i'm jim cramer and welcome to my world. you need to get in the game. firms are going to go out of business, and he is nuts! they're nuts! they know nothing. i always like to say there is a bull market somewhere. i promise to find it just for you. "mad money," you can't afford to miss it. hey, i'm cramer. welcome to "mad money." welcome to cramerica. other people want to make friends. i'm just trying to make a little money. it's my job not just to entertain, but i'm doing some teaching tonight. so call me at 1-800-743-cnbc. look. nobody said the stock market is going to be easy. particularly this year when the first thing we seem to talk about every morning is the stumble bums of europe with

their german puppet masters. today was no different. dow tumbling 31 points. that was quite a comeback from earlier european-inspired losses. don't you love that? ultimate cliche' for the last two years. but tonight i am dedicating this show to how easy it can be. yeah. if you simply know how to think about the way the stock market works and the way you work! that's right. tonight i'm going to work a little magic and pull a portfolio out of not a hat but a bag. my dopp kit, my kit bag. and augment it with some basic kitchen staples you and i all know by heart. i am not trying to say this business is simple. no. they'll lamb baste me for that. i'm saying it can be a bit of a simple exercise when you use a

pearl-lined prism when the answers are right in front of you. edgar allen poe could have been the great portfolio manager "quote the raven, buy low, sell high." let's go through the contents of my kit bag, the moment i get out of the shower. first because i work out before the shower, i like to brush my teeth for a second time of the day. what i do use? no, not a bottle of jack. how did that get here? i do look like keisha? other than the fact that she uses the dollar sign instead of an s when she spells her name? ha. no, i use a brand-new toy. i use the church and dwight electric toothbrush. gets in all those hard to reach places. church and dwight, which you know as arm and hammer perhaps, is one of my favorite stocks. and american innovator and brand line extender for everything from baking soda and brillo to

laundry detergent and toothbrushes. this domestically-focused stock has rallied almost 25% this year while the averages are struggling. right in front of you. 7%? no, 25. my toothpaste? let's see. my toothpaste. well, colgate. which i recall is a great innovator. these guys are like the edison of toothpaste. i'm not kidding. it's advanced 13% year to date. it's winning the battle for lesser developed nations by introducing new products that seem to be technologically advanced. since i'm on tv i am always fearful that something will be caught in my teeth. so what floss i do use? johnson & johnson's reach. i've been using it for years. i use this all the time.

i even floss out here on the set. i'd be a flossing magician. j and j has been a terrible performer because of the previous ceo. but now he be history. in his place is alex gorski. he's a spark plug kind of guy. with j and j's outsized 3.6% yield, the brothers johnson, not the strawberry letter 23 kind but the guys based in jersey, they are paying you to wait as gorski streamlines the place or breaks it into several household divisions. you got a stock here that's worth substantially more than it's currently trading for with the new regime. breaking up is easy to do. after i finish brushing, i like to clean my ears and dry them. because of that nasty thing i stick in my ear for squawk on the street, the ifb they call it. a real rocks gatherer. i grab some j and j cotton swaubs and dry my ears with clean ex. that's kimberly-clark, a brand

so strong i think it's a key component behind why the stock has increased 15% for the year. the other, a 3.5% yield. okay. not as big as it used to be, that's thanks to the sharp share price appreciation. then, i don't know about you, but i apply deodorant. all right. this is a tough one. i use old spice, legacy of my grandfather. mother's father, not my dad's side. although what a convenient way to wish my dad a happy birthday. happy 90th birthday, pop. . happy returns. here's the conundrum. old spice is made by proctor & gamble. which is a terrific company that happens to be burdened with terrible management right now. however, proctor is a ton that will 3.65% dividend yield. even without the tax benefit it sounds like obama is ready to scrap. the stock is waiting for the firing of the ceo bob mcdonald who would provide the stock an

immediate lift if he simply decided to resign to spend more time with his family. then it's time for a shave. what i do use? bert's bees shaving cream. because it's natural. it says it. i like natural. clorox, which is clearly admitted it overpaid for burt's bees, not getting its money worth from the acquisition. we know the ceo is a serial dividend razor. 8% performance gain this year plus that 3.5% yield. what more can you ask for. even icon who gave up trying to sabre rattle because they recognized they couldn't do better than the current management when it comes to bringing out value. high praise from america's most accurate critic of corporate fat and incompetence. here's the dilemma. the dilemma of proctor & gamble in a nutshell. after i apply the shaving cream, guess what i do. yeah. i shave. i shave with a gillette razor from proctor. but not those expensive,

gimmicky ones. i think they're overpriced and not worth it. i use this old-fashioned mach 3. doesn't do anything at all except for shave me well. it's cheaper and i swear does give me a better shave than all those 17 like the mach 5, f 15, whatever that is, b 52, i don't know. that's a terrible indictment of what's going on at p and g. it shows that the cincinnati colossus has ceased giving you high value for higher prices. no wonder it's losing shares to its competition. anyway, next i splash on a little baby powder because it gets hot under these lights. baby powder? i do even have to identify it as johnson's baby powder? can you imagine how much that franchise alone must be worth? how undervalued is this company? sure enough. while i was away, i went away last week, i got a boo boo on my hand. we call them boo boos. before i came out on the set i ripped off my band-aid. there we go again. band-aid. registered trademark at j and j. baby powder, band-aid. how much i do want to own shares

in this johnson & johnson? oh, and let's be real clear. about all the products at cbs, travel chest been buying because it's taking share from troubled walgreen's. stock got hammered today. used the decline and bought some. does that mean it's going to go up tomorrow? no. but so now i'm all done. i'm all dressed. anyway, then before i go to work i head downstairs to the kitchen. what i do do? well, of course, i make myself some dunkin donuts coffee. that's because i don't have time to swing by the place where they always know my name. but this company with the stock that's up 36% for the year, gives you a nifty home pot i use every day. i'm not buying the thing i put the pot in because that's like the razor. i like the blade. i then pour in some silk soy milk from the white wave organic core. you cannot taste the difference. just look at that label.

this could have given you a 42% return to date as we push this stock along with every other stock in this bag for many years. finally i take my vitamins. with a big glass of tropicanao.j. never start my day without it. this belongs to pepsico. 3% yield. 5% gain. i think there's much more ahead as the price of the commodity inputs. remember, this part, it costs more than the juice. and it's coming down. crashing down. allowing the companies mortgage to head higher in 2013. pepsi's got one of those smaller exposures to europe and could be on the more successful side of packaged storage after a long hiatus. are these stocks that hard to find? are they? are these needles in a haystack? no, just the opposite. they're some of the most obvious players out there. they are in your drawers. they're on your bureau, on your counter. here's the bottom line. it might be a difficult stock

market. but only if you outthink the darn thing. if you look right in front of you, if you consider what's in this bag, i bet you'll find it's a heck of a lot easier than you thought. jack in florida. jack. >> caller: jim, a big booyah from the treasure coast. >> all right, hit me, sunshine. >> caller: on the subject of well point, i heard about their recent big acquisition. is this going to put them in a position to take off and do better? >> yes. yes. this is a company that recognized it had some areas where it wasn't strong enough. and sure enough, the stock went up today because amerigroup fulfills problems they had. i love the acquisition. congratulations to management. how about howard in indiana? howard. >> caller: booyah, jim, from auburn, indiana. >> loving it. >> caller: my question is about cpb, campbell's soup. today they announced they

acquired knot hills farms, a beverage maker? >> bull house, yeah. >> caller: yeah. well, my question is, with the drought affecting commodities in europe and the far east and going into recession, isn't this a bad time to be acquiring a company like this? >> okay. this was campbell's before this. this is campbell's after it. this company has been more abundant had it done nothing. they're stepping up to the plate. they didn't get any credit for today. the market was wrong. campbell's is right. now that you have my morning solution which does not include this bottle of jack, i mean, my beauty and hygiene solutions in the bag. investment ideas are everywhere. stop looking at western digital and c gate and start looking inside! "mad money" will be right back. coming up, recession

resistant. does the threat of a world-wide slowdown have you yearning for protection? kramer's breaking out his recession portfolio to help get you through the worst-case scenario. and later, batter up! the boys of summer are prepping for their all-star break. but kramer's not taking the day off. he's squaring off this market's heavy hitters in his stock derby and needs your help to call them safe or out. get ready to tweet @jim cramer, your pick for the home run. plus healthy breakup? five years after its spin off from tyco, covidien has become one of the world's largest providers of health products. with the supreme court's health headache in the rear view could it keep your portfolio in tip top shape? cramer's exclusive with the company ceo is just ahead. all coming up on "mad money." don't miss a second of "mad money." follow @jim cramer on twitter.

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let's be honest about this. united states have been doing great compared to europe. but in absolute terms, things are not so hot here. [ booing ] >> i mean, it seems to be impossible to come by any growth in this country. witness the second hard employment number in a row last friday. meanwhile we know congress will never pass any kind of job creating stimulus. we have a looming fiscal crevice or maybe a gully that has everyone and his brother panicked. and the 30-year treasury is signalling forget about it. the economy is dead on arrival. be afraid. be very afraid. in short, we need to prepare ourselves for the possibility -- the possibility -- of a

recession. that's why tonight i'm giving you a diversified portfolio. five recession resistant stocks that will do better than most if the economy keeps slowing down. that certainly seems to be the trajectory worldwide cramer how do you protect yourself? first of all, it means lower commodity prices as demand slows for every material under the sun. we want a company hurt by high commodity costs who passed on the costs to the consumer. at this point the commodity costs will come down but the raised prices for the most start will stay elevated cramer we need a company that doesn't have much exposure to europe. that will lead to a softening in earnings, even for some of the packaged goods plays. finally we need a good dividend to protect us in the event of huge s&p selling from the potential collapse of spain or italy or whatever else europe might throw at us cramer you know what that means? that means we need a general

cramer it means general mills cramer with the 3.4% yield and the terrific array of food products the company has been murdered by raw costs for grain to plastic. the wrapper in the big g cereal box, paper board, oil and gas. they all play a role. as ceo ken powell recently told us on "mad money," general mills has just weathered the worst commodity cost crisis in years and it's come out much stronger than almost every other food company, especially archrival kellogg cramer they have stumbled in the yogurt category. but powell said the new wave of product introductions could reverse the trend. plus, despite recently raising the dividend by 8%, classic sign of confidence, 12th dividend boost in eight years powell kept expectations low which gives the company a phenomenal chance of beating them. next up, you can't have a recession portfolio without a dollar store entry cramer now, we flogged this dollar tree

forever cramer it's been a great one cramer up 30% year to date, no doubt in part because of my hefty candy purchases at my local dollar are tree cramer but morgan stanley downgraded it on potentially slowing numbers. i'm jumping on another general. this time dollar general. it's up a similar amount but has but in many ways has more of a national opportunity than the money trees which i call dollar tree cramer they are getting in california. vastly underdollared. one of the chief reasons i like dollar general is i have never seen the stock of a company eat through not one, two, three but four secondaries and still come out ahead after every one of them. while the dollar store theme is no longer unknown and the price to earnings have expanded rather dramatically, dollar general still sells at only a slight premium to its growth rate cramer i expect that growth rate

will accelerate thanks to the expansion to california and ever improving same store sales cramer i like ross, tjx and petsmart, too. when portfolio managers hear the word recession they turn to dollar stores first. when they do, they buy the general. third, we know -- well, we think breaking up is easy and smart for corporations to do. we're going to hear from covidien, a fantastic breakup beneficiary in a moment. we need another breakup play, one that sells indispensable products and gives us a a better than 3% yield cramer in other words, we need abbott labs cramer it's one of the fastest-growing big pharma names out there. it's not streamlined or easy to understand cramer so that's why i think it's fantastic the management has decided to split the company into a branded drug business and diversified medical products.

it sells everything from nutritionals to diagnostic products. the pharma division can stand on its own facing fewer big patent expirations than the competition and the medical products deserve to be in a different company. because it can grow much faster cramer the drugs take forever ton approved cramer this split is all about creating two stocks that deal to a different constituent of money managers cramer abbott's pharma lab gives you a dividend vehicle, and growth vehicle, and both companies deserve to go higher especially in a recession where portfolio managers pay for consistency. fourth, man, we have to have domestic security in the worldwide slow down. what could be better than a domestic security play with a bountiful dividend and a business as consistent as it gets? i'm talking about consolidated edison. mr. ed or con-ed, the new york based utility with a hefty 3.9% yield cramer it's a new york-based transmission and distribution utility cramer it's not a power generation play cramer not a stinky one you.

know what i mean? so there's no reason for the epa to crack down on them cramer best of all, this company is a champ when it comes to raising the dividend. [ applause ] con-ed has boosted the payout every one of the last 38 years. in fact, it is the only utility in the s & p 500 with 30 years or more of consecutive dividend boosts cramer plus as the ceo kevin burke said they are a huge beneficiary of the collapse in natural gas prices targeting more than 7,000 buildings overpaying for oil. and cowl save a mountain of dough if they would just switch to gas a la con ed cramer also con ed unlike the rest of us is benefitting from this martha vandella-style heat wave cramer we need more than one utility cramer i toyed with the idea of including duke energy now that it's merged with progress. that's a terrific stock. when the new old, new ceo jim rogers pulled. the coups de gras cramer

came on our show and i said i thought it was a great buy. the stock went up a buck and a half. then we got hit with a huge equity offering. why mention it? today the stock is falling. who can be considered consistent without surprise equity offerings or board coups? how about verizon, you can tell verizon's a winner because usually it and at&t are the only two stocks in the dow that go up every time italy or spain barfs cramer witness today where verizon opened higher despite the fact that almost everything

else was down, yeah cramer even genuine exorcist-like reaganprojectile vomiting doesn't affect verizon, it's able to put some non-apple phones, i see jim cramer on twitter he's giving up on apple, no, but it does make interest in -- all play right into the hands of this serial dividend booster, here's the boss line you need to start preparing for the very real possibility of a recession which means it's time to build yourself a recession-proof portfolio, with two generals, general mills and dollar general, abbott labs, mr. ed and verizon, after the break i'll try to save you more money. >> coming up the boys of summer

are prepping for their all-star break, kramer is not taking the day off cramer he's squaring off these heavy hitters in his stock derby and ready to call them safe or out, get ready to tweet your pick for the home run cramer

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tonight. at least here on "mad money" where we are exploiting the all-star break to bring you the best homerun hitters of the first half of the year. the stocks that have driven in the most runs and made you boat loads of dough. the big question, which of these power hitters like the actual hitters in the home run derby will perform best in the second half cramer because this is the most interactive show in the universe we're going to present you with five top home run hitters cramer specifically the best performers of the second quarter cramer and then you get to vote for your favorite by going to @jimcramer on twitter cramer @jimcramer on twitter cramer we'll compile your twitter votes and present the winner tomorrow night cramer maybe give you a little more fleshed-out version of why the company could be a star and not just an f.i.t.e., lingo for flash in the pan cramer first up, arena pharma, which has

rallied an astounding, a whopping 225% on the strength of its newly-approved anti-obesity drug belvy cramer what's the big deal here? how about the fact this is the first drug that's been approved for obesity in more than a decade, it works better than the last one that was approved without the apparent high heart attack ratio of its predecessor. a drug which defined half of the eternal truth that you can never be too rich or too thin. i'm not going to tell you it's a slam dunk. the drug probably won't be on the market until the second half of the year. right now even after the run arena has a market cap of just 2 billion, another pharma company would have to be nuts not to buy this one, this is a box

situation that statistics dominate, you decide, second place we got onyxpharma, with a surprise new drug which treats multiple myeloma, drug cancer -- fda panel recently gave onyx's drug the thumbs up, that's one reason why the stocks shot up like it did, the other is possible takeover chatter since onyx's nexovar which treats kidney and liver cancers hand performed so well, when you consider the endless rallies successful biotech companies have had recently going into and after fda approvals, i can see anyone voting for onyx even after the run especially when you consider the case regenero n at 117, even though it like on

nix faced an entrenched company for an eye disease. . >> i now this is my show and i have the ego to prove it. tonight i'm turning the reins over to you so you can vote on twitter @jimcramer for the home run king of the second half of the year. that's the only reason why i am putting, oh, boy, u.s. airways on the ballot. you heard me! an airline! u.s. airways! simple locc. i'm not just including this one because my united flight out of mexico on friday wasn't able to gain altitude and caused us to have an emergency landing in someplace called st. louis of the sea. go google that town the i'm

including it because u.s. airways is a second quarter champ. a real high flier. having rallied 75%. how? why? how about plummeting fuel prices? if you think oil's coming down further because of the recession this might be the single best way to play the decline. how about u.s. airways taking advantage of disarray at amr caused by their bankruptcy filing. how about it actually might be able to buy amor out of bankruptcy. those are all solid reasons for you to vote for lcc. u.s. airways won't be getting my vote. but given that every plane i've ever flown in this era is always an extremely full flight, an oxymoron. have you ever heard -- oxymoron. what the heck would be a mildly full flight? i can see you might want to just pull the trigger on lcc! speaking of names we're just becoming familiar with, have you seen the run in melanox

technologies? when i read it i thought it was for something like your stomach, like tums. you know, maalox? in a second quarter this small israeli semiconductor company has jumped 69% on the strength of its technological prowess which allows data to be faster, bigger and cloudier than now. most people didn't see this one coming given that the analysts expected a revenue forecast of 2.8%. instead they projected a 44% increase. and blowing away the numbers entirely an astounding example of both how wrong highly-paid analysts can be and how well a company can practice youpod, which is to underpromise and overdeliver. these guys are like japanese beetles, like asian carp. they got no national predator. with intel choosing not to compete against them, even as intel's incredible new line of chips buttresses the case for using melanox's hardware. their rally surely doesn't seem like a one-time event.

yet major analyst coverage is downright spartan. given how much most semiconductors companies have real slow growth including a and d, this might be a home run hitter that isn't going to flame out in the stretch although i'm sure it's going to be weak tomorrow because of amd. last and maybe lease is an incredibly controversial stock. pharma cyclcs. worth 97% this year it treats chronic lymphocytic leukemia. that's a fatal cancer of the blood. it's a small sample here. the company's drug, abruteniv, is being compared to glivec. now i'm skeptical about this. you got to be skeptical about this one. given how drug is only early in its trials and a lot of people are betting against it, 10%

stock sold short. how about the fact it's been around since 1996 with little to show for itself so far? company's been burning through cash. considering how long it take to develop new drugs that's never a good sign. plus the patient population for this particular form form of leukemia they're trying to treatise much small be than the big block bust teres address. it's up to you not me to announce the home run derby winner. and omitting this star would be a hideous injustice to the process. here's the bottom line. which of the second quarter's biggest winners will continue to perform like all stars in the rest of the year? you make the call. go to twitter @jimcramer, #stockderby, to choose among arena pharma, onyx pharma, u.s. airways, melanex technologies or pharmacyclics. let's speak to bill in florida. bill >> caller: jim, thanks for

taking my call. >> no problem. . >> caller: what do you think about green mountain coffee? down from over 100 in the past year. it traded around four times usual volume on friday, and it was up over $1 in a down market. >> people are always going to try to call a bottom in something that doesn't have good fundamentals. i've been skeptical of it ever since @herbgreenburg on twitter introduced the concept of perhaps the numbers being way too high. i'm going with ed greenberg. all right, play ball. in honor of in celebration of all-star weekend, the home run derby, i'm letting you vote. tweet me @jimcramer, #stockderby, and vote for which stock you think is going to be the biggest home run hitter in the second half of the year. and stay with. . >> coming up, healthy breakup?

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. it's time for the lightning roun round. lightning round is over. john in florida. john. >> caller: hi, jim. john kowalski in florida. the stock i'm interested in is veltate. >> i'm done eating that because that's mobile advertising. i want nothing to do with it. sally in california. sally. >> caller: hi, jim. a big booyah to you from manteka, california. >> right back at you. >> caller: what can you tell me about talisman energy? >> the rates are going down. jeannette in florida.

. >> caller: hi, jim. nice to talk to you. calling about a stock that never seems to do anything, although i think it's got pretty good earnings. axl. what do you think? >> i say ixnay. let's go to scott in new york. . >> caller: el dorado gold egl. >> i'm not going to recommend a gold stock. gld. that one, ladies and gentlemen, is the conclusion of the lightning round. >> the lightning round is sponsored by td ameritrade. you'd spot movement, gather intelligence with minimal collateral damage. but rather than neutralizing enemies in their sleep, you'd be targeting stocks to trade. well, that's what trade architect's heat maps do. they make you a trading assassin. trade architect. td ameritrade's empowering web-based trading platform. trade commission-free for 60 days, and we'll throw in up to $600 when you open an account.

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if it's a rocky environment we need stocks with a reason to go higher even if the broader economy goes down the tubes. that makes the breakup plays more attractive than ever. you know the story. we have seen it so many times. big companies can create tremendous value for the shareholders by saying, okay, enough. let's split up into smaller, easier to understand and categorizable units. help out the portfolio managers, the health care company that makes everything from drugs to medical supplies, medical devices, clovidien.

they announced they would spin off their pharma biz. same reason as every other break up story. the businesses don't belong under the same roof and they make more sense as separate entity. i have felt the pharmaceutical business which is 17% of sales has held back the more consistent and higher margin medical device franchise. with the pharma spin-off expected next year it is on its way to being a leaner, meaner medical device play that can attract growth oriented money managers who have been put you off by the volatile drug business. clovidien understands the power of a good breakup given the fact that the company was created when the old tyco international spun off the health care division back in 2007. i got behind this on december 19. it's given us a juicy 25% gain.

the value of the breakup is becoming baked into the spot. we'll check in with the chairman and ceo to find out more about where the company is headed and learn more about the breakup strategies that are good for you. welcome to "mad money." >> hi, jim. how are you? >> great, thanks. how about you? >> good, thank you. >> first, congratulations. what you did is something we have urged executives to do. which is to recognize that it's time to take control of your own stock and your own company just to be able to bring out the real value. how did you know since the stock has been unstoppable since you did thought breaking up was the right thing to do for clovidien? >> it's all about shareholder value. you think how can the companies do better separately? in the pharmaceutical business it's a different product lifecycle than medical devices. so understanding that was crucial. second was we had to do something. we had to do something about the

performance of the pharmaceutical business. so once we fix a lot of the issues they got a good management team in place. now is the right time to take this company in a spin-off. >> one thing curious about your company versus a lot of the others i deal with, your medical device business is fast r growing than the pharma business. so talk about what the acquisitions you have done to speed up the growth of medical devices and make it into what i think is probably the fastest-growing medical device company of all >> the first thing we did is trim businesses off our portfolio from medical devices. then we focus on the areas we know has growth. one was vascular. by the acquisition of that we were able to get into the neuro vascular business and the peripheral vascular system. our neuro is double digits. peripheral vascular is high single digits. when we got into those we started looking at all the other

areas that have therapies that are underpenetrated in the marketplace. hence the acquisitions we made in the last six months. we had seven acquisitions in. they are all adjacencies that will go well with our current businesses and expanding to markets growing fast r than the current medical devices are growing. >> you're talking about disruptive technologies. i'm used to seeing that with computers. what do you mean in the health care industry about a disruptive technology you're bringing? >> the disruptive technology, let me give you a couple of examples. in neurovascular we have a device called pipeline device that treats aneurysms that were untreatable before. by doing that we get clovidien to be pulled into the suite and be used by physicians. nobody else has that kind of a product. another one is our solitary for ischemic strokes.

that product is one in the world. so having products that disrupt competitors, bring treatments to patients that are not available today are the things we're looking for. now, i felt when i saw justice roberts, supreme court, said okay to obamacare. i had been concerned if they didn't say it the hospitals would be under pressure to not pay companies for the new devices. this has got to be, for you, a level of certainty going forward because hospitals will be able to pay for what you have offered. >> well, the hospitals will pay for it because the devices are saving lives. remember, cloviditn goes by two things. clinical evidence and economical evidence. if we don't have both together we do not have a story. so the hospitals will look at our products in a different way and say, okay, we need those products because they save lives. >> i don't want to slight this pharmaceutical business. i think when it's spun off it's going to attract a lot of people because of the contrast products

in radio pharmaceuticals. those are still fast-growing parts. this didn't fit in. but they've got good markets. >> they have great market. not only that, they have great cash flow. so the pharmaceutical business being spun off has nothing to do with the performance of the business. those businesses are in great markets. they've been able to generate great and strong cash flows and this is going to be a great spinoff. it's all about life cycle management. those products will take much long for come to fruition than medical devices. therefore we decided that they should have their own company that can invest in that kind of product portfolio. >> well, you have done a great job for shareholders. really has set the tone for what a lot of other health care companies are going to have to do because you understand shareholder value is pre-eminent. thanks very much the chairman and ceo of clovidien. thanks for coming on the though. >> thank you, jim. look, managements that are doing the right thing for you,

look at the returns they bring in it was a good company now it's a much better company i think you should stay with it and stay with "mad money".

now we are staring down the barrel. when we look through the valley of the shadow of earnings cuts and fear no short falls. that's a question a lot of invest rs are trying to figure out right now and i think i know the answer, no, we won't

it's important to point out that there are two components to the reports that started with alcoa, the first is actual a earnings. the second and more important is the outlook. many companies may report decent earnings. but there will be few companies that can report decent outlooks particularly those involved with europe where there is nothing good to say about the future. so many tech companies charged into europe a while ago. take advantage of the strong market. let's look at intel. it's on a pretty good course, europe buys a lot of personal computers and it's hard to marginalize for a company as honest as the world's largest chip maker. as much as i think the 3.6% yield could prevent any severe sell-off i can't imagine the stock can transcend the

earnings value if estimate are going to go low r, if intel can't stand the onslaught what about hewlett-packard. if you got a so-so outlook and a low estimate there, guess what, i think it goes still low r, not unlike serial estimate cut rs research in motion and nokia, i don't believe the industrials to be different. we grew concerned about general electric's ability to deliver earnings or outlook we'd like to hear because they would be dissing europe and the huge bet on windmills subsidized by ailing governments. my charitable trust sold it for a nice gain. how about stanley black & decker. another stock my charitable stock dumped. it's in the sweet spot for a housing rebound but 20% of the business is in europe. that european exposure could produce the short fall and negative outlook. don't forget they sell 20% of

goods into europe. i don't believe caterpillar which is transcend europe, either. china is important for caterpillar. consequently i figure we could get the short fall and a cloudy outlook. i believe these reports will produce selling even though everybody is supposed to know about the weakness. everybody says there's got to be weakness. so what? my experience is there are always people disappointed by anything less than a beat and a raise. those disappointed souls, do you know what they do? they don't just sit there. they [ sell, sell, sell ] they simply can't look through the valley to better teams. even though it's entirely logical europe will eventually be incorp righted into reduced estimates which will be at last so low that they will most definitely be beaten the next time around. stick with cramer. [ male announcer ] before you take it on your road trip...

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[ male announcer ] summer is here. and so too is the summer event. now get an incredible offer on the powerful c250 sport sedan. but hurry before this opportunity...disappears. the mercedes-benz summer event ends july 31st. i'm not telling you to hide in your bathroom or kitchen. i am saying there's a lot of good ideas there particularly when i'm worried about the earnings coming from financials, from technology, and from the