China is doing horribly, so why not short Vale, instead of buying it, as we did in our charitable trust? Because we are in the perfect bullish paradox, as I heard it described by some nameless soul during some early morning TV watching. The worse it is in China, the more they have to stimulate, so buy. If it gets better, well, buy.
We know that housing's getting better ever so slowly. It's not getting better because of employment growth, though. It is getting better because of pent-up demand and falling supply. We have worked off a lot of the foreclosures in a lot of areas. We have also had families bursting at the seams in the houses of parents. So household formation plus reduced supply spells better earnings for the homebuilders.
We heard from Avnet the other night that the last two weeks of June were horrendous and that July was no better. Horrid for tech. But then Cisco got two upgrades--terrific for tech.It goes on and on. For every bit of bad news, there seems to be something good. But what's most noteworthy is that we don't expect anything good. We are so used to everything either being one way or the other, but we don't have that kind of environment. So the negative pin action on disappointments such as reports from Monster Beverage or Chipotle Mexican Grill or Priceline simply gets blunted.
Therefore, you get some decent earnings news with a backdrop of gently rising rates and a quiet Europe, and the next thing you know--voila!--you have the hated rally that you see on your screen.
Random musings: You cut numbers enough, a la Alpha Natural Resources, and even a horrendous quarter can drive the stock higher.
Disclosure: Cramer's charitable trust has a position in VALE.
