The European sovereign debt crisis is creating increased concern and risk for global investors. On Friday, following a roller-coaster day and the day after a steep sell-off, Mad Money host and former fund manager Jim Cramer stated that he feels the recent market volatility and general downward movement could continue, and he also feels that this coming week will produce information that can help investors discover the health of the general market as well as particular corporate strength.
Cramer continued to stress that investors should use this broad weakness to seek out high yielding opportunities in health companies that are being brought down with everything else. He also stressed that the European response to their sovereign debt crisis will be a crucial indicator of global market momentum, and that investors should listen to any news that comes out of European central banks on Sunday. Cramer believes that an announced deal to bail out Italy could rebound the market, but that the failure to reach one in a timely manner will likely result in continued devaluation.
"We want a worldwide intervention where everyone from our fed to the Chinese come in and buy these sovereign bonds at a discount," Cramer stated. He went on to comment that "[i]f the Chinese step up to the plate and help, and they certainly are the only people on earth with the balance sheet that can do this, the problem can actually be solved." Cramer also noted that though many skeptics have scoffed at Chinese ownership of U.S. Treasuries, that those holdings have again appreciated. He also noted that the U.S. Federal Reserve Bank will meet on Tuesday, August 9, and hinted that it may also opt to buy some European sovereign debt.
Equities Cramer Will Watch This Week
MarkWest Energy Partners (MWE) will report earnings results Monday, August 8. This mid-cap master limited partnership primarily engages in the distribution of natural gas from the Marcellus shale in Pennsylvania. Cramer believes this MLP's yield, at over 6%, makes it worth watching and picking up on any weakness. Additionally, the conference call may indicate strength and even potential distribution increases in the coming quarters. Similarly, on Thursday, Cramer recommended large-cap MLP Kinder Morgan Energy Partners (KMP), which yields just under 7%.
On Tuesday, August 9, Cramer will be looking at Walt Disney (DIS), which releases its quarterly report after the U.S. markets close. Cramer commented that Disney's decline to the $34 is a gift, and he recommended buying DIS shares into any weakness on Monday that may follow Europe's failure to reach a bailout deal on Sunday.
On Wednesday, August 10, technology giant Cisco Systems (CSCO) will report earnings after the close. Cramer noted that technology equities are out of favor now and that he would stay away from most, but noted that Cisco has dropped so much this year that it could be a buy at the current level, especially if the report is not bad.
On Thursday, August 11, Cramer suggested watching SodaStream International (SODA). Though a high flier since its late 2010 IPO, Cramer likes the product and believes that it is still relatively unknown and unappreciated by consumers. Nonetheless, and likely due to the significant performance of the equity since its IPO, Cramer stated that the only method of buying into the equity that he would endorse is through deep in-the-money call options.
On Friday, August 12, J. C. Penney (JCP) reports its quarterly results before the markets open. Cramer believes JCP's performance is a strong indicator of the health of the middle class consumer. He also noted that he is interested in seeing what progress, if any, former Apple (AAPL) executive Ron Johnson has made with the retailer. Mr. Johnson, who is the creator of the Apple Store and considered a retail genius on account of their success, joined Penney's board of directors earlier this year and is expected to become JCP's CEO in 2012.
This week could be as volatile as the last one. Investors should listen to the news coming out of these companies and nations in order to grasp the reality of the situation and discern whether this panic is warranted or merely providing investors with opportunities. Chances are that a little bit of both is happening.
Disclaimer: This article is intended to be informative and should not be construed as personalized advice as it does not take into account your specific situation or objectives.
Disclosure: I have no positions in any stocks mentioned, and no plans to initiate any positions within the next 72 hours.