After Friday’s sell-off, CNBC’s Jim Cramer needed to emphasize why investors must remain vigilant in this new, much more volatile stock market.
“The key is to recognize that you’re only human. Your sense of timing is going to be fallible,” the “Mad Money” host said. “That’s especially true with this current White House and a Federal Reserve that’s now tightening. You can’t presume anything other than a good chance that when you buy, you’re going to be wrong.”
Cramer pointed to the escalating trade dilemma with China as one of his chief concerns, particularly if retaliation is paired with another errant tweet from President Donald Trump.
“In the end, you want panic working for you, not against you,” Cramer said.
“The mercurial nature of the president’s negotiating style, coupled with his determination to tame China even if it means hurting the earnings per share of our exporters and also, of course, hurting the spending power of our consumers, well, it is a recipe for daily panic,” he continued. “That translates into lower prices, which is why you need to keep some cash available at all times [to] take advantage.”
With that in mind, Cramer turned to his game plan for the week, which will kick off the market’s next earnings season:
On Monday, the “Mad Money” will be focused on China, particularly if the People’s Republic chooses to retaliate in light of Trump’s proposal to place an additional $100 billion worth of tariffs on Chinese goods.
“We just can’t expect a quiet Monday when there’s so much saber-rattling on the part of our president,” Cramer said. “I expect China will announce some more duties of their own as retaliation this weekend or early next week, and that’s likely to cause more turbulence.”
Ethan Allen: An analyst meeting at the furniture manufacturer could shed light on the likelihood that the Trump administration will place tariffs on furniture imports, Cramer said.
“We don’t make as much furniture as we used to in this country. Why? Because it’s so much cheaper to make this stuff in China,” he said. “Unlike many retailers that rely on Chinese manufacturing for bargains, this company could, theoretically, be a huge beneficiary of any tariff on Chinese furniture imports. Hey, let’s see what they have to say.”
Producer Price Index: The Producer Price Index, which tracks selling prices for wholesale and manufactured goods as well as commodities, will give investors a better snapshot of the economy.
Paired with the Consumer Price Index released Wednesday, Cramer expects to see very little inflation, which would give Fed Chair Jerome Powell more leeway with rate hikes.
On Wednesday, Cramer expects yet another weak number from Bed Bath & Beyond’s earnings report because of the home goods retailer’s struggle to compete with Amazon on pricing.
“If President Trump wants to know how Amazon crushes brick-and-mortar retailers, well, maybe he should listen to this conference call,” Cramer quipped.
Private equity giant BlackRock will report earnings on Thursday, and Cramer will want to hear if investors are selling their equity holdings because of the market’s newfound uncertainty.
“The asset class has gotten too risky for many people. Is there an abandon-ship attitude among sophisticated investors? BlackRock will know,” he said.
On Friday, earnings season kicks off in full force with reports from major banks J.P. Morgan, Wells Fargo, Citigroup and PNC.
“It’s essential to this market that all four report good numbers,” Cramer said. “We want to hear about bountiful loan growth, steady reserves, possible increases in buybacks or dividends and a sense that deregulation is already producing some good results.”
The “Mad Money” host pointed out the irony in the fact that the market has seen a number of strong earnings results, but they haven’t been enough to offset the declines tied to macro issues like global politics.
“With the exception of Wells Fargo, which is in the penalty box in a major way, these banks should be able to tell fantastic stories,” Cramer said. “But if they can’t do that, let’s just say it’s going to be one long earnings season.”
“Here’s the deal: 2018 is a year of intense controversy and erratic news flow, with a president who’s no longer as friendly to the stock market as he once was,” the “Mad Money” host said. “In other words, be on your toes, carry a lot of cash and let these endless panics give you better prices on the way down, better prices than you might otherwise deserve.”
Disclosure: Cramer’s charitable trust owns shares of Amazon and J.P. Morgan.
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