The consumer-goods and consumer-spend plays are all acting as if numbers are way too low.
I can see that for the restaurants and retailers. Anyone who was doing well before this is doing better. But I am shocked at how fast the consumer-goods plays, stocks like Procter & Gamble, are performing because those are companies that won’t see the benefits for a couple of quarters because they are hedged or because the cumulative declines they are experiencing in packaging and gasoline may not matter this quarter. They are really baking in a terrific 2015.
Now the oils are simply in free-fall, and I think that they are going to levels that make me feel there is no way yet you can buy them because WE HAVE NOT HAD THE NUMBER CUTS YET. There will be no way to figure out where they are going until the cuts happen.
For example, do you buy an oil with a safe dividend of 6 percent knowing that it can’t protect you from a 10 percent decline from here? I think that’s really the risk/reward. All I can say is that if an oil is at a two-year low and it yields 6 percent or more, I find that mighty tempting.
The drillers are disastrous, again, until budgets are cut, and they must all be cut below $70.
The total collapse of many of the chemicals–because of an attenuated decline in their ability to charge higher prices if oil is down–seems a little overdone, but again there will be number cuts too.
The market’s acting rationally overall, but the exacerbations in light of the Saudis carrying the day and the lack of oil demand, or at least ability to store oil at what are thought to be low prices, is pretty shocking. Have to let this all settle, though, before you pick–and you can only pick among the most hedged.
Too early. Still better to buy retailers and restaurants, the true winners for the moment.
Disclosures: Cramer’s charitable trust has no positions in the stocks mentioned.
— Jim Cramer