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February 8, 2013  Fri 8:13 AM CT

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You can't ever be complacent about anything as big as the still-wrenching economy that is Europe.

I have said all year that Europe is not affecting us so far, that the measures put into place by the European Central Bank last year are working, meaning that Europe has shown a degree of stability that is welcome. I didn't want anyone to sell our stocks because of the declining economies there, notably Spain and Italy, as well as the potential for a real plunge in France.

That has been the right call during this bountiful start to 2013. In fact, it's been the right call since the summer, when Mario Draghi, the ECB chieftain, said he would do whatever is necessary to preserve the currency union.

Now that free ride looks like it is ending. Yesterday morning Draghi talked about how the euro is too strong and how it is hurting European competitiveness. But he did not cut rates, taking back the second of two rate hikes that his predecessor, Jean-Claude Trichet, mistakenly put through since the financial crisis erupted in 2008. (I use the term "mistakenly" because I am trying to be a diplomat. It was a disaster.)

By acknowledging that the economy is staying weak but not cutting rates, Draghi succeeded in only freaking out the world's markets--our futures dropped precipitously this morning after his statement. At the same time, he did get the euro down against the dollar, something that is not welcome for U.S. companies that have emphasized selling product in Europe in the last decade but is certainly welcome on the Continent.

Draghi's negative statements amount to an investing clarion call to put Europe back on the map of worries, even as we heard recently from a host of U.S. companies that Europe has started to stabilize, although it is a decidedly mixed picture.

TheStreet.com logoJust yesterday, for instance, on the fourth-quarter conference call by the tremendously successful retailer Ralph Lauren, we heard that the United Kingdom, Germany, and Scandinavia are all improving. But the company noted, pointedly, that Italy and Spain remain weak.

We also heard from the worldwide news and entertainment giant News Corp. that its Italian business is soft. Heaven only knows how weak Spain, which has massive, Depression-style unemployment, really is. There's certainly enough weakness to merit a rate cut, but we now know we aren't getting one anytime soon.

So what happens next? We know the multinationals will take hits again, as will the financials, such as JP Morgan and Morgan Stanley, that are tied into Europe. That's what happened before, and it is happening again.

But because the statements Draghi issued were so frightful, we know that the whole market has to come down first. Yesterday we saw the S&P 500's indiscriminate knockdown of companies that do business in Europe and companies that are 100 percent domestic.

Perhaps the best thing to do right now is to default to what happened in the tail end of the crisis, when the U.S. stock market was able to distinguish our domestic economy from Europe's domestic economy. That means the housing plays, including the retailers, would be places to go, as well as domestic health care companies that are also pulling back.

I am advocating that after being able to avert our eyes for some time, we now have to keep one eye on Europe again, while the other eye can be on domestic opportunities. You simply can't be as aggressive now as you might have been in January, given the run we have had and the ongoing ineptitude of the European financial and political leaders, who always seem to find a way to screw things up.

Disclosure: Cramer's charitable trust is long NWSA.
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