Stocks discussed on the in-depth session of Jim Cramer's Mad Money TV Program, Tuesday July 31.
Dashboard For the Market: SPDR Gold Trust ETF (NYSEARCA:GLD), iPath DJ-UBS Copper Total Return Sub-Index ETN (NYSEARCA:JJC), CurrencyShares Euro Trust ETF (NYSEARCA:FXE), Market Vectors Retail ETF (NYSEARCA:RTH), SPDR Homebuilders ETF (NYSEARCA:XHB), Financial Select Sector SPDR ETF (NYSEARCA:XLF), Market Vectors Oil Services ETF (NYSEARCA:OIH)
With the Fed Meeting, European Central Bank Meeting and Employment numbers coming out this week, Cramer discussed his "dashboard" to help investors navigate their way through these obstacles. What investors need is some way of predicting results, rather than a tally of results, like the Dow Jones Industrial Index and the S&P 500. Cramer discussed each item on his dashboard:
Gold lately has been levered to discussion of reforms in Europe. Prior to calls for aggressive action, SPDR Gold Trust ETF (GLD) has rallied, but often plummets when Germany puts the brakes on. If GLD rallies, it is a good sign for stocks, and if it declines, look out below.
The euro, as measured by CurrencyShares Euro Trust ETF (FXE), has been holding above $119, which is a good sign. Any movement toward its high of $130 would be excellent for stocks.
Copper is used to manufacture many essential goods, and since the copper market is so large, it is difficult to manipulate. The iPath DJ-UBS Copper Total Return Sub-Index ETN (JJC) has been bouncing between $42 and $45, and could go either way.
Retail has been impressive for its refusal to roll over. The Market Vectors Retail ETF (RTH) is a valid measure of consumer spending and confidence.
Housing is sensitive to action of the Fed. If the SPDR Homebuilders ETF (XHB) declines ahead of the Fed Meeting, expect disappointment.
Banks measure confidence, or lack of it, about Europe. The Financial Select Sector SPDR ETF (XLF) has been hanging in there, and tried to break to the upside last week.
Oil has lately been more a barometer of geopolitical tension than of the economy of Europe and the U.S. However, a real run in oil could derail negativity. Cramer uses Market Vectors Oil Services ETF (OIH) as a gauge of oil.
The Mixed Picture of the Domestic Consumer: Coach (NYSE:COH), Starbucks (NASDAQ:SBUX), Whole Foods (NASDAQ:WFM), Michael Kors (NYSE:KORS), Under Armour (NYSE:UA), Tiffany (NYSE:TIF), Dunkin' Brands (NASDAQ:DNKN), Yum Foods (NYSE:YUM), Chipotle Mexican Grill (NYSE:CMG), Panera (NASDAQ:PNRA), Armstrong World Industries (NYSE:AWI), Masco (NYSE:MAS), Stanley Black & Decker (NYSE:SWK), Ford (NYSE:F), General Motors (NYSE:GM), Cummins (NYSE:CMI), ADM (NYSE:ADM), Electronic Arts (NASDAQ:EA)
Recent earnings are providing a mixed and conflicting picture of the domestic consumer. Coach (COH), disappointed mightily, cited weakness in its domestic business, and a fall in same store sales growth from 11% to 1%. The stock lost 11 points. Perhaps investors should have seen this coming after Starbuck's (SBUX), disappointment, when CEO Howard Schultz discussed the "fractured" confidence of the consumer. However, it could be that Dunkin' Brands (DNKN) is taking market share from Starbucks, just as the decline in same store sales from Chipotle Mexican Grill (CMG) might be related to Yum Brands' (YUM) report that same store sales at Taco Bell increased 15%. However, the trade-down thesis concerning food stocks doesn't explain the strength of Whole Foods (WFM) and Panera Bread (PNRA), unless one can say that health conscious consumers are the ones who are willing to pay more for their favorite items. Concerning other retailers, there was strength in Under Armour (UA), Michael Kors (KORS), but Tiffany (TIF) was weak.
While housing seems to be in a bull market, given positive data about housing prices and homebuilders reporting increasing demand, Armstrong World Industries (AWI) and Masco (MAS) gave disappointing results. However, these were offset by strong performance in Stanley Black & Decker (SWK).
While auto production domestically is rising, Ford (F) and General Motors (GM) are seeing declines in their stock prices, mainly due to weakness in Europe. Cummins (CMI), which gave a dour pre-announcement last month, actually reported decent results.
This confusion is as "vicious and jarring" as a volleyball match, said Cramer, but it is showing that the market is resilient, since there has not been, at least recently, a wholesale sell-off in stocks.
Cramer took some calls:
Archer Daniels Midland (ADM) is not a stock Cramer wants to "touch with a ten foot pole," and is a "classic bad stock" that he has never liked.
Electronic Arts (EA) is not a stock Cramer wants to opine on until he has perused the conference call. EA's Earnings were reported just prior to Tuesday's Mad Money program.
Who Is Right About Chico's (NYSE:CHS)? Other stocks mentioned: Ralph Lauren (NYSE:RL), Phillips-Van Heusen (NYSE:PVH), Mattress Firm Holding (NASDAQ:MFRM)
What was shocking about Coach's conference call was that it didn't lay the blame at the feet of Europe or China, but the weakness was in North America. This may shed light on conflicting analysis of Chico's (CHS), which has made a magnificent turnaround in recent years. Morgan Stanley downgraded Chico's to Underweight on macro concerns and the idea that its turnaround might have peaked. Piper Jaffray upgraded Chico's to Overweight on the company's strategies, such as its color initiatives, store expansion plans and loyalty program. However, Piper Jaffray did not focus at all on the macro picture. While the fact that Chico's is 100% domestic might have seemed like an advantage before COH's earnings, COH's weak results in North America are worth taking into consideration.
Cramer thinks both analysts are right. He agrees with Piper Jaffray about Chico's long-term success, but takes Morgan Stanley's concerns about the economy seriously. If the stock rallies before its report three weeks from now, Cramer would sell CHS on the strength and buy back the stock at a lower price.
Cramer took some calls:
Phillips-Van Heusen (PVH) and Ralph Lauren (RL) both were punished because of Coach's results. Cramer doesn't see a catalyst to buy either stock, but thinks one or both might be hit with a downgrade. Investors who want to get into these stocks should wait for a downgrade.
Mattress Firm Holding (MFRM) is not a stock Cramer likes, since he is bearish on the mattress industry.
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