In a volatile and fast-moving market, context is in short supply. Jim Cramer told his Mad Money viewers Thursday that most investors are simply reacting to current events, rather than looking at the bigger picture. Failing to see the forest for the trees, however, is a sure-fire way to lose money, he said.
The big picture is that both the president and the Federal Reserve are putting the brakes on our economy. The Fed is doing it intentionally in the efforts to tamp down inflation, while President Trump has done it as a side effect of his hardline stance on trade.
The more the Trump touts a "red-hot economy," the more the Fed feels compelled to follow through on the promise of four additional rate hikes no matter the cost, Cramer said.
As for China, Cramer said the Chinese don't seem interested in negotiating and still have plenty of ways to fight back if they chose to do so. In the meantime, American companies doing business in China are seeing their businesses slow, as tariffs take hold.
Eventually, business will slow to the point where earnings estimates will need to be lowered and layoffs will follow.
Cramer said he doesn't feel today's market is similar to 2007, when we were on the cusp of falling into a deep recession.
But today's market does have similarities to 2006, when many of the early warning signs began to appear. Let's hope that those in the government are able to see them in time.
Cramer and the AAP team are buying more Amgen (AMGN) . 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: Visa
For an "Executive Decision" segment, Cramer sat down with Al Kelly, CEO of Visa (V) , the payment processor with shares that are up 20% for the year, including a 4.6% gain today.
Visa just completed a very strong quarter, Kelly said, one that included adding seven million new merchants to their network, taking them to over 54 million around the globe. Cross-border payments were also strong, a sign that the global economy remains healthy.
When asked about competition from new payment platforms like PayPal (PYPL) and Square (SQ) , Kelly said that Visa's biggest competitor remains old-fashion cash. Converting people from paper to digital will be a trend that drives his company for quite some time.
Visa is still the largest payment processor on the planet, and Kelly said that its network and its brand are among their biggest assets. Sports sponsorships, like the World Cup and Olympics, will remain a big part of maintaining their brand.
Over on Real Money, Cramer says companies have topped their earnings benchmarks. Get more of his insights with a free trial subscription to Real Money.
Who's Really Losing the Trade Wars?
Even the supposed winners from President Trump's tariffs don't appear to be winning, Cramer told viewers. Nowhere is that more evident than with Nucor (NUE) , the steelmaker with shares off 9.2% for the year.
The tariff on steel was the first of many for Trump, and initially, Nucor told investors tariffs would be good for business. But as the full impacts of the tariff set in, Cramer said, three things became clear.
First, a 25% tariff on steel reduced demand for steel. Second, the escalating trade war is adding new barriers to global trade. And third, the price increases are being felt by companies and consumers alike.
Cramer said he's been wrong to recommend Nucor thus far, as it's the wrong time in the business cycle to invest in steel and the trade wars are only complicating matters even further. There's going to be a lot more pain before the gain, he concluded, if we see gains at all.
Executive Decision: Centene
In his second "Executive Decision" segment, Cramer welcomed back Michael Neidorff, chairman and CEO of Centene Corp. (CNC) , the health plan provider that's exactly the type of stock investors should be looking for when the economy is slowing.
Neidorff said that investors need to adjust how they think about Centene now that it's a Fortune 50 company with $70 billion in revenues. He said they're no longer the same $10 billion company they were just four years ago. That's why investors are seeing tax deductions and other charges in their earnings reports that weren't there in years past. As the company has made more and more acquisition, some of their transactions have gotten more complicated.
When asked about the state of healthcare in America, Neidorff said that our government has shifted from policy to politics and it needs to get back to writing policy. That said, Centene will remain a physician-driven organization that is always looking out for their customers.
Cramer asked whether Americans even understand what open enrollment means when it comes to their insurance plans. Neidorff said more are learning every day, but the government doesn't make it easy to learn or enroll. Many people still don't understand how the process works.
Are We There Yet?
In his "No-Huddle Offense" segment, Cramer tried to answer the question, "Has the market finally bottomed?"
Cramer reminded viewers that there is no bell that goes off when a bottom is formed, but there are some indicators they can look at. One of those is the VIX, or fear gauge, which chartist Mark Sebastian said is finally high enough to warrant a bottom. But then there's Cramer's favorite S&P Oscillator, which indicates there might still be more weakness ahead.
Sentiment has fallen, but people don't seem to be as negative as they were in past declines, Cramer noted. The media still isn't giving Wall Street wall-to-wall coverage, which is also indicative of a bottom.
When you add up all the signs, the answer is inconclusive. Cramer endorsed buying some stocks for a trade, but he's not willing to give the all-clear for the longer term.
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