Jim Cramer looks ahead to next week's market moving moments

Mad Money – January 12, 2024: Market Analysis & Earnings Preview

Key Concepts:

• Magnificent Seven: A group of seven large-cap technology stocks (Apple, NVIDIA, etc.) that have driven significant market gains.
• Source of Funds: A situation where money managers sell existing holdings to fund new investments.
• CPI (Consumer Price Index): A measure of the average change over time in the prices paid by urban consumers for a basket of consumer goods and services.
• Earnings Season: The period when public companies release their quarterly financial results.
• Rate Cuts: Reductions in interest rates by the Federal Reserve.
• AI (Artificial Intelligence): The simulation of human intelligence processes by computer systems.
• Freight Recession: A period of decreased demand for freight transportation services.

I. Market Overview & Recent Rally

The broadcast began with an assessment of the market following an “uneventful” unemployment report. Cramer highlighted a “broad-based rally” encompassing overlooked sectors, with the Dow Jones Industrial Average rising 238 points, the S&P 500 gaining 0.65%, and the NASDAQ Composite jumping 0.82%. This rally is occurring despite some stocks, notably Apple and NVIDIA (members of the “Magnificent Seven”), experiencing selling pressure. Cramer attributes this to a common January phenomenon where fund managers sell existing winners (“source of funds”) to reallocate capital into newer opportunities. He explicitly advises holding Apple and NVIDIA, dismissing the current selling as temporary and stating, “Nothing’s changed for me.” He emphasizes that the stocks wouldn’t be declining if the selling pressure was truly over.

II. Upcoming Economic & Earnings Events – A Detailed Calendar

Cramer dedicated a significant portion of the show to outlining key events for the upcoming week, emphasizing their potential market impact.

• JP Morgan Healthcare Conference (Sunday – ongoing): Cramer is attending this conference, deeming it “way too important to miss.” He anticipates announcements of mergers and acquisitions, potentially involving large biotech companies. He stresses its historical significance as a catalyst for market-moving news.
• Consumer Price Index (CPI) – Tuesday: While the recent labor department figures were inconsequential, Cramer believes the CPI release will be more impactful. He anticipates potential tension between the President’s inflation containment efforts, consumer spending (which was “very strong” during the holiday season), and the Federal Reserve’s deliberations on interest rate cuts.
• JP Morgan Earnings – Tuesday: Cramer expressed concern about the JP Morgan earnings call, despite expecting a strong quarter. He anticipates CEO Jamie Dimon will focus on potential risks rather than positive outcomes, potentially triggering a stock decline. He advises viewers to “buy into that weakness” if it occurs, referencing a similar pattern in the previous quarter.
• Delta Air Lines Earnings – Wednesday: Cramer expects a “fine quarter” from Delta, citing its strong operational performance.
• Retail Sales & Producer Price Index (PPI) – Wednesday: These figures could provide the Federal Reserve with justification for further interest rate cuts. However, he notes these numbers are delayed (November data) due to the government shutdown and may not fully reflect strong December spending.
• Bank Earnings (Wednesday – Thursday): A major focus of the week.
  • Citigroup: Cramer believes Citigroup is being underestimated by analysts and will continue to surprise on the upside.
  • Wells Fargo: He is optimistic about Wells Fargo, highlighting CEO Charles Scharf’s successful transformation of the bank and its expansion into corporate and investment banking, including involvement in the Netflix deal. He anticipates discussion of AI’s impact on efficiency.
  • Bank of America: He expects a “solid growth quarter” from Bank of America, contributing to a steady stock price increase.
  • Goldman Sachs & Morgan Stanley – Thursday: Cramer anticipates “excellent numbers” from both investment banks, driven by strong activity in financial markets and asset gathering (particularly at Morgan Stanley).
  • BlackRock – Thursday: While expecting a “pretty good number” from BlackRock (the world’s largest asset manager), he cautions that strong bank earnings might overshadow its performance due to sector competition.
• Taiwan Semiconductor Manufacturing (TSMC) – Thursday: Cramer expects a “monster quarter” from TSMC, NVIDIA’s manufacturing partner, and hopes it will alleviate selling pressure on NVIDIA.
• J.B. Hunt – After Close Thursday: He believes the trucking industry is emerging from a “freight recession” and a positive report from J.B. Hunt could reinforce this trend. He also praised the performance of FedEx under Rajesh Subramanian.
• PNC Regional Bank – Friday: He views PNC as an up-and-down performer and prefers other bank stocks.

III. Stock Specific Recommendations & Analysis

• Cloudflare (NET): Responding to a viewer question, Cramer advised buying more Cloudflare despite a 20% decline from its high, citing strong execution by CEO Matthew Prince. He suggested adding to the position on further dips.
• Cheesecake Factory: Cramer reiterated his “buy” rating on Cheesecake Factory, noting its 8% weekly gain and strong management. He believes it’s undervalued at 13 times earnings and has potential to reach all-time highs.
• SharkNinja: Cramer highlighted SharkNinja as a “comeback story” with continued growth potential.
• Ulta Beauty: He analyzed Ulta Beauty, noting its consistent new highs and positive momentum.

IV. Key Arguments & Perspectives

Cramer’s central argument is that the current market rally is fundamentally sound and driven by broad-based participation, despite headwinds for specific stocks like Apple and NVIDIA. He views the selling pressure on these stocks as a temporary reallocation of funds, not a sign of underlying weakness. He consistently emphasizes the importance of focusing on company fundamentals and long-term potential rather than short-term market fluctuations. He also stresses the importance of being contrarian, buying into weakness when a fundamentally sound company experiences temporary setbacks.

V. Notable Quotes

• “My job is not just to entertain but to teach.” – Cramer, emphasizing his role as an educator.
• “You just have to wait these two out [Apple and NVIDIA]. You’ll know when the selling is done.” – Cramer, advising patience with these stocks.
• “Jamie’s cautious comments crushed his own stock last quarter. He could do it again.” – Cramer, warning about the potential impact of Jamie Dimon’s commentary on JP Morgan’s stock price.
• “I think you buy a little more here [Cloudflare]. And if it comes down because the chart is ugly, you buy some more after that.” – Cramer, advocating for averaging down on a strong company.

VI. Synthesis/Conclusion

The broadcast conveyed a generally optimistic outlook for the market, particularly in the context of the upcoming earnings season. Cramer’s analysis emphasized the importance of understanding the underlying dynamics driving market movements, recognizing opportunities amidst volatility, and focusing on fundamentally strong companies. He provided a detailed roadmap for the week ahead, highlighting key economic data releases and earnings reports that investors should closely monitor. His core message was to remain patient, disciplined, and focused on long-term value.