Now's the time to be cautious, Jim Cramer warned his Mad Money viewers Wednesday, as he listed no less than 12 things that could derail any market attempt at a meaningful rally. Given everything that could go wrong, it would be smart to sell into strength and raise some cash, he said.
China topped Cramer's list of worries, as President Trump still has more tariffs up his sleeve that could affect several industries, and the Chinese could retaliate with tariffs of their own.
There's also the looming May 1 deadline for already announced steel and aluminum tariff exemptions and Trump's proposed tariffs on European cars, which could also result in retaliation.
Beyond tariffs, Cramer said the markets still have uncertainty over negotiations for NATFA and with Iran. The conflict in Syria could also come back to haunt the markets.
Closer to home, stocks are still dealing with rising inflation, especially in transportation and oil, rising interest rates, and most recently, the notion that companies may be experiencing their "peak earnings" for the year.
Add to that investors' disdain for companies that attempt to outspend the competition (think Amazon (AMZN - Get Report) and Alphabet (GOOGL - Get Report) ), and there are a lot of stocks that could be in jeopardy. That's especially true going into Fridays, the day when things have been pretty weak lately.
Cramer said there are no systemic risks to the market, and he remains optimistic, but investors need to stay focused, because a selloff could happen at any moment.
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Don't Fear the 10-Year
The market has many problems to worry about, Cramer told viewers, but a 3% yield on the 10-year Treasury isn't one of them. Rising interest rates are a predictable consequence of a strong global economy, after all, which makes today's move over 3% purely symbolic.
All things being equal, higher interest rates are net negative for stocks, as only the financial stocks actually benefit from them. But while the move in interest rates from 2% last September to 3% today might seem huge, it actually isn't. If you look at a 100-year chart of interest rates, you'll quickly see that the last time rates fell below 3% was the 1950s. In the 1980s, they rocketed to 10%.
That makes 3% look pretty good, Cramer said, and nowhere near the level where recession becomes a concern. Investors must realize that the Federal Reserve bought a ton of bonds after the financial crisis, and as they sell those bonds, rates will increase.
In this environment, investors should be looking to add the banks to their portfolios. He likes Goldman Sachs (GS - Get Report) and First Horizon National (FHN - Get Report) , which appeared on "Mad Money" last week. He would avoid any high-yielding stock however, as they are getting increased competition from risk-free Treasuries.
Viewers Call In
In his "Voice of Cramerica" segment, Cramer took calls from viewers to find out what's been on their minds.
The first caller wondered whether tech companies could suffer in a trade war with China. Cramer said that while some, like Facebook (FB - Get Report) and Alphabet (GOOGL - Get Report) , two Action Alerts PLUS holdings, don't have any Chinese exposure, other tech giants certainly do.
When asked if a trade war could tip the U.S. into recession, Cramer said it depends just how far the war escalates. If it remains contained to just China, and just a few items, we'll probably only endure short-term pain in the markets.
When asked about the fairly recent IPO of Forescout Technologies (FSCT - Get Report) , Cramer felt it was still a good company, but said Proofpoint (PFPT - Get Report) remains his favorite in the group.
Finally, Cramer explained that when he recommends "raising cash" in your portfolio, he means selling some of your biggest winners so you can either reposition or buy them back on weakness.
'When The Wolves Bite'
In a special interview, Cramer sat down with CNBC colleague Scott Wapner, author of the new book, "When The Wolves Bite". The book recounts the battle between activist investors Bill Ackman and Carl Icahn over the stock of Herbalife (HLF - Get Report) , which culminated in a heated 2013 interview between the two billionaires on CNBC.
Wapner said he was shell-shocked by that interview, as were the traders on the floor of the New York Stock Exchange, who were listening to them. Trading volumes dropped 20% as traders paused to listen to the billionaires air their dirty laundry.
Wapner said that Ackman made a billion-dollar bet that the government would intervene and put a stop to Herbalife's sales practices, while Icahn was not only betting with the company, he was also betting against Ackman.
Cramer said the book was a page-turner and is a must-read for anyone interested in the stock market or any of these key players.
In his "No Huddle Offense" segment, Cramer was scratching his head to figure out why investors are fretting that big tech companies are spending big to meet their growing demand. Isn't that a reason to like these stocks, not hate them?
The cloud is seeing explosive growth, which means companies like Alphabet need to invest to meet the demand for YouTube, but like Amazon is investing in its web services and Netflix (NFLX - Get Report) is investing to meet the needs of binge-watchers around the globe.
Lots of industries spend a lot, but for many, like the consumer packaged goods and oil companies, the returns are very small. For tech though, the returns can be huge, which is why we should be encouraging, not discouraging, these kinds of investments.
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