Don't blame today's market decline on President Trump, Jim Cramer told his Mad Money viewers Wednesday. The real culprit was the Federal Reserve.
Cramer said the markets instantly took a negative tone to rumors that Trump was considering firing special prosecutor Robert Mueller. The fears were then amplified by presidential tweets aimed at Russia in Syria.
But at the end of the day, Cramer asked, "what does Russia have to do with the price/earnings multiples of stocks?" China has a big effect on trade for the U.S., he said, but Russia is immaterial.
The other news of the day was Facebook's (FB - Get Report) continued testimony before Congress. Cramer said the stock's rise over the past two days has less to do with CEO Mark Zuckerberg's testimony than it does short sellers gone awry and covering their positions.
What was really driving the markets today, Cramer explained, were the minutes of the last Fed meeting, one which reminded investors that more rate hikes are coming. Interest rate hikes, unlike Russia and Facebook, actually do have an impact on the P/E multiples of stocks, Cramer concluded, especially if the global economy is will be slowing as well.
Cramer and the AAP team say Wednesday's Consumer Price Index data bodes well for Darden Restaurants Inc. (DRI - Get Report) . Find out what they're telling their investment club members and get in on the conversation with a free trial subscription to Action Alerts PLUS.
Executive Decision: Gap
For his "Executive Decision" segment, Cramer sat down with Art Peck, president and CEO of Gap Inc. (GPS - Get Report) , the bricks-and-mortar retailer that saw its shares rise over 50% last year, only to slip this year, down 9%.
Peck explained that the key to their success is a portfolio of great brands that customers know around the globe, including Gap, Old Navy, Banana Republic and their newest concept, Athleta. Gap is focused on staying nimble and flexible, he said, and moving with their customers. That means giving them products the love and moving away from locations that are losing foot traffic.
Big data has been a key driver for Gap, Peck continued, as Gap sees over two billion visitors online and in stores every year. The difference between a casual shopper and an engaged one can be 10 times, he said, which makes finding those shoppers extremely valuable.
When asked about spending, Peck said that they remain disciplined and focused and will only invest in profitable growth, which leaves money for things like share buybacks, where the company has reduced their share count from 533 million to under 389 million in just five years.
Gap is also embracing the fast fashion trend, streamlining their supply chain so they can move from idea to products on shelves in under 10 weeks.
An Eye on Earnings
Earnings season kicks off on Friday and this will be an important quarter for the banks, Cramer told viewers, as the bulls desperately need some good earnings to focus on instead of fretting over trade wars and presidential tweets.
After digesting our first two interest-rate hikes in December and March, the banks should be poised to profit again from additional hikes, especially in an environment with low unemployment and strong consumer confidence. There's lots to like if you're a bank, Cramer said, including a pickup in mergers and acquisitions, a stronger IPO market and continued strength in mortgage and commercial lending.
Cramer said Bank of America (BAC - Get Report) benefits most from rising rates, while Citigroup (C - Get Report) remains a value play. JPMorgan Chase (JPM - Get Report) has excellent management, Cramer said, and Goldman Sachs (GS - Get Report) , an Action Alerts PLUS holding, remains his favorite in the group.
Executive Decision: Taylor Morrison Homes
In his second "Executive Decision" segment, Cramer sat down with Sheryl Palmer, chairman, president and CEO of Taylor Morrison Homes (TMHC - Get Report) , for a read on the state of the housing market.
Palmer said while many investors are focused on interest rates, they fail to acknowledge all of the tailwinds in the housing market, including demographics, rising consumer confidence and the tight supply of homes. Consumers are generally feeling better and incomes are rising, she said, and near a third of all millennials still live at home.
The U.S. is currently building 1.1 to 1.2 million homes, Palmer noted, but the market needs 1.5 to 1.6 million to make up for the deficit created by the recession. That's why her company is seeing strength across geographies and from starter homes to retirement homes.
Turning to the topic of gender equality and equal pay, Palmer said it's not enough to just compare people's titles. You must also look at their responsibilities. The more important question to ask is how do we get more qualified women in the workforce to have true equality.
Don't Ignore the Tech Titans
Just because a company seems alien to you, it doesn't mean it's not real, Cramer cautioned viewers. Stocks have valuations for a reason, he said, even if you may not understand what that reason is.
If you watched any of Facebook CEO Mark Zuckerberg's testimony to Congress over the past two days, there's one thing that became abundantly clear. Many members of Congress don't really understand how Facebook makes its money.
Cramer said that's also true for many older investors. Tech companies are hard to understand in general and they're constantly evolving, which only makes things harder.
But what's important to know about big-cap tech companies is that they all have two things in common: visionary leadership and amazing earnings growth. That's not an endorsement of sky-high valuations, Cramer noted, but it's an explanation for how many tech stocks got to where they are now.
Over on Real Money, Cramer says the FAANG stocks are very different and they shouldn't be lumped together. Get more of his insights with a free trial subscription to Real Money.
In the Lightning Round, Cramer was bullish on GTT Communications (GTT) , Steel Dynamics (STLD - Get Report) , Nucor (NUE - Get Report) , Marriott International (MAR - Get Report) , MGM Resorts (MGM - Get Report) and Twitter (TWTR - Get Report) .
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