You can finally buy stocks again without fighting the Federal Reserve, Jim Cramer proclaimed to his Mad Money viewers Friday, after offering three cheers for Fed chair Jay Powell's about-face on the need for more interest rate hikes.
Cramer said Powell's new wait-and-see approach is exactly what the markets have been begging for since October, and it shows the Fed is actually listening to more than just the labor report.
Cramer's game plan for next week starts on Monday, when trade talks with China are set to resume. Any progress on trade will be seen with the same optimism as today's interest rate news. Cramer will also be looking for news stemming from the JPMorgan Chase (JPM) - Get Report Healthcare Conference, which also kicks off Monday.
On Tuesday, Cramer's sights will turn towards the latest small business optimism survey, a report that could confirm the weakness being seen by larger companies.
Wednesday brings the first earnings of the week, with Constellation Brands (STZ) - Get Report , Lennar (LEN) - Get Report and KB Home (KBH) - Get Report reporting, along with Bed Bath & Beyond (BBBY) - Get Report . Cramer expected a gain in Constellation and said that both Lennar and KB Home could see a bounce. He was not bullish on Bed Bath & Beyond, which has continued to struggle against Amazon (AMZN) - Get Report .
Finally on Friday, we'll get the latest consumer price index, and Cramer said he expects the report to be negative, confirming the Fed's decision to take a pause.
Cramer and the AAP team are trimming their position in Raytheon (RTN) - Get Report as the markets ripped higher. 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.
A Look at the Markets
Friday might not be the last day the markets roar higher, Cramer told viewers, as he offered some perspective on how the stock market has performed in the two years since President Trump took office.
Before the recent slump, the markets had risen 17% since the election, Cramer noted, as Trump's agenda of tax cuts and deregulation spurred the economy into high growth with little inflation. But then the markets were hit with the one-two punch of a trade war with China and an overly aggressive Federal Reserve.
Fortunately, both of these headwinds are man-made, which means they can easily be un-made, Cramer said. That was evident today, as the Fed reversed course on the need for more imminent rate hikes. What would our economy look like if the trade war was resolved? In a word, he said, "wow."
Cramer said many investors will use Friday's news to put money back to work in the market, and given that the major averages are lagging their historical performance for the first two years of a new president, it's likely that 2019 could be a great year for stocks after all, and the lows of Dec. 24 might mark the bottom.
Over on Real Money, Cramer reviews the stocks that are still a buy heading into 2019. Get more of his insights with a free trial subscription to Real Money.
Winners and Losers in the Dow
The collapse in the markets last quarter created a lot of opportunities, Cramer told viewers, but only if you're patient. That's why he took a look at the top winners and losers in the Dow Jones Industrial Average in the fourth quarter to see what we can learn.
Among the best performing names in the Dow were Procter & Gamble (PG) - Get Report , Merck (MRK) - Get Report , McDonalds (MCD) - Get Report , Verizon (VZ) - Get Report and Coca-Cola (KO) - Get Report , all stocks investors buy when something is going seriously wrong with the economy. Cramer said he's a fan of well-run Procter and applauded Merck's acquisition of Celgene (CELG) - Get Report . McDonald's remains a compelling turnaround story, while Verizon offers a terrific dividend yield. He added that Coke is the perfect stock for this environment.
What can we learn from the biggest losers in the Dow last quarter? That list included Apple (AAPL) - Get Report , Goldman Sachs (GS) - Get Report , IBM (IBM) - Get Report , United Technologies (UTX) - Get Report and Exxon-Mobil (XOM) - Get Report . Cramer said while Apple's shares have been pummeled, the company's products remain the envy of the world. Goldman is also a gem of the company, despite currently being hated by just about everyone. He was less optimistic on IBM, taking a wait-and-see approach, but was bullish on United Technologies, and its breakup plans, and Exxon-Mobil for its 4.6% dividend yield.
Executive Decision: JP Morgan Chase
In a special interview, Cramer sat down with Lisa Gill, managing director and senior equity analyst at JPMorgan Chase, to discuss the firm's upcoming healthcare conference that kicks off on Monday.
Gill said that over 8,000 institutional investors will be attending this year's conference and over 300 companies will be presenting. There is always a lot of news generated at this event, she added, and it's the one time every year when companies will tell investors what they're thinking about for the year.
When asked about increased consolidation in the industry, Gill said that in healthcare, size matters, and smaller companies will have to merge in order to stay competitive. She expects one of those consolidation stories, CVS Health (CVS) - Get Report , which acquired Aetna, to be the star of the show as they lay out their plans for the combined company.
Among the big trends Gill expects to see this year will be the increase of consumerism in the industry. She said more and more, consumers want services that offer quality and convenience, and that's hopefully what the combined CVS will outline for customers.
No-Huddle Offense: Support the Expansion
In his "No-Huddle Offense" segment, Cramer said he cannot understate the importance of Friday's comments by Fed chair Jay Powell. For months now, the Fed has been pounding the table that interest rates need to return to "normal" levels.
But, Cramer said, that's the old way of thinking and an outdated view of how inflation really works. Normal, he said, is where the data tells you it is, not some mythical percentage that has historically worked.
Taking a pause and seeing what effects the most recent rate hike will have on the economy is exactly the right move, Cramer added, because the Fed may have already tightened too much. They just don't know it yet.
Case in point: KeyCorp (KEY) - Get Report , the regional bank that saw notably lower numbers in the fourth quarter than they did in the third. That news sent the stock plunging from $20 to just $13 a share at its lows, before rebounding to $15.
The Fed has an opportunity to prolong this expansion, Cramer concluded, and hopefully they won't be the ones who end it.
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At the time of publication, Cramer's Action Alerts PLUS had a position in RTN, JPM, AMZN, CVS, AAPL, GS.