Next week by Jim Cramer: Earnings and economic data should give clues to Fed policy
CNBC’s Jim Cramer on Friday looked forward to next week’s earnings report and economic data, which will provide fresh insights into a core concern on Wall Street: whether the Federal Reserve’s rate hike drive will push the United States into recession.
“We want the Fed to talk big game, without having to do too much,” Cramer said on Friday’s episode of “Mad Money.” “Talk is better than action. We want [Fed Chair Jerome Powell] To scare the economy and make it slow under its own weight. We don’t want endless price increases…that will destroy everything in their path.”
Kramer’s comments on Friday came after the stock market concluded consecutive losing weeks, with the S&P 500 now down 5.6% in December. This decline came as investors are increasingly concerned that the US economy will enter a recession next year. On Wednesday, the Federal Reserve raised interest rates by half a percentage point to their highest levels in 15 years.
All earnings and revenue estimates and economic data are provided by FactSet.
Tuesday: Housing Starts and Earnings from General Mills, FedEx and Nike
Housing begins in November
- Seasonally adjusted annual rate: 1.41 million
The Census Bureau’s Tuesday morning report on residential construction is notable for the rise in home prices during the Covid pandemic, according to Kramer. Building more homes is one way to lower prices and help calm inflation in general. However, he cautioned that concern about the US economy makes it unlikely that housing starts in November will be strong.
- Q2 2023 earnings before the bell; Conference call at 9 a.m. ET
- Expected earnings per share: $1.06
- Projected revenue: $5.19 billion
General Mills has a tough earnings setup, Kramer said, because shares are up 29% year-to-date despite a generally rough market year. He pointed out that the company was able to raise prices because its brands of cereals are popular.
- Q2 2023 earnings after closing; Conference call at 5:30 p.m. ET
- Expected earnings per share: $2.82
- Estimated sales: $23.70 billion
Last time FedEx reported, it detailed major cost-cutting plans that should help boost profitability. Cramer said that for any investor who thinks the Fed may not eventually raise interest rates as he expects, the post-earnings sell-off could create an opportunity to buy FedEx stock.
- Earnings Q2 2023 4:15 PM ET; Conference call at 5 p.m. ET
- Projected earnings per share: 65 cents
- Estimated sales: $12.58 billion
Nike has received a series of analyst promotions recently, which Cramer said is likely because analysts are trying to get out before the broad reopening of the Chinese economy. “I think they’d be right,” he said.
Wednesday: Carnival, Centas, and Micron earnings
- Announcement of Q4 2022 earnings prior to opening; Conference call at 10 a.m. ET
- Expected loss: a loss of 88 cents per share
- Projected revenue: $3.9 billion
Spending on experiences has remained resilient despite fears of an economic slowdown, and Kramer said he expects Carnival management to continue to look bullish.
- Q2 2023 earnings before the bell; Conference call at 10 a.m. ET
- Expected earnings per share: $3.03
- Estimated sales: $2.13 billion
The business services company is an interesting barometer of the overall health of small and medium-sized enterprises, Kramer said. “If the Cintas say business is better than ever,” Cramer said, that may indicate the Fed will need to stay aggressive.
- First Quarter 2023 Earnings After Closing; Conference call at 4:30 p.m. ET
- Expected loss: 1 percent loss per share
- Projected revenue: $4.14 billion
Cramer said he will listen closely to what the memory chip maker has to say about inventory levels. If Micron indicates there is still a glut, Kramer said, large semiconductor stocks could see another drop. “I think the most likely outcome will be a glut, and you’ll see a lot of chip stocks selling Thursday.”
Thursday: Paychex and Carmax earnings
- Q2 2023 Pre-Opening Earnings; Conference call at 9:30 a.m. ET
- Projected earnings per share: 95 cents
- Estimated sales: $1.19 billion
Cramer said he thinks Paychex is a better small and medium scale business than Cintas. But just as with Cintas, Cramer said if Paychex talks about a healthy business environment, that could mean the Fed could need to raise interest rates by half a percentage point.
- Q3 2023 Earnings Before The Bell; Conference call at 9 a.m. ET
- Projected earnings per share: 73 cents
- Projected revenue: $7.34 billion
From an inflation standpoint and Fed policy, Kramer said Carmax is another company he hopes will point to weak sales and lower prices.
Friday: inflation data
Personal consumption expenditures price index for November
- On a basic monthly basis: 0.2% expected
- On an annual basis: 4.6% expected
Core PCE is the Fed’s preferred measure of inflation. Excludes food and energy. If the PCE data indicates that inflation “remains scorching,” Kramer said, the Fed may need to maintain its stance on gas.
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