Remember, Everything Gets Exaggerated at First

It's what happens after they hammer the S&P 500 futures that matters. Of course they all have to come down as we decide that China's slowdown is "destroying" everything and everyone in its path. We then get to listen to and read a plethora of bears saying, "I told you so" -- bears who will hate it as much at the end of the day as they did at the beginning of the day. That's because anyone who is bearish thinks the S&P should be back to where it had been before this gigantic advance, and they've been looking for a reason to make that happen.

Might as well be the Chinese.

But then the smoke clears and what do we see?

We see a windfall for the U.S. consumer. We see a windfall for the U.S. manufacturer. We see pressure on those companies that actually ship to China or depend on mining to advance themselves.

You see, this is not 2008. It is the opposite of 2008. We had terrible commodity inflation back then, and it collapsed, but it was almost immediately buttressed by a Chinese acceleration. Now it has already collapsed -- and, unless Europe gets some growth, prices will stay down. Europe is China's biggest trading partner, and I think it has more to do with this decline in China gross domestic product than anything else. China is still an export-driven country, and the goods seem to have nowhere to go.

But let's speak of America -- not that it will matter at 9:30 p.m. EDT, but it will matter for the numbers. For months now, we've seen magnificent performance in U.S. stocks involved in creating consumer products. We had presumed that a lot of that had been because they tend to offer safe, above-average dividends in a declining-yield world. Plus, they have favorable tax treatment over bonds, something that we thought would be taken away.

Now the move has been so nosebleed that a lot of people, including yours truly, had to say to be careful of the very stuff you don't need to be careful about -- bleach, detergent, candy, soft drinks. The stocks began to sell at super high multiples to earnings, and those earnings weren't growing very fast.

But let's see. If you keep your long-fought-for price point in the supermarket or drug store, and your principal raw ingredient -- petrol -- is going down, the margin expansion could be breathtaking. That's what General Mills (GIS) CEO Ken Powell meant when he came on Mad Money and said that he saw the end of runaway commodity inflation.

It's this.

Today.

These companies are huge winners, and after the S&P futures destroy everything in their path, remember that. Their rally makes sense. Can it continue to make sense? Yes, if the numbers are too low, and if gasoline comes down a lot, then they are too low.

How about the U.S consumer? The government has been taking away purchase power at the same time that gasoline has been going higher. But gasoline is priced off of Brent crude, and that is getting hammered. For certain, we have seen peak prices at the pump. While most of the people who opine on these issues can only talk about things like the payroll tax holiday ending, a big decline in gas prices could explain why we are seeing such robust action in both retail, and, more important, restaurants. The latter is also going to profit from what will surely be a collapse in grain prices, because they have been trading as part of what had been a terrific bet on the whole commodity complex that has now turned into a disaster.

Yet you thought McDonald's (MCD), Darden (DRI), Chipotle (CMG) and Panera (PNRA) were done? All they are is a collection of raw foodstuffs whipped into concoctions that people in cars fueled by gasoline eat. The consumer spends more, and the restaurant spends less, and the gross margins go higher, and now we know why Panera hit a 52-week high and Chipotle and Darden keep going higher even as we didn't think they could do so without reporting better numbers.

While the drug companies shouldn't, per se, be winners, they will be. That includes the higher-growth names like Celgene (CELG) and Biogen (BIIB), simply because the threat of inflation to the outyears earnings is dramatically lessened. Of course, that's what the stocks have been saying already -- but I presume that, after a nasty opening hit, the buyers will come in to accumulate them again.

I know all of this seems obvious but, by nature, the S&P 500 futures crush everything even as most of the companies in the index are net beneficiaries of a commodity collapse.

OK, who will get hurt? Because that is all anyone's going to focus on anyway. The producers of energy will get walloped. Even though they still make a ton of money getting mostly Brent pricing, the oil companies will see margins squeezed. Some drilling should drop off because of worries that oil here won't be economic to find here; and you thought that only the Canadian tar sands companies would get hit. We don't know about natural gas -- the Street is wildly long the commodity, but nat gas surely doesn't trade like other commodities, or it wouldn't have advanced when they had all been contracting.

Coal? The stocks will trade as if they'll go bust.

The steels and coppers and miners, as horrendous as they have been, will keep going down. I am sure people will presume that gold will retrace its entire move for the last few years. It's been up for 12 years straight, so it is reasonable to presume that the 20% decline isn't finished. Silver actually has industrial uses, so it gets hammered more.

Can you buy it?

I think that, if you own no gold, you have to pick up some silver into the weakness. Otherwise, no.

Obviously all machinery stocks get hit, and it won't matter how they are doing. They are considered China plays, and something major will need to happen in China before they get moving. I am sure people will say that will China hurts the tech space, too, so they'll hammer the personal-computer makers. But does Google (GOOG) deserve to sell down on this, given the fact that it doesn't even sell into China? Or does Apple (AAPL), given that it can't sell as well as it would like into China. Take your pick, but tech isn't as dangerous as it would seem because of China, it's just dangerous because we are about to get earnings.

Finally we get to the winners -- and I am sorry to point out winners on a loser day but, in the end, the world is controlled by profits, not S&P futures. First are homebuilders, as their raw costs have been rising and it is hard to see that continuing. The banks should perform well, simply because they do well in a lower-inflation environment. Then, of course, there's the Federal Reserve, which now looks pretty darned smart with its bond buys, not that anyone would ever say that.

Finally, perhaps the biggest winners of all: the airlines. If they can control their pricing -- and it looks like they can, given that there is now a slap-happy oligopoly in the airlines -- then the lower fuel costs will flow right to the bottom line.

Remember, everything gets exaggerated at first and the recessionistas get conflated with the earnings fear mongers while the commodity-based hedge funds liquidate.

Then the bottoming process begins. I wish I could tell you give it berth, but this is a problem largely among China and Europe and much less us, even as we know that there are plenty of company stocks that trade as if all that matters is China.

It matters, but it matters in both a positive way -- as a huge marginal buyer of commodities that we consume and don't produce enough of -- as well as in a negative way. People only think of the latter in the morning. But, in the end, there are a lot more companies like General Mills than there are names like Joy Global (JOY) -- and a lot more service and financial companies than there are oil and coal miners.

At the time of publication, Action Alerts PLUS, which Cramer co-manages as a charitable trust, was long AAPL.