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

Key Concepts

• Market volatility driven by presidential statements and economic data.
• Inflationary pressures due to tariffs and potential impact on retailers.
• Importance of the upcoming non-farm payroll report and its implications for the Federal Reserve's interest rate policy.
• Stock analysis of various companies including CrowdStrike, Dollar General, Dollar Tree, Five Below, Brown-Forman, Cracker Barrel, Broadcom, Lululemon, Pfizer, Uber, and Fair Isaac.
• Impact of weight loss drugs on food companies like Campbell's and Goldfish.

Market Overview and Presidential Influence

The market experienced significant volatility, heavily influenced by President Trump's statements regarding China. The S&P 500 initially dropped 1.2% due to hostile postings about China but recovered after a press conference where the President mentioned speaking with President XI soon. Despite the volatility, the S&P 500 had its best May since 1990. Cramer highlights the unusual situation where positive economic coverage on CNBC's Squawk Box coincided with market gains.

Inflation Concerns and Retail Impact

Cramer expresses concern about rising prices and their impact on retailers. He notes that multiple retailers have indicated that prices are headed higher in June. He questions the President's decision to raise tariffs, wondering if he anticipated a significant drop in energy prices or if he expected retailers to absorb the tariff costs. He emphasizes that retailers, especially those with low margins, cannot easily absorb these costs.

Key Argument: Cramer believes that inflation is inevitable due to tariffs, and the Fed will likely not cut rates in response.

Notable Quote: "I can't recall a time when I actually knew for certain that inflation would go higher."

Non-Farm Payroll Report and Fed Policy

The upcoming non-farm payroll report is crucial. A strong employment number would likely prevent the Fed from cutting short-term rates, while a weak number might still not lead to rate cuts due to inflationary pressures from tariffs. Cramer hopes that Fed Chair Jay Powell will provide clarity on the situation.

Possible Scenarios:

• Strong Employment Number: Fed unlikely to cut rates; longer-term rates may increase.
• Weak Employment Number: Fed still unlikely to cut rates due to tariff-induced inflation.
• Ideal Scenario (for market rally): No job growth and no wage growth.

Stock Analysis and Specific Companies

CrowdStrike (CRWD)

Despite a poorly received quarter, Cramer is sticking with CrowdStrike due to the upcoming anniversary of a significant service outage ("the big glitch"). He advises investors to own the stock rather than trade it.

Dollar General, Dollar Tree, and Five Below

These discount retailers are facing challenges due to tariffs on Chinese goods. While they may report good quarters due to pre-tariff merchandise, their guidance is a concern. They will either need to raise prices or accept lower profitability. Cramer hopes they can raise prices once and then find cheaper sources.

Costco (COST)

Costco is praised for its ability to manage costs by focusing on a small number of items bought in bulk and its ability to swap suppliers if necessary.

Brown-Forman (BF.B)

Cramer is bearish on Brown-Forman due to poor beer sales and health-conscious younger consumers.

Cracker Barrel (CBRL)

He is positive on Cracker Barrel due to its value proposition and a CEO focused on reinvigorating the company's stores.

Broadcom (AVGO)

Cramer anticipates an excellent quarter for Broadcom due to strong software margins.

Lululemon (LULU)

He believes Lululemon is too cheap and is sticking by his judgment, noting its strong business in China.

Pfizer (PFE)

Cramer is positive on Pfizer, citing its pipeline of drugs and a recent acquisition from a Chinese company. He also notes its attractive 7% yield.

Uber (UBER)

Cramer suggests buying Uber, especially after David Faber's interview with Elon Musk where it was stated that Tesla would not buy Uber.

Fair Isaac (FICO)

Cramer believes Fair Isaac has been unfairly treated by the government and plans to have Will Lansing on the show to discuss the issue.

Callers' Questions and Cramer's Responses

• Ann (Indiana): Question about Fair Isaac (FICO). Cramer agrees and wants to get the CEO on the show.
• Louis (Massachusetts): Question about Uber and the impact of tariffs on car prices. Cramer suggests buying Uber.
• David (Tennessee): Question about Pfizer. Cramer is positive on Pfizer due to its pipeline and acquisition.

Week Ahead and Final Thoughts

Cramer emphasizes the importance of the Friday jobs report and hopes for a "Goldilocks" scenario of no job growth and no wage growth, which could lead to a market rally. He advises investors to stay long but avoid aggressive trading. He concludes by previewing upcoming segments on Agilent, Abercrombie & Fitch, American Eagle, and Zscaler.

Synthesis/Conclusion

The market is currently facing uncertainty due to trade tensions and potential inflation. The upcoming jobs report will be a critical indicator of the economy's direction and the Fed's likely response. Investors should be cautious and selective, focusing on companies with strong fundamentals and the ability to navigate the challenging economic environment.