Jim Cramer looks ahead to next week's market game plan

By CNBC Television

FinanceBusinessEconomics
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Key Concepts:

  • Tariffs and their impact on the market
  • Stagflation and recession fears
  • Consumer sentiment and spending
  • Homebuilder stocks and housing market trends
  • Retail sector challenges (Dollar stores, Walmart)
  • Earnings reports and company-specific analysis
  • Mergers and acquisitions (Capital One & Discover Financial Services)
  • Importance of profitability and growth in stock selection
  • The Fed's role and inflation indicators (PCE)

1. Market Overview and Sentiment:

  • Initial Market Reaction: The market initially reacted negatively to earnings updates from Nike and FedEx, and overnight investor sentiment turned negative on Micron despite a positive initial reaction.
  • Trump's "Flexibility" on Tariffs: President Trump's indication of "flexibility" on tariffs provided a glimmer of hope and helped the market recover from a negative opening.
  • Overwhelming Negativity: Cramer emphasizes that there is too much gloom in the market, creating buying opportunities that are being ignored.
  • Stagflation Concerns: The analyst hedge fund Journal Complex is emphasizing a stagflation moment, but Cramer is not buying it.
  • Late Friday Selling: Investors have been booking profits due to the fear of weekend truth social posts that could roil the market.

2. Next Week's Game Plan (Company Analysis):

  • KB Home (Reports Monday):
    • Homebuilder facing inflation and high mortgage rate issues.
    • Stock is down significantly, but Cramer doesn't see a bottom yet.
    • Recommends Toll Brothers as a better option in the homebuilding sector.
  • McCormick (Reports Tuesday):
    • Spice company expected to perform well during a recession as people cook at home more.
    • Dominates the spice and seasoning aisles.
  • GameStop (Reports Tuesday):
    • Stock tends to rise before and during earnings but lags afterward.
    • Cramer advises against trying to "game GameStop."
  • Dollar Tree (Reports Wednesday):
    • No longer represents the value it once did due to price increases and reduced sizes.
    • Cramer recommends staying away from the stock.
    • Even Walmart is struggling.
  • Cintas (Reports Wednesday):
    • Uniform and services provider for small to medium-sized businesses.
    • Cramer is worried about small business formation and its impact on Cintas.
  • Paychex (Reports Wednesday):
    • Payroll processor with many bearish analysts covering it.
    • Cramer believes Paychex will continue to do well.
  • Chewy (Reports Wednesday):
    • Online pet food store that has been performing strongly.
    • "Crushing it" since calling the bottom on Mad Money.
  • Lululemon (Reports Thursday):
    • Battleground stock with many short sellers betting against it due to its high price point.
    • Cramer believes it's a remarkable company and recommends buying on weakness.
  • Dutch Bros (Investor Day Thursday):
    • Expensive stock, but a regional and national growth story for the coffee chain.
    • Can be bought on weakness.

3. Economic Indicators and Events:

  • Pending Home Sales (Thursday): Used to assess the slowdown in housing.
  • Personal Consumption Expenditure (PCE) Numbers (Thursday): The Fed's favorite inflation indicator.
  • University of Michigan Consumer Sentiment Index (Friday): Will confirm the negative sentiment seen in the last couple of weeks if it's real negative.

4. Listener Questions and Stock Recommendations:

  • Ford Motor (F): Cramer is not positive on Ford due to warranty problems and prefers GM.
  • Costco (COST): Cramer is bullish on Costco, stating that the stock is too low and recommends buying some now and next week. He dismisses concerns about the company's stance on Trump's ideas.
  • Discover Financial Services (DFS): Cramer believes the Capital One merger with Discover Financial Services will go through and recommends sticking with Capital One.

5. Conclusion:

  • Expect more uncertainty and volatility until there is resolution on the trade front.
  • There is too much negativity in the market, but it creates opportunities to "pounce" when it gets extreme for no reason.
  • Next week is packed with earnings reports and economic data that could move the market.

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