NEW YORK (TheStreet) -- The exchange-traded fund representing companies sensitive to economic cycles is doing far better than the ETF of companies selling food and other necessities consumers need. That could mean better times in this back half of the year for the economy and the stock market as consumer sentiment improves. The Consumer Discretionary Select Sector SPDR includes Walt Disney Co , Amazon , Home Depot , McDonald's , Ford Motor and Starbucks . It is currently trading around $67, down a fraction for the year to date. Read More: Kinder Morgan May Target Oil, Gas and Coal After $71 Billion Deal By contrast, the Consumer Staples Select Sector SPDR includes Procter & Gamble , Coca-Cola , Philip Morris International , Wal-Mart Stores , and CVS Caremark . that ETF trades at $44, up 2.8% for the year to date. Until recently, spending was tight. But consider the chart below. XLY data by YCharts Looking at the relative strength of a basket of consumer discretionary stocks over a basket of consumer staples stocks is an important determinant of consumer behavior as discretionary spending predicts future economic growth. Consumer spending accounts for up to 70% of economic activity, so essentially the more they spend the faster the U.S. economy grows. Similarly, discretionary spending is more elastic than spending in the consumer staples space. For example, a person may not need a new rake from Home Depot if money is tight, but will always need to get their medications at the local CVS. Read More: MannKind Lands Afrezza Partner but at High Cost Earlier this year, discretionary stocks took a massive nose-dive compared to consumer staples. Weak employment growth and severe winter weather in the first quarter deterred people from shopping and led investors to sell discretionary names across the board. Recently, however, discretionary stocks have begun to show some strength again. This is a positive sign as stronger spending from the consumer indicates sentiment is on the rise, and economic growth could accelerate in the second half of the year. Over the past three years, when discretionary stocks pivoted from lagging to leading the staples sector, it incited a strong rally in the SPDR S&P 500 . SPY data by YCharts This week is also important for the consumer discretionary sector as both July Retail Sales and August Consumer Sentiment figures are released. Retail sales are expected to show improvement on June’s mild 0.2% gain. Andrew Grantham, an economist at CIBC World Markets, expects to see spending increase gradually in the second half of 2014 and then accelerate in 2015, according to an investor note. “There are growing indications people are willing to take on more credit and spend more,” he said. If the economy continues to add jobs and part-time labor declines as a percentage of the workforce, then wages should eventually rise over the next few years. This will lead to more disposable income for the consumer, which should translate into continued leadership of consumer discretionary stocks over the more inelastic consumer staples sector. A way for the investor to get exposure to stronger consumer spending would be to look for recently battered companies that show signs of bottoming.Read More: 3 Reasons to Worry About AT&T's Dividends Dan Wantrobski, managing director of Janney.com, said in a research report that investors looking to gain exposure to consumer spending “may find opportunity” in some of the flushed-out shares of companies in the apparel group. Among some stocks he recommends considering, Urban Outfitters , Abercrombie & Fitch , and American Eagle , which all “show promise” he states. URBN data by YCharts At the time of publication, the author held no positions in any of the stocks mentioned, although positions may change at any time. Follow @macroinsights This article represents the opinion of a contributor and not necessarily that of TheStreet or its editorial staff.Click to view a price quote on XLY. Click to research the Financial Services industry.
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Search Jim Cramer's "Mad Money" trading recommendations using our exclusive "Mad Money" Stock Screener. NEW YORK (TheStreet) -- When good things happen that aren't suppose to happen, that's when you get a winning stock market, Jim Cramer said on "Mad Money" Wednesday. Cramer said there have been a host of negatives that were supposed to be keeping stocks lower but many of them have simply failed to materialize. The financials have been heading lower quarter after quarter, Cramer noted, but today Bank of America delivered a true upside surprise, a move which has that stock already up 10% for the year. Intel was supposed to be in horrible shape with the PC market declining. Yet, many of the component makers, like Seagate , has all been rallying. Even maligned businesses like construction equipment and oil tankers have been bucking the negative trends, with Caterpillar seeing strong sales and low inventory in the U.S., while Nordic American Tanker is seeing day rates for its ships soar. Even cable TV, which is supposed to be suffering from cord cutters, is seeing stocks such as Comcast hit 52-week highs as the bidding war heats up for Time Warner Cable . This is what happens when the bad news isn't that bad, Cramer concluded. There's likely more positive news yet to come. Executive Decision: Barry Davis For his "Executive Decision" segment, Cramer sat down with Barry Davis, president and CEO of Crosstex Energy , an oil and gas master limited partnership that's up 80% since Cramer last checked in with the company a year ago. Davis said these are exciting time for Crosstex and a new era for the industry as the oil and gas revolution in America continues. He said his company's new partnership with Devon Energy will help provide a diverse portfolio of assets that's over 95% fee-based, meaning they're not tied to the price of the commodities they move. Davis continued that Crosstex and the new entity that will be created with Devon have multiple avenues for growth, from expanding their platform organically to having partners like Devon drop assets into the MLP, to additional mergers and acquisitions. One of the challenges the oil industry now faces is production growth is not in the same places it has always been. But that plays right into the hands of Crosstex, which helps connect production to consumption. Cramer said that even with Treasury yields on the rise, the yields from MLPs like Crosstex remain an attractive source of growth and income. The Power of Technical Analysis Technical analysis should be embraced by investors, Cramer told viewers, as he circled back to Carolyn Borodon's fabulous call on Apple , a stock Cramer owns for his charitable trust, Action Alerts PLUS, on Monday. Borodon once again correctly predicted a rally in Apple, on a bad day when the markets looked awful. She indicated that if Apple could break through resistance just above $534 a share it would trigger a sizable rally. That rally occurred, as Apple is now trading at $557 a share. Boroden thinks the next stop for Apple is $587, or possibly even $603 a share if the stock can jump past its next resistance between $562 and $565 a share. Cramer said he's a believer in Borodon because the cynicism surrounding Apple is totally out of sync with reality and no one is giving the company the benefit of the doubt about its opportunities in China and the possibilities of new product categories. Lightning Round In the Lightning Round, Cramer was bullish on Himax Technologies , Alcatel-Lucent , Kraft Foods , ITT Industries , Noble Energy and Cemex .Cramer was bearish on Emerald Oil .Executive Decision: Michael Mussallem For his second "Executive Decision" segment, Cramer spoke with Michael Mussallem, chairman and CEO of Edwards Lifesciences , one of last year's laggards that is now up 7% so far in 2014. Mussallem commented on his company's recent legal win against Medtronic for patent infringement. He called the decision a big win for his team as it's the second time a jury has found in the company's favor. Mussallem said Edwards has always been an innovator, inventing the technology that allows heart value implants without the need for open heart surgery. When asked why the company lowered expectations for Wall Street analysts, Mussallem said there was never a question of if competition was coming, only when. Now that it's here, it's only prudent to be realistic. That said, Mussallem touted his company's new "Sapien 3" technology as the next generation of treatments, something the competition will not be able to mimic for quite some time. Cramer said Edwards has a lot of great technology and last year's laggards may just be this year's big winners. Am I Diversified? In the "Am I Diversified?" segment, Cramer spoke with callers and responded to tweets sent via Twitter to @JimCramer to see if investors' portfolios have what it takes for today's markets. The first portfolio included Borg Warner , BEA Aerospace , Whole Foods Markets , Regeneron and American Realty Capital . Cramer said this portfolio was totally diversified. The second portfolio's top holdings included SPDR Gold Shares , Phillip Morris , Standard Pacific , Energy Transfer Partners and KBR . Cramer also blessed this portfolio as properly diversified. The third portfolio had Yum! Brands , Gilead Sciences , Discovery Communications , Linn Energy and Boeing as its top five stocks. Cramer said he was also a fan of this caller's portfolio. The fourth portfolio's top stocks were Google , General Motors , Goldman Sachs , General Electric and Gilead Sciences. "What a great portfolio," Cramer concluded. To watch replays of Cramer's video segments, visit the Mad Money page on CNBC. To sign up for Jim Cramer's free Booyah! newsletter with all of his latest articles and videos please click here. -- Written by Scott Rutt in Washington, D.C. To email Scott about this article, click here: Scott Rutt Follow Scott on Twitter @ScottRutt or get updates on Facebook, ScottRuttDCClick to view a price quote on BAC. Click to research the Banking industry.
Search Jim Cramer's "Mad Money" trading recommendations using our exclusive "Mad Money" Stock Screener. NEW YORK (TheStreet) -- Weren't the markets supposed to plummet when the Federal Reserve stopped its bond buying? That was the question Jim Cramer pondered on "Mad Money" Wednesday. Cramer said after all the panic and all the worry, it turns out the Fed knew what it was doing after all. Cramer said the Fed has come a long way since his infamous "they know nothing" rant in 2007. Back then, Cramer said Fed Chair Ben Bernanke didn't see the gravity of the situation and didn't act quickly enough to prevent it. But ever since then Bernanke has been doing everything in his power to save the economy, Cramer admitted, and for that he deserves a "job well done." The Fed's ultra-low interest rates allowed countless companies to refinance and fix their balance sheets, Cramer noted, while countless others were about to stay afloat where they otherwise wouldn't have. The Fed was able to compensate for Washington's inaction and budget wrangling and for the near-collapse in Europe, he added. But despite all these successes, Cramer said that many people still misjudged Bernanke, a man who has not once taken any credit for saving us all from the brink of financial collapse. Bernanke was able to change on a dime, Cramer said, and for that, we all owe him a debt of thanks. There's nothing left to stop this rally only reasons to buy, Cramer concluded,. Break Up the Conglomerates There's one surefire formula for value creation, Cramer told viewers, and that's breaking up huge conglomerates into smaller, easier-to-digest pieces. Yes, the parts are indeed worth more than the whole for most companies and the analyst community tends to specialize in certain areas and simply cannot make heads or tails of a company that tries to do it all. Cramer said this formula has been tested time and time again, from companies such as Abbott Labs to Phillip Morris , the latter having more than doubled its value since splitting of its domestic and international divisions. There are four phases of gains during a breakup, Cramer explained. First, shares rise as investors speculate on a split. Then shares rise more after an announcement is actually made. Next, shares rise further still as the date of the split nears. There's a final pop after the split actually happens. So which companies could be next? Cramer said the big pharma dinosaur Merck is ripe to split because that company isn't getting any credit for its drug pipeline, nor its diabetes and vaccine divisions. Also on the list: Applied Materials , the semiconductor equipment maker that also includes a solar panel and display technology component. Cramer said that either of these stocks would unlock a ton of value if only they considered taking a play from the break-up handbook. Yet More Stocking Stuffers For his next "Stocking Stuffers" segment, Cramer added two more stocks to his holiday wish list, this time in the tech sector -- Ciena and Xilinx , both of which Cramer owns for his charitable trust, Action Alerts PLUS. Cramer said the optical networking business has been boom or bust recently, but the industry is beginning a secular growth phase as wireless networks continue their arms race for more capacity and faster speeds. The moves toward more mobile video and cloud computing are only fueling this trend, and Ciena is preparing for that future with no less than 12 recent acquisitions. Cramer said the company did stumble this month, delivering a two-cents-a-share earnings miss, which sent shares down a quick 7%. But with the bad news behind them, this stock is a buy, buy, buy. Cramer was equally bullish on Xilinx, the provider of programmable logical chips that essentially has no competition. Cramer said this company had its stumble in October but is now trading at a discount to its peers. With the continued build out of 4G LTE wireless networks, Cramer said that Xilinx will prosper for quite some time to come. Lightning Round In the Lightning Round, Cramer was bullish on The Blackstone Group , Gamestop , Opko Health , DaVita and Kinder Morgan Energy Partners . Cramer was bearish on Christopher & Banks and Quest Diagnostics . An Unhealthy General Mills Investors always need to be on the lookout for long-term themes, Cramer reminded viewers, a notion that once again came to him after hearing the General Mills conference call where the company blamed its earnings miss on a multitude of inconsequential factors. Cramer said that, in reality, General Mills is suffering from a shift in the way Americans eat, a transition towards healthier eating being led by the millennials. He said that back when he was growing up, breakfast meant loading up on a box of General Mills cereal while vegetables came from a Green Giant can. But for Cramer's daughters, food has taken on a whole new meaning. Cramer explained that his daughters long ago shunned McDonald's for Chipotle Mexican Grill 's "food with integrity" along with anything made at Panera Bread . That trend led them to Whole Foods Markets to buy their groceries and a preference towards Hain Celestial's healthy products. There's no Coca-Cola at the Cramer house, he continued. Filtered water rules the day. Cramer asked why General Mills just doesn't stop with its excuses and admit the truth: For a growth percentage of Americans, what the company offers is just no longer seen as healthy. No Huddle Offense In his "No Huddle Offense" segment, Cramer circled back to his interview with the Whole Foods Market co-CEOs on last night's show and the topic of valuing employees. Cramer said that over the years he's only come across four companies that strive to pay their employees more and treat them better and those are Whole Foods, Starbucks , Chipotle Mexican Grill and Costco . He said it's no wonder that all of these companies are leaders in their categories because they've all realized the true cost of high employee turnovers is a great one. Paying more may seem counter-intuitive, he said, but in reality it costs more not to do it. To watch replays of Cramer's video segments, visit the Mad Money page on CNBC. To sign up for Jim Cramer's free Booyah! newsletter with all of his latest articles and videos please click here. -- Written by Scott Rutt in Washington, D.C. To email Scott about this article, click here: Scott Rutt Follow Scott on Twitter @ScottRutt or get updates on Facebook, ScottRuttDCClick to view a price quote on ABT. Click to research the Health Services industry.
Search Jim Cramer's "Mad Money" trading recommendations using our exclusive "Mad Money" Stock Screener. NEW YORK (TheStreet) -- The Federal Reserve may be taking center stage right now, but that's about to change, Jim Cramer told his "Mad Money" viewers Wednesday. Cramer said after the first of the year the Fed will start becoming a sideshow, and that's the time investors want to be owning stocks. The tug-of-war between stocks and bonds was evident again today as the most recent employment and housing data were first received as bad news but then good news by the end of the day. Why the differing opinions? Cramer said it's because a transition is at hand, one where those worried about the Fed, or the "good news for the economy is bad news for stocks" crowd, is making its exit while those who know that good news for the economy is good news for earnings are beginning to pile in. Today's housing numbers, the strongest in almost three decades, cannot be ignored, Cramer said. The Fed's policy of keeping rates low to spur activity is clearly working. Housing permits are up and banks are more willing to lend, and that can only lead to one thing -- the Fed beginning to tighten. Cramer said the markets will likely be buoyed by money managers piling into stocks in order to beat the averages before the year ends. When January rolls around, the stock pickers will follow, as they know that all this increased activity will mean better earnings for companies in the first quarter. Bonds, on the other hand, will continue to become increasingly unattractive, as stocks with big yields and bigger earnings will garner all the headlines. Shop Elsewhere Perhaps the best thing to do with retailers this holiday season is stay away, Cramer told viewers. This group has become wildly inconsistent and offers investors nothing but a total lack of clarity. That was clearly the case with Express , the normally consistent retailer with 630 locations that has seen its stock up 50% for 2013. After results "did not meet expectations," shares of Express plummeted 23% in today's session. Meanwhile, Ascena Retail Group , purveyors of Lane Bryant and Justice, had been hit or miss all year but this quarter delivered great earnings. Ross Stores , once terrific, now seems to have all the wrong merchandise while rival TJX Stores is hitting it out of the park with its HomeGoods stores. JCPenney reported a strong October but then a slumping November, while downgrades at Sears Holdings and Gap Stores sent those stocks lower. Even GameStop and Best Buy seem to have run out of gas, Cramer noted, while strong home sales didn't send Home Depot higher but lower. With all this confusion, Cramer said good riddance to the whole group until we get some stability. Oh, Canada After underperforming for the past three years, the Canadian economy is heating up, Cramer told viewers. That means its stock market will be playing catch-up. Canadian stocks may only be up 7.1% for 2013 compared to 25% for the S&P 500, but Cramer found seven stocks he said would make an excellent addition to a well-diversified portfolio. The first two on Cramer's list are Shaw Communications and Rogers Communications . Cramer said Shaw has a global television network with 17 channels pumping out content. The stock trades at an 8% discount to its peers. Meanwhile, Rogers is the largest wireless operator in Canada and has media assets and the Toronto Blue Jays baseball team. Anytime an economy is on the mend, you need banks. That's why the next four stocks on Cramer's list are Bank of Nova Scotia , a global bank with a 4% yield; Bank of Montreal , another high-yielding bank; Royal Bank of Canada and Toronto Dominion . Cramer said any of these banks would make an excellent portfolio stock. Finally, there is Ritchie Brothers , the industrial auctioneers that bring invaluable expertise and information to buyers of large industrial equipment and machinery. Ritchie currently trades at 22.8 times earnings with a 15.3% growth rate, making it not expensive at all in Cramer's book. Lightning Round In the Lightning Round, Cramer was bullish on General Motors , KeyCorp , Magnum Hunter Resources , New York Community Bancorp and Sirius XM Radio . Cramer was bearish on Ford Motor , NXP Semiconductors , Superior Industries , WPX Energy and Cumulus Media . Off the Tape In his "Off The Tape" segment, Cramer sat down with Ken Austin, co-founder and chairman of the privately held Tequila Avion, the fastest-growing premium tequila maker. Austin said in an industry dominated by giants he set out with little more than an entrepreneurial spirit to create the world's best tequila. He said as a privately held company there aren't pressures to cut costs or cut corners, which has helped the company achieve its goal. While there has always been a dominant number one player in tequila, there's never been a clear number two player, Austin continued. But thanks to regular appearances on the hit TV show "Entourage," which happened by chance, quality met lifestyle and Avion was recently voted the best tequila. Cramer saluted Austin and his entrepreneurship, saying he embodies some of the best attributes America has to offer. Am I Diversified? In the "Am I Diversified?" segment, Cramer spoke with callers and responded to tweets sent via Twitter to @JimCramer to see if investors' portfolios have what it takes for today's markets. The first portfolio included Netflix , Pfizer , EOG Resources , Tractor Supply and Spirit Airlines . Cramer said this portfolio was properly diversified. The second portfolio's top holdings included Phillip Morris , McDonald's , Boeing , Johnson & Johnson and Cemex . Cramer said he'd replace Phillip Morris with an industrial like General Electric . To watch replays of Cramer's video segments, visit the Mad Money page on CNBC. To sign up for Jim Cramer's free Booyah! newsletter with all of his latest articles and videos please click here. -- Written by Scott Rutt in Washington, D.C. To email Scott about this article, click here: Scott Rutt Follow Scott on Twitter @ScottRutt or get updates on Facebook, ScottRuttDCClick to view a price quote on EXPR. Click to research the Retail industry.
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NEW YORK (TheStreet) -- Investing is about making money, not about having the best investment strategy, Jim Cramer told his "Mad Money" TV show viewers Monday as he commented on a recent tweet he received regarding Amazon.com .
The question was whether Cramer would recommend buying Amazon or whether the stock was overvalued. His answer? Yes on both counts. ...Click to view a price quote on AMZN. Click to research the Retail industry.
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NEW YORK (TheStreet) -- As the year draws to a close, there's only one thing on the minds of money managers, Jim Cramer told his "Mad Money" TV show viewers Tuesday, and that's beating the averages and their peers.
Cramer recalled that when he ran a hedge fund, if he was beating the averages at this point on the calendar, he'd simply declare victory and take a vacation so as not to screw anything up before Jan 1. If anything, his fund would become day traders, making a little here or there but not taking any major risks that could undo their gains for the year. ...Click to view a price quote on NOV. Click to research the Energy industry.
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NEW YORK (TheStreet) -- "You're welcome to be optimistic," Jim Cramer told "Mad Money" viewers Monday on the eve of a government shutdown, but just understand the downside risks outweigh the upside ones, at least for now.
Cramer said it's clear by the lack of a major selloff on Wall Street today that many investors are hanging their hopes on a last-minute secret deal being made by Congress to avoid the shutdown. But in reality, he said that it's unrealistic to think that Congress can agree on both the budget and the debt ceiling all in one fell swoop. Some in Washington are prepared to see the U.S. default on its debt just to make a point, he continued, and views like that are not where compromises come from. ...Click to view a price quote on T. Click to research the Telecommunications industry.
NEW YORK (TheStreet) -- Investors are like most TV watchers, always changing channels, Jim Cramer told his "Mad Money" TV show viewers Thursday. He opined about a multitude of stocks that were once hated but are now loved as investors have once again changed their minds.
No stock illustrates this move better than Facebook , a stock Cramer owns for his charitable trust, Action Alerts PLUS. Cramer said that after the worst IPO in history, Facebook has emerged as the king of mobile and social advertisers. He's still a buyer of Facebook, along with Google . ...Click to view a price quote on FB. Click to research the Internet industry.
Search Jim Cramer's "Mad Money" trading recommendations using our exclusive "Mad Money" Stock Screener. NEW YORK (TheStreet) -- We are not the world, so stop investing like it, Jim Cramer commanded his "Mad Money" TV show viewers Wednesday.
Cramer said Europe's woes are likely to cause a weak open for our stock markets Thursday, but investors need to be smart and use that weakness to buy, buy, buy.
There's been a shift in our markets, said Cramer, and smart investors are no longer using weakness in Europe as a reason to sell, they're using it as a reason to buy. That makes sense because problems with banks in Cyprus or elections in Italy have absolutely nothing to so with sales at retailers such as Ross Stores , Bed Bath & Beyond or Costco , nor the U.S. housing or oil booms. ...Click to view a price quote on PVH. Click to research the Consumer Non-Durables industry.