Our economy has seemingly been split in two, Jim Cramer told his Mad Money viewers Wednesday. On one side, the consumer economy is doing fantastic, but on the other side, the business economy is falling apart. Both sides were on display today, Cramer explained, and neither side is in tune with the other. He said this is why he wants the Federal Reserve to pay close attention.
It's clear after listening to JPMorgan Chase (JPM) - Get Report and a host of retailers that the consumer is alive and well, Cramer said, meanwhile, waning freight loads at CSX (CSX) - Get Report rocked all of the railroads, with Union Pacific (UNP) - Get Report plunging 6% and Norfolk Southern (NSC) - Get Report falling 7.2%. Cramer said the business economy is simply "brutal" right now.
But investors need to remember that as money flows out of one sector, it must flow into another, and in this market that means stocks like Abbott Labs (ABT) - Get Report and fast growers like Shopify (SHOP) - Get Report . Cybersecurity also remains a hot group, with Palo Alto Networks (PANW) - Get Report remaining a Cramer fav.
When faced with two economies, Cramer said he's still siding with the bulls, urging investors to hang in and wait for more positives to materialize.
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Mr. Tech Goes to Washington
When big tech goes to Washington, investors need to determine whether the testimony they're providing is going to make them look bad, cost them money, or both. Cramer took a look at recent events surrounding Alphabet (GOOGL) - Get Report , Amazon (AMZN) - Get Report and Facebook (FB) - Get Report to figure out who's most at risk.
Cramer said that honor goes to Alphabet, which is on the forefront of free speech yet has done very little to win political mindshare. Google shies away from lobbyists and or outside counsels that can help them navigate the Washington landscape and that puts the company's earnings at real risk, according to Cramer.
Amazon is largely a West Coast company, but it also has distribution centers throughout the country and CEO Jeff Bezos also owns The Washington Post, which helps give Amazon at least a little political clout. Cramer said he thinks any fines that may come Amazon's way are likely to be painless.
Finally there's Facebook, which has jumped from the $5 billion fine from the Federal Trade Commission, the largest in the agency's history, right into a new controversy with Libra, Facebook's proposed cryptocurrency. Cramer said Libra isn't likely to succeed and suggested Facebook simply buy Square (SQ) - Get Report if they want to enter the payments space.
Turning Losers Into Winners
Losing stocks can become winners again if management makes some smart decisions, Cramer told viewers. That's certainly been the case with Boston Beer Co. (SAM) - Get Report , best known for Sam Adams. The stock has skyrocketed from $150 a share just two years ago to over $400 today.
Sam Adams was a pioneer in the craft beer movement and for several years was red hot. But as more and more craft beers entered the market, Boston Beer saw sales grow decline from 22% in 2014 to -6% just two years later in 2016.
In February of 2018, Boston Beer hired a new CEO and expanded its portfolio away from beer and into other beverages with its Angry Orchard and Twisted Tea brands. Both brands were soon able to offset the declines in beer. The company then added Truly, its spiked seltzer brand to the mix and sales were again off to the races.
In its last conference call, management said Truly continues to exceed expectations, news that's sent shares higher.
Cramer said Boston Beer is now super expensive at 39 times earnings. He suggested not chasing it higher and waiting instead for a meaningful pullback.
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What's Boosting Parker Hannifin?
Why aren't shares of Parker Hannifin (PH) - Get Report going down, even though the company has received six analyst downgrades in a row? Cramer said it's because investors are following the Federal Reserve.
Cramer has often reminded viewers that they cannot fight the Fed and they cannot fight the market, both of which are helping to boost Parker Hannifin, which manufactures industrial equipment and gets nearly half of its sales from overseas.
Looking at the chart, Cramer said it's easy to see that this stock's trajectory is in sync with both the Fed and the current outlook on trade. As trade tensions escalate, Hannifin share fall, and as the Fed is set to cut interest rates, shares rise.
It's clear that investors are willing to overlook any short-term weakness in Parker Hannifin, including all six downgrades, and focus instead on the long-term outlook with lower interest rates. "The market simply doesn't care," about downgrades when interest rates are on their way down, Cramer concluded.
Time to Buy the Banks
In his "No-Huddle Offense" segment, Cramer weighed in on whether the big banks are worth investing in after JPMorgan Chase, Citigroup (C) - Get Report , Goldman Sachs (GS) - Get Report , Bank of America (BAC) - Get Report and Wells Fargo (WFC) - Get Report reported a combined $29.5 billion in earnings.
Cramer said JPMorgan remains a powerhouse, trading at just 11 times earnings. Citigroup delivered a great top and bottom line earnings beat and sells for just 9.3 times earnings. Goldman Sachs is seeing strength in investment banking and trades at 9.4 times earnings. Bank of America is excelling mortgages and digital banking, yet trades for just 10.4 times earnings.
Of the group, Cramer said only Wells Fargo remains questionable, but he'd be a buyer of all of the others.
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At the time of publication, Cramer's Action Alerts PLUS had a position in JPM, ABT, SHOP, PANW, GOOGL, C, GS, AMZN, FB.