Skip to main content

Thoughts After the Jobs Data

I'm still looking to buy companies that can thrive in a low-demand environment.
  • Author:
  • Publish date:
Comments

Everyone was waiting for the economic numbers today, and with the 10.2% headline unemployment rate, the markets have spent most of the morning in the red. As I have said on many employment Fridays, this is a lagging indicator. If you want more of a real-time glimpse of the job market, it's in the weekly initial jobless claims report, which yesterday posted a 20,000 decline -- a step in the right direction despite remaining at elevated levels.

Within the data this morning, there are a few items that offer some glimmer of hope -- stronger temporary hiring, positive August/September revisions and a slight rise in average hourly earnings. In fact, if you smooth out the last three months' moving average of non-farm payrolls including all the revisions, the overall job loss number has declined.

The jobs situation in America today remains problematic, but there are some encouraging signals out there. And overall this week, there's been some good news in manufacturing, productivity, unit labor costs, factory orders and pending home sales. Retail sales yesterday were decent, and corporate earnings have been good (although done more on cost-cutting vs. actual revenue growth).

My strategy hasn't changed, and despite putting $30,000 of cash to work this week I have plenty to buy on a real pullback. On the short list are Cooper (CBE) in the upper $30s, Cisco (CSCO) in the low $20s, eBay (EBAY) in the low $20s, Honeywell (HON) in the mid-$30s, Home Depot (HD) under $25, Johnson Controls (JCI) in the mid-$20s, Weatherford (WFT) at $17 and Weyerhaeuser (WY) in the mid-$30s. From a fundamental point of view, all of these companies have done a great job restructuring their businesses and have reduced their overall cost structures permanently; as a result, they can be profitable in this lower-demand environment. When growth returns, all of these companies have tremendous leverage. So I'll keep my eye out for more buying today.

Regards,

Jim Cramer

Click here to trade alongside Cramer!http://www.thestreet.com/staticFull/aap-td-ct-offer_alert.html

DISCLOSURE: At the time of publication, Cramer was long CBE, CSCO, EBAY, HON, HD, JCI, WFT and WY.