If you think President Donald Trump has gotten as aggressive as he’ll get on the trade front, “you ain’t seen nothin’ yet,” CNBC’s Jim Cramer said Friday.
With steel and aluminum tariffs already in place and more on the horizon, the “Mad Money” host didn’t expect the president to let up on his trade dispute with the rest of the world anytime soon.
“Here’s the thing: the president believes we’ve seen remarkable job creation thanks to his steel and aluminum tariffs, so in his view, this policy’s working,” Cramer said.
He even expected Trump to ban acquisitions by Chinese companies of U.S. businesses to protect intellectual property and continue escalating tensions with the United States’ trading partners, potentially at the expense of the stock market.
“You need to prepare yourself for more combative tweets,” Cramer told investors. “Be prepared for him to try to tear up NAFTA. Dismiss the notion that there are two camps in this administration — a hard line and a soft line. In truth, there are only hardliners.”
And if you can’t handle the pain, the “Mad Money” host’s solution is simple: raise cash.
“If you can handle all of this, if you don’t mind the implications, then you’ll be able to handle the vicissitudes of the next quarter,” he said. “If you cannot handle the pain, if you think these issues will take a long time to resolve, then you know what you’re going to do next week? You’re going to raise cash. Don’t fight me about this. Raise some cash — you’ll thank me later.”
With that in mind, Cramer turned to his weekly game plan:
Cruise line operator Carnival Corp. will report earnings on Monday, and Cramer hoped its quarter would offer investors more clarity on what he said has become a “real battleground stock.”
In May, CEO Arnold Donald said on “Mad Money” that business was strong, Carnival’s outlook was promising and pricing was steady despite new ships coming online.
“Against that we have a lot of nervous investors who fear there are too many ships coming on and not enough passengers at a time when fuel costs are rising,” Cramer said. “At least we won’t have to wait very long to find out who’s right.”
While Cramer has grown bearish on the homebuilding sector because of rising raw costs and interest rates, he acknowledged that, at some point, stocks like Lennar’s “will be too cheap to ignore.”
“With Lennar, we need to see the reaction to the conference call, not the headlines,” he said ahead of the homebuilder’s Tuesday earnings report.
“Last time they reported an excellent quarter, it meant nothing,” he continued. “I’m betting that they find a way to spin the story positively on the call and it could have an impact. However, with two more rate hikes in the cards this year and no end to the Canadian tariffs, I think any bounce will be short-lived.”
General Mills: Cramer liked the risk-reward payoff in the stock of General Mills, down nearly 24 percent year-to-date, ahead of the underlying company’s Wednesday earnings report.
“I do think they’ll say good things about [the] Blue Buffalo acquisition,” he said.
Paychex: Shares of the longtime Cramer-fave payroll processor Paychex have lagged behind those of its rival, ADP, but the “Mad Money” host wasn’t worried ahead of its quarterly results.
“The fact is that this payroll processor should thrive in an environment with ultra-low unemployment and rising short-term interest rates and job creation,” he said.
Bed Bath & Beyond: Bed Bath & Beyond’s stock was clobbered after its last earnings report, so Cramer was wary of its stock going into the next one.
“Bed Bath better have some real good things to say or this one’s going right back to $16.50,” he warned.
Walgreens: Pharmacy operator Walgreens will report earnings Thursday having just replaced the stock of General Electric in the Dow Jones Industrial Average.
“Walgreens and CVS have been moving up of late and there’s been talk that both drugstores are taking action to protect themselves from the Death Star: Amazon,” Cramer said. “I’ll believe it when I see it. That said, Walgreens is way off its highs and it’s only $6 bucks off its lows.”
Nike: After the close, investors will get what Cramer called “the quarter of the week” from athletic footwear giant Nike.
“It’s incredible to me that despite all the hectoring between the U.S. and China, Nike’s name rarely comes up as a target of tariffs or boycotts,” he said. “There are tons of good apparel investments here, but Nike and Under Armour are very strong and they have my blessing.”
Stress tests: The market will also receive the results of the Federal Reserve’s stress tests. The central bank uses the tests, which were established in response to the 2008 financial crisis, to “grade” banks on their ability to withstand financial turmoil.
Good results “will allow the well-graded banks to immediately boost their buybacks,” Cramer said. “I think Citi, letter C, will get the best grades and it’s going to buying [its] stock hand over fist.”
“I would buy Citi on Wednesday, and I’d buy it aggressively, as we will for my charitable trust if we get a chance,” he recommended.
Beer, wine and liquor maker Constellation Brands will report earnings Friday. Investors may be concerned about slowing beer sales, but Cramer figured Cinco de Mayo would provide a boost.
“I’m actually more concerned about the wine sales,” he admitted. “That category’s been challenged, too.”
“Here’s the bottom line: the next week ends the quarter. With that I think will [come] a series of vicious trade salvos,” the “Mad Money” host said. “Keep that in mind before you buy anything, and if you fear the president’s bellicose tweets, you should use Monday to do some selling into what might be some very strong carry-over action from [Friday].”
Disclosure: Cramer’s charitable trust owns shares of Amazon, Citigroup and Constellation Brands.
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