Monday, March 13, 2017

Russian Roulette With An Automatic

On Wednesday, the Fed has to choose between imploding the leading sector, Financials, or everything else...

From none other than perma-bull Jim Cramer...

"I see historic moves that are based on false preconceptions, or an atmosphere that is too bullish"

"three rate hikes are still essential for bank stocks to move higher..."

Bank stocks with Rydex financials leverage (red):

On the other hand...

"If rates go higher we are going to have a real earnings slowdown and stocks are way too high for the market to handle that..."

"The negativity will manifest in the form of analysts downgrading housing stocks"

"The second concern for Cramer is the consumer packaged goods stocks...If interest rates rise, this group could be vulnerable."

"Third on his worry list were the longer-dated assets, such as biotech stocks

"If the Fed signals that it is worried about inflation, then you will see a sell-off in the biotechs"

Cramer's fourth concern was Washington, as it is now clear that the repeal and replace of the Affordable Care Act is high on the President's agenda. Unfortunately, that means tax relief isn't, and Cramer doesn't think there will be results for taxes or infrastructure any time soon.

Construction stocks:

Small caps / Dow ratio:

The fifth concern is the border tax issue, which could have a considerable impact given the precarious state of the retail industry in the U.S.

Mall REITs aka. The Big Short 2.0...

"The final worry on Cramer's mind is the oil inventory number that is set to be released on the morning of the Fed meeting. It is likely to show no reduced production, and a buildup of the crude stockpile"