Search Jim Cramer's "Mad Money" trading recommendations using our exclusive "Mad Money" Stock Screener.
When the Federal Reserve speaks, the big investors listen, Jim Cramer told his Mad Money viewers Monday. Now that the possibility of not one but two interest rate hikes may be on the table for later this year, the big money managers are springing into action.
"The that led us higher in the past are no longer in charge," Cramer explained. Big money managers are moving money into the sectors that prosper from economic growth. Sectors like the banks profit from a growing economy and higher net interest margins. Cramer said a growing economy is also great news for global industrials, such as Eaton (ETN) and Honeywell (HON) and railroads like CSX (CSX) .
Other hot sectors will now be paper and chemicals, along with tech stocks like Microsoft (MSFT) and Cisco Systems (CSCO) . Cramer is also bullish on chipmakers including NXP Semiconductor (NXPI) and others that may become the takeover targets.
What's good for the economy is also good for oil, Cramer added, which is why the oil patch has seen recent strength. It's even good for retailers, at least the higher-end names that consumers typically trade up to. That's why L Brands (LB) is up and the dollar stores are sinking.
Cramer said the only sector he can't recommend are the drugs, a group which is coming under increasing political and congressional fire.
Running Like a Deere
"The next time Wall Street gives up on John Deere (DE) , please, please, please remember how management head-faked the analysts" this quarter, Cramer told viewers. Deere's earnings a week ago were so surprising that it makes you wonder how just about everyone missed it.
Before this quarter, shares of Deere were essentially flat for the year. The company delivered a modest top and bottom beat with it last reported in May, but it also lowered forecasts and tempered expectations. Investors took the company at its word.
But shortly after those earnings in May, Deere received an upgrade from a forward-thinking Goldman Sachs (GS) , which noted that the time to buy agriculture stocks is when they're at their absolute worst. It turns out, equipment sales were at 30-year lows.
But other than Goldman, no one saw last week's 61-cents-a-share earnings blowout coming. Not only were the earnings terrific, the company's commentary painted a rosy picture for the rest of 2016.
Better still, sales were still sluggish at Deere, and the company delivered on those earnings just by cutting costs and executing perfectly. That means as demand picks up, investors can only expect earnings power to be multiplied.