Sometimes you have to take a breath and ask why things seem so momentous, says Jim Cramer

Key Concepts:

• Market volatility driven by presidential statements and trade tensions with China.
• Impact of economic data (specifically the non-farm payroll report) on Federal Reserve policy.
• Inflationary pressures due to tariffs and potential impact on consumer prices.
• Relationship between employment numbers, interest rates, and the Federal Reserve's actions.
• The role of energy prices (specifically oil) in mitigating or exacerbating inflationary effects.

Market Performance and Presidential Influence:

• The market experienced significant volatility, heavily influenced by President Trump's statements regarding trade with China.
• The S&P 500 initially dropped 1.2% due to hostile postings about China.
• A subsequent positive statement during Elon Musk's goodbye press conference, where the President mentioned speaking with President Xi, led to a market rebound.
• The Dow finished up 54 points, the S&P dipped 0.1%, and the Nasdaq declined 0.32%.
• The S&P 500 had its best May since 1990, despite the volatility.
• Positive coverage of the economy by CNBC's Squawk Box during the Elon Musk event was noted as a positive factor.

The Looming Non-Farm Payroll Report:

• The non-farm payroll report is identified as a critical factor influencing market direction and Federal Reserve policy.
• The report is described as a potential "gun" pointed at the market, creating a sense of unease.
• Recent reports from retailers indicate rising prices, suggesting inflationary pressures are building.

Inflation and Federal Reserve Policy:

• A strong employment number could prevent the Federal Reserve from cutting short-term interest rates and potentially lead to higher long-term rates.
• A weak employment number might also not prompt the Federal Reserve to cut rates due to concerns that tariffs are inherently inflationary.
• Jamie Dimon, CEO of JP Morgan, is cited as expressing similar concerns about the inflationary impact of tariffs.

Tariffs and Energy Prices:

• The President's decision to raise tariffs on the "entire world all at once" is questioned, particularly regarding its potential impact on inflation.
• The possibility that lower energy prices could offset the inflationary effects of tariffs is raised.
• The upcoming OPEC plus meeting is mentioned as a potential catalyst for a significant drop in oil prices (possibly to $50 from the $60s).

Conclusion:

The market is currently facing uncertainty due to trade tensions, potential inflation, and the upcoming non-farm payroll report. The Federal Reserve's policy decisions will be heavily influenced by these factors. The impact of tariffs on consumer prices and the potential for lower energy prices to mitigate inflation are key considerations. The overall sentiment is one of cautious anticipation, with the non-farm payroll report acting as a significant potential market mover.