Bring on the Grumps
By James J. Cramer
7/5/99 5:54 PM ET
Something probably has to go wrong here eventually. But I can't see it yet. I think the earnings parade, which begins this week, will offer mostly good news and we will go still higher.
Think about it. The reason why we had such a rocky June until the last week was because the economy is too strong. When the economy is too strong, you get all sorts of good earnings, even from the also-ran companies that typically don't do so well. When you have a super-strong economy, you get those small caps cooking -- the ones that seemed to do very little right at even 3% GDP growth do catch fire at four-plus percent, which is roughly where we really seem to be.
So now we get the good side of all of this strength, having wallowed through all of the bad side, which is higher rates, increased prime and a terrible bond market.
Of course, we haven't put to rest the bogeymen in that last paragraph, but he certainly won't be the focus, no matter how CNBC tries to make it one!
(Which reminds me, don't forget the upcoming Fox News Channel gig for TheStreet.com, two weekends from now, which will be as raw and uncut as you get in business. And I hope if your cable operator doesn't get Fox News Channel, he is about to get a world of hurt from you. )
With the bond bogeyman on the sidelines, and earnings taking center stage, you can bet that sometime between now and the U.S. Open we are going to be wondering what all the fuss was about when bonds got back to 6%. Who cares? The economy hums just fine here.
In fact, what I think might shock people this go-around is that the market might not get trashed at 6.5%. If you had asked me that at 5%, I would have said no way, we are going to collapse. But this market's resilience won't even be tested 40 basis points from here.
Let me give you my thinking: Greenspan's decision to switch bias said, basically, "We know all of you old paradigmers want us to throw some people out of work and make this economy be crummier than it is. But we made Congress a deal, you balance the budget and get a surplus going and we aren't going to act like the killjoys we have always been. We look around this great nation and we see that prosperity is the antidote to just about everything, from bad schools to crime. And we aren't going to insist on throwing this country back into the '70s and '80s when the government has stopped its massive inflationary spending."
Yep, the budget surplus, so ignored by everybody as a big yawner as we were worried about those 15,000 jobs that got created, or the 2,200 unemployment claims that didn't get filed, definitely played a role in the Fed's thinking.
You have to understand that this budget, a legacy of Bob Rubin, makes the Fed breathe easy. It also makes you think, why the heck aren't our interest rates much lower than those of the profligate European nations that couldn't hold a candle to our manufacturing capabilities or our financial prowess?
As I reflected on what has occurred during this beautiful but scorching Independence Day, I realized that very few of these bond market commentators, so scared of their shadow, even bothered to read the front page of the paper. Things just aren't as bad as they used to be.
But I don't want to lose the David Joneses of the world, no way. Just like I wish they would have Jim Grant on more, or maybe Charles Allmon again, or how about Joe Granville? Bring back more Barton Biggs; heck, he is a big name and he is always angry, and mean and negative. He gets the people panicking. Remember, that old doctor from Salomon, the doom guy? I forget his name, but Man, he is always good for some selling and some rigorous gloom. He can clear a theatre of buyers faster than a bomb threat! Or, more importantly, when will Dow Jones' puppet CNBC put on Abelson already? Why can't we have a dose of Alan right at 9:30, say, instead of Maria Bartiromo, making us feel like idiots for getting long at Dow 800 or 8000 for that matter? Why won't CNBC cross-promote with Barron's big gun?
We need some dancing bears to give us some lower prices, create some bargains, get merchandise artificially low and inspire worry and calamity. Without them, somehow I feel we will be forced to pay still higher prices if we want into this market.
Bummer.
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