Jim Cramer has a memo for investors. When CEOs of major companies says the environment has become tougher, they really mean it.
No, it is not just small-talk.
Last week Ford Motor (NYSE: F) CEO Mark Fields acknowledged the auto industry faced a difficult environment. Ford's monthly sales numbers were released on Tuesday and indicated a 3 percent drop, even though the consensus expected only a 0.5 percent decline. As a result, Ford's stock plunged more than 4 percent.
"This, to me, is where I find the obvious nature of investing so unnerving," the " Mad Money " host said.
It seemed to Cramer that investors expected auto numbers to miraculously recover, even as Fields said things weren't great on his conference call.
This was absolutely ridiculous, Cramer said. When a CEOs say they see weakness, they have a good read on how the quarter is going.
"To think that Fields didn't have the July numbers in front of him when he lowered the boom last week is to think that Ford keeps track of its sales using an abacus hidden in some utility closet, where management will never find it," Cramer said.
General Motors (NYSE: GM) echoed the same sentiment when it reported results, too. This should have been expected, as Fields made it clear that the downturn was industry-wide.
Fields gave investors a crystal clear signal to sell automakers, Cramer said, unless investors can tolerate the pain.
The retail and restaurant groups also represented an interesting conundrum for Cramer.
Panera Bread (NASDAQ: PNRA) reported a strong quarter, courtesy of its store remodels that have given sales a boost. Yet, Texas Roadhouse (NASDAQ: TXRH) said business was softer and called it a "bit of a slowdown."
This worried investors, as Texas Roadhouse has been one of the stronger restaurants in the industry. Management had no idea why business was weak, and that was a problem for Cramer.
Amid the uncertainty, Cramer recommended not to forecast any actions unless a company confirms that business is good. In this case, Panera said it saw strength, so there is no reason to doubt that anything changed.
"When the best operators aren't sure what the story is, you have to be careful. But when it's good, you use the weakness of the other guy to buy the one that just gave you the buy sign," Cramer said.
In other words, as Panera Bread goes down, Cramer wants investors to start buying. As for the autos, he said to stay away altogether.
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