[ad_1]
In case you didn’t know, the first three weeks of this year saw investors taking comfort in the idea that the Fed had finished raising interest rates and would soon cut them, leading to more luck and more highs. Brought an update. But to me, despite what the public bond market yield curve and its ancillaries such as futures tied to the overnight federal funds bank lending rate tell us, why not pull something back? I can’t see any evidence that it doesn’t. A rate cut soon is even more doubtful given Wednesday’s strong Purchasing Managers numbers showing strength in both the service and manufacturing sectors of the economy. As the year begins, I’m actually bullish about the state of the U.S. economy. This is because the Fed believes it has a chance to reduce inflation by continuing to tighten. This was my message to club members at our January monthly meeting. After all, inflation is our most destructive force and we must prevent it from returning. I don’t want interest rates to be cut just because the economy is weak. No, only some of them are. We don’t want cuts because the stock market needs cuts. Fortunately, we are in the best shape ever. Furthermore, lower interest rates encourage inflation, which is not good for the stock market either. We need measured and considered responses to real inputs, such as Friday’s consumer spending report, which includes the Fed’s preferred measure of inflation, next month’s jobs report, and consumer and producer price data. If you go below that, you won’t be able to earn as much money as you want because inflation will take away your money. We say we take the Fed off the table as a reason to buy something. Just focus on the company and history and you’ll be fine. For example, as history has it, really good things will happen this year. When markets break out of past highs, they tend to rise by a ridiculously positive percentage. In that case, even if it took two years, the market would have generated a return of 12%. We also know that presidential election years almost always produce positive results. However, it is sad that there is still concern about inflation. But industry giants General Electric and RTX were blaring about it on Tuesday, showing that housing, transportation, travel and entertainment haven’t shrunk yet. But in terms of wage inflation, we have something big that is very positive. Immigrants are filling jobs that were previously understaffed in huge numbers. That’s not being talked about in the White House, and I’ve certainly been trying to get them to do that. And if you want to get into the White House, you’ll want to send these immigrants back to their home countries. I don’t think we can stop all types of immigration, but we are very positive in terms of stopping wage inflation. Suffice it to say, anyone with a heart finds what’s going on with immigration horrifying, but heart is in short supply on Wall Street. Without further ado, let’s summarize everything. There are positive seasonal factors in 2024. (1) Although the economy will not stagnate, it will create some weakness. (2) This year is an election year. (3) You don’t need interest rate cuts to make money. So stop being brainwashed and start picking stocks and building your portfolio based on a bottom-up approach to finding the right stocks instead of relying top-down on the Fed like many people do. Sho. I think they will be disappointed and sell. We buy optimistically. But…and this is a big problem, this week we seem to be back to the market that existed before the Fed changed policy in November. We now realize that the stock prices of many companies rose after central banks decided to hold back and not raise interest rates. Not everyone should have run. Perhaps we are looking at the period between the 2023 banking crisis (after the Silicon Valley bank failure and everything that followed) and the end of the rate hikes, when market leadership was narrower and only the best technologies were performing higher. Maybe we are going back in time. Underperforming companies such as DuPont, which issued an earnings warning Wednesday, 3M, Texas Instruments and homebuilder DR Horton, are a reminder of a time when only a tight-knit group of tech stocks did well. is. taller than. So why own anything other than technology? After the first three weeks of this year, club name Nvidia is the second best performer of the year, and Netflix is surging with good subscriber numbers. I have to admit that it’s a legitimate question. It’s as if there is a button on people’s keyboards that says “buy technology” when things go wrong. I don’t know how this happened. These highly volatile products have somehow become a kind of new form of cash. But they are not cash. These companies are inherently high-risk companies at this level. Factoring in the holdings of those four clubs, Amazon trades at 41.5 times forward earnings, according to FactSet on Wednesday. Nvidia has it at 28.7x, but I expect this estimate to be too low. Salesforce’s selling price is 28.9 times, followed by Apple, of course, at 28.8 times. Yet they work because each one has a story to tell. And often that story involves artificial intelligence. That’s because this is the year we’ll see how much money AI can save and profit from. I think it will be quite something. (See here for a complete list of Jim Cramer Charitable Trust stocks.) As a subscriber to Jim Cramer’s CNBC Investment Club, you will receive trade alerts before Jim makes a trade. After Jim sends a trade alert, he waits 45 minutes before buying or selling stocks in a charitable trust’s portfolio. If Jim talks about a stock on his CNBC TV, he will wait 72 hours before executing the trade after issuing a trade alert. The above investment club information is subject to our Terms of Use and Privacy Policy, along with our disclaimer. No fiduciary duties or obligations exist or arise from your receipt of information provided in connection with the Investment Club. No specific results or benefits are guaranteed.
Jim Cramer, Squawk on the Street, June 30, 2022.
Virginia Sherwood | CNBC
In case you didn’t know, the first three weeks of this year saw investors taking comfort in the idea that the Fed had finished raising interest rates and would soon cut them, leading to more luck and more highs. Brought an update.
But to me, despite what the public bond market yield curve and its ancillaries such as futures tied to the overnight federal funds bank lending rate tell us, why not pull something back? I can’t see any evidence that it doesn’t. A rate cut soon is even more doubtful given Wednesday’s strong Purchasing Managers numbers showing strength in both the service and manufacturing sectors of the economy.
As the year begins, I’m actually bullish about the state of the U.S. economy. This is because the Fed believes it has a chance to reduce inflation by continuing to tighten. This was my message to club members at our January monthly meeting.
[ad_2]
Source link
