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Jim Cramer (0:00)
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Jim Cramer (1:07)
My mission is simple to make you money. I'm here to level the playing field for all investors. There's always a bull market somewhere and I promise to help you find it. MAD money starts now. Hey, I'm Kramer. Welcome to mad. Welcome to Cramerga. I'll do my friends. You know I'm just trying to make you money. My job is not just entertain, but I'm putting this in context, explaining it. So call me 1-800-7-for3 CBC. We meet you Kramer. The great bear market continues. But you only know that if you're first. By the way, for days on end, stocks have been going down and down and down. Just not the great semi software data center companies with the wind at their backs, riding the tremendous themes of our time, accelerated computing and artificial intelligence. These tech plays are so strong that they end up buoying the averages, including today. Which is why the tech light Dow Jones industrial average actually dropped 26 points while the S& Pierce 0.55%. A lot of that now that the tech stuff and the tech heavy NASDAQ filled with semis and software gained 1.24%. And that's what people are looking at. Even though you might not know it from the averages. Today was one of the worst days of what I am starting to call the great selective bear market of 24, 25. The bear has been Rolled around all sorts of areas, mauling the consumer staples, the energy sector, health care, the material stocks. All groups that have underperformed dramatically last year doing it again. Now I understand the hyperbole here. I'm simply pointing out that these sectors, important swaps in the market are an anchor to leeward. That leeward they spent last year hurting the market. And this year already many are in the red. It's not just a continuation, people. It's actually an acceleration. Why does it happen? Why isn't stock of Procter gamble down another 2.7% today? That's a great company. Why is Colgate toothpaste dog food? Why is Colgate down 2.9%? How about Clorox? It got pummeled. It's down 3.3% today alone. All right, so let's go over the reasons. One, maybe the biggest reason someone would say interest rates. When long term interest rates spike, as they've been doing ever since the Fed started cutting short rates, these stocks have been hammered. That's what happens. The dividends, by the way, are supposed to offer some protection, right? But they become a source of vulnerability when bond yields, the main competition, dividend stocks, keep marching higher. And they might do that all week because long rates are rising thanks to supply. The Treasury Department sold three year notes today and the auction fell flat on its face. Tomorrow The treasury sells 10 year paper. And Wednesday, I don't know if the market is prepped for 30 year paper, but there's a ton coming. As these bonds go down in price and up in yield, things get worse and worse for the dividend stocks, even if there's actually nothing wrong at the companies. Which brings me to the second reason this group has just been hammered. The dollar's gotten too strong. These consumer packaged goods companies tend to be very big overseas. That's not the case with Clorox, which is largely domestic. But you know how our stock market works. The consumer staples all trade together. If the dollar hurts a big international company like Procter and Gamble as it is, it's going to reverberate even into a Clorox. Because they're all in the same sector. And sector ETFs are like gravity. They pull all their subjects down, even the ones that should. Now then there's the most insidious problem wall, the one that no one is talking about. Let's, let's open the discussion. Pricing. Now, have you noticed that when you buy consumer products on Amazon, they're discounting heavily, Particularly the stuff you see at a drugstore have you seen the pressure being put on companies by Costco where it's like a different world but those prices, they're crazy low. I know that Walgreens is trying to keep up offering their own outrageously lower prices on their website, but probably don't go to their website now. It is true that profitability may be pinched at some of these retailers. Walgreens, Dollar General, Dollar Tree, Target, all of which sell these goods and they've all seen their stocks just get cr, Wal Mart, Costco and Amazon have more scale and get you better prices for many daily average needs. But if the retailers are being squeezed in their suppliers definitely going to be squeezed too. Maybe these companies have had so much of a run, so much price flexibility post Covid that they are finally losing it. Maybe the consumers had it will no longer tolerate Covid era high prices from the likes of a Proctor or a Colgate. Maybe the stocks are saying prices will indeed be rolled back. Sell, sell sell sell sell sell. The stock of Procter Gamble is. It's tempting, it's tempting. But as long as bonds go down in price, as long as the dollar stays high or goes higher and until we see the earnings find out there really is some price pressure that I'm sensing it's too risky to buy. Now look at this counterintuitive situation. I know it sounds crazy to call Procter and Gamble and Clorox, Colgate risky. These were safety stocks for most of my life. But there's nothing safe about their stocks anymore. This is a market rewards growth regardless of price. So people will pay up for tech growth which real demand and pricing power. And they're avoiding companies that have lost pricing power and offer yields that are too low to compete with Treasuries. I don't expect that dynamic to change anytime soon. Next bear market. Oh my. It's in health care as this group's off 20% from its highs. Next week I'm going to the JP Morgan Health Care conference, find out what the heck is going on in this group and I am aghast. These stocks are just hideous. You managed down 43% from size. HCA the hospital coming off 29%. That one's been a winner for years. Signal off 25% well run. Centi down 23% percent a wasteland of burned out companies. Look at the biotechs. Whoa. Vertex off 23% from its size. That's a great company. Amgen dow stock down 25%. Regeneron for Evans say Biogen off huge. Moderna down a hideous 75%. Remember when they were strong that are heinous now. Food group just taking it on the chin. Hormel, great company down 17% from its smucker, General Mills. ConAgra off 19%. Hershey, Campbell's, Kraft Heights and the Mondelez all down the low 20s. That's incredible. Same script. Higher rates, stronger dollar pricing pressure. But let's throw in the gop. That's one weight loss. Drugs too. We know these companies are loath to admit that GOP dash ones have anything to do with their weakness. But that Cornell Business school study I referenced last week, it talked about a 6% decline in grocery spend for people who take drugs. The GOP Dash 1 drugs. Processed foods are designed in part to be craved. But when you're getting these GOP just one injections, you crave nothing. Maybe the sales decline is just beginning. Maybe that's what the stocks are saying. What else? Real estate wasteland. Just today we saw Federal Realty and Kimco's chopping center and a strip mall come and get crushed. More stocks do. The worst stocks in the S and P. Now, this is highly unusual. These companies are linked with interest rates and the spike in long rates has all hurt them. But the actual businesses, they're terrific. It doesn't matter to the stocks, though. What matters is interest rates. Oh, hey, listen. As bad as those are because I just said about rates, the bear has really rolled. Housing stocks declines are staggering. Lenore trading at 193in September, down 135. Tolls going from 169 to 126. Polti 149 to 109. Dr. Horton, 199 to 139 and no time flat. What do you think it says? I think the home prices are going lower, maybe much lower. Something at no one is thinking about. But nothing's as bad as the materials. Mining, minerals. When you look at the stocks in this group, and I'm talking about plastic, I'm talking about wood, it's almost enough. Steel, it's almost enough. There's got to be something going on. If you didn't know any better, you think there's a recession. The chemicals, the papers, the coppers, the steels, they are factory in a definite recession. No other way to explain a decline. How? Nuclear stocks down 41% for the top new mining down 36%. Freeport, the copper coming down 30%. Cleveland Cliffs has punched from 22 to $9. And how about the oils? They're all horrid too. Which brings me To a thesis that's not talked about much when we see all these Federal Reserve officials telling us how inflation is not being brought to heel. It's true, there is plenty of inflation supermarket. But the bottom line, when you look at these super underperforming stocks, all I can say is maybe the Fed had better be careful what it wishes for. Companies that represent a gigantic chunk of the real economy have seen their stock swoon. Could their earnings be that far behind? And could inflation be running its course a lot faster than expected? Considering the stocks that are going down in the magnitude of the declines, I'll tell you. Sure wouldn't surprise me. I'm going to Frank in Texas. Frank.