
88.60 -.89
Some investors may wonder how the highest unemployment rate since 1983 is a positive. Yet that is exactly how Friday played out, as monthly jobless numbers reached 9.4% and the market edged higher. Cramer’s theory: The layoffs are largely over, Wall Street knows it, and stocks were bought and sold accordingly.
Consider this: The Lehman Brothers collapse was an eye-opener for everyone, not just the financial sector. When that comet hit, CEOs across the entire economic spectrum adopted a bunker mentality and started to make massive cuts in preparation for a worst-case scenario. The first and most obvious target was the workforce, and companies slashed jobs big and deep.
Thanks to responsive governments the world over, though, a second round of layoffs wasn’t needed. Stimulus programs spared us that trouble, and President Obama’s decision to save General Motors [GMGMQ 0.865 0.119 (+15.95%) ] and Chrysler – and as a result, their suppliers – was a big help, too. This prevented the U.S. unemployment rate from reaching Great Depression levels, which were 33%, and instead kept us under 10%. All this despite the near collapse of the entire financial sector, a bursting housing bubble, retail’s decline and those problems in Detroit.
Not bad, right? At least that’s how the market saw it. And that’s why stocks finished the day in positive territory. Cramer wasn’t making light of the 343,000 Americans who lost their jobs in May. But overall there are now fewer people in danger of foreclosure, though more are able to spend money and pay taxes.
“Believe it or not,” he said, “that’s bullish.”
This doesn’t mean it’s all up from here. The recession is not over yet. Today’s jobs report was only a signal that the mass firings are done. Of course, Wall Street never waits, and that will benefit stocks. Cramer offered ways to play it.
Buy B.O.A.T. – Banks, Oil, Aerospace and Tech – if you think the economy will come roaring back. JPMorgan Chase [JPM 34.55 -0.80 (-2.26%) ], ConocoPhillips [COP 45.00 -0.97 (-2.11%) ], Boeing [BA 52.65 2.08 (+4.11%) ] and Apple [AAPL 144.67 0.93 (+0.65%) ] work for believers in this thesis.
Worried about inflation? If so, you must think the economy is actually too strong. But still, Cramer recommended Agnico-Eagle Mines [AEM 57.36 -3.09 (-5.11%) ], SDPR Gold Shares [GLD 93.71 -2.52 (-2.62%) ] or gold bullion for those in this camp.
Lastly, Johnson & Johnson [JNJ 55.93 0.09 (+0.16%) ], Colgate-Palmolive [CL 70.90 -0.42 (-0.59%) ] and Hershey [HSY 34.87 -0.27 (-0.77%) ] are the stocks to buy for anyone feeling a bit more cautious. These are classic defensive names for anyone who is not as bullish on the economy.
Consider this a portfolio for the market as it is right now. Throw in a small cash position, too. No one really knows which way we’ll go, Cramer said. So we need to be ready when we find out.
I will tell you again. This guy said the same thing about Real Estate in the summer/Fall of 2006. The message was the same. It is bad but the stocks are going up and that tells you the market has bottomed. I like the idea that he is touting Gold. He also likes the banks whick is interesting after they sold their stock to pay back TARP.
This week the experts told us that the market is bullish, the economy is bottoming and inflation and a lower dollar is on the way. The FED is flooding the market with dollars and watch out for the flood. Mikey says the worst is yet to come. Watch the fire not the flood. I think it is time to move out of the market and into cash and bonds. The Fed was supposed to buy down the bonds remember. They let them get hammered now I think they are buying just as the touts tell us that we should sell our bonds and worry about inflation. Makes you wonder who these experts are working for, eh? I tell ya this stuff never stops.
I am starting to quoite long and intermediate government bonds now. TLT (Long Term Gov Bonds) 89.84 -.69 IEF (7-10 Yr Gov Bonds)88.60 -.89 so you can track them.
Here are some rates
US Treasury Indexes
Name Discount/Price Change Yield
3-Month U.S. Treasury Bill 0.19 +0.05 0.19%
6-Month U.S. Treasury Bill 0.33 +0.07 0.33%
2-Year U.S. Treasury Note 99.16 -0.66 1.30%
5-Year U.S. Treasury Note 97.28 -1.16 2.83%
10-Year U.S. Treasury Note 94.16 -1.00 3.83%
30-Year U.S. Treasury Bond 93.78 -0.81 4.63%
I did very little this week added to ZSL(silver short) @7.67 and Shorted F @6.15
Mikey
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