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Jim Cramer (0:48)
My mission is simple to make you money. I'm here to level the playing field for all investors. There's always a bull market somewhere and I promise to help you find it. Man Money Starts Hey, I'm Kramer. Welcome to Man Money. Welcome to Kramer. Other people make friends. I'm just trying to help you make a little money here. My job is not just entertain, but try to explain days like today or yesterday. Put them together. Call me at 1-800-743-CBC-TWEET, YouTube. Kramer don't make a forecast if you can't make the forecast. I know it sounds pretty silly, but in the world of Wall street, if you make a prediction, you better beat it or else your stock's going to get clobbered. That's what throw much of the sell off, Expectations not met, guidance too aggressive, promises dashed. It's why we struggle to bounce back from yesterday's hideous action. Dow gaining only 15 points. The S&P decline.09% NASDAQ dipping.1% even as we had much higher prices earlier today. Let's start with the Fed. I play with an open hand. I think Jay Powell is doing a fabulous job. What he does the only Fed chair since Paul Volcker in my lifetime who knows he has the power to take control of a difficult situation and do the right thing no matter what. Powell's been very true to his word, which is integral to maintaining his integrity and the integrity of the institution, which has never been done. When he says he'll do something the markets believe in him. That's because he has a lot of credibility. But yesterday I felt the Powell had a setback. I'll be a momentary because he didn't telegraph his views ahead of time. It was a tough call to cut rates by 25 basis points only because he made it a tough call. I think he felt that the Fed had to cut rates because he believed that would help bring down mortgage rates and auto loan rates. Solving two of the most intractable sources of inflation left in this country. But immediately after the first cut in September, double cut long term rates went up, not down. See, that was a sign the big bondholders weren't buying the need to cut rates. They were more worried about inflation. That's fine. The Fed can defy the bond market for a spell. But Powell should have quickly pivoted after the second rate cut and told people he needed to see more weak economic data and lower inflation before making a move. He didn't do that. Instead, Powell consistently signaled that there would be a third rate cut even as the data didn't justify it. If the Fed supposed to be data driven, then it had no business cutting rates yesterday. But Powell was trapped by his own prediction. One that he didn't need to make sure. The market got crushed yesterday because of a huge number of people who were shocked that Jay Powell now wants to wait and see rather than quickly make more cuts. Got him off the treadmill, but at a big cost as people question the credibility of the Fed. The fact that we saw a huge spike in the vix, the fear index told you that Powell overreached and then couldn't deliver on the inflation numbers. Of course Powell recover and so will the stock market. If long term rates stay high, the homebuilders will build far fewer homes. But we could see a generational shift that was more turnover in existing homes. Cars break down and eventually need to be fixed or traded in. It'll. It'll happen. But now Pals plan for time and he's gotten out of prediction it Data dependency is back. But we saw the frailty of the institution when its predictions aren't met. The Fed simply didn't need to forecast that third rate cut loudly or subrosa. The data was not there to justify it. Again, don't make the forecast. If you can't make the forecast now, consider really volatile stock that's very visible stock called Micron Commodity Chipmaker run by the irrepressible Sanjay merger. Anyone who knows Sanjay knows that he's a cautious industrialist who never wants to let anyone down. Maybe that's why I like him so much. He never encourages you to get all boiled up about a stock. He has at times tried to rein me in when I got ahead of the story. But not that long ago he predicted two things. One, that the data center business would be stellar and to the PC business would be strong and need a lot of chips. Unfortunately, the latter didn't come true. It's wrong. The IPC has turned into a bit of a bus practice. Now there's excess chip inventory in the system. Sanjay made a prediction. He failed to meet it or even come near it. Very, very disappointed. So the traders get out. The stock plunged 16%. From the looks of things, there were a lot of traders in Micron and they don't want anything to do with it because they don't even know what it does. Stocks now at a reset level, but it's much lower now. Contrast that with both Broadcom and Marvell Technology, which have similar exposure to both AI and personal computers. But their stocks have been fabulous. Neither was willing to predict good things for the personal computer or cell phone business. Now, the micro market at best, they were willing to predict a gradual recovery in the markets that that Sanjay would say, had said would have good numbers. Broadcom and Marvell soared when they reported because their businesses were on fire. And the other businesses, the ones that pulled Micron down, were no worse than advertised because they made no claims that things would recover or at least it would start going up for the recovery phase. Had Micron been more muted, or I should say much more muted about the PC business beforehand, had they not gotten too excited, needlessly bullish, the the stock would probably still be down, but definitely not down double digits. You think that everyone in the semiconductor world would be on their toes after Pat Gelsinger and that fiasco at intel where he became one of the most radical open CEOs I've ever seen. Opaques, the opposite of upon. It means over promise and under deliver. My hope is that the US government gets its money's worth from the subsidies of paid intel companies. Had the husband every penny to keep the rating agencies away. And so far it's done so. It's just moderate success. But gels are never stopped. Reassuring you right to the end. Now I'm worried about the balance sheet. I can't believe it. People have lost fortunes because of the reassurances that Gelsinger made. One thing for certain, you never want to be Estee Lauder CEO Fabricio Freda, who infamously called it an inflection point. Whereas luxury cosmetics and skin care company would return to growth. That was back in February of this year. Stocks soared 12% to 150. Waters stayed a bit on those words as business was stabilizing. But then we learned the problems were structural leading to number cut, number cut, number cut until the Stock fell to 60 to 62 at its lows on November 12th. Just a disaster. One of the worst stocks in the S and P. Sometimes it can't be avoided. People knew that mortgage rates stayed up. So Lenore, the giant homebuilder, so its stock plummet and we knew it would go down because the week for Toll Brothers reported mild miss stock got clobbered. Those are all because of higher rates. Nobody in the housing business can defy higher mortgage rates. Nobody. Other times, like with speculative names in nuclear power, space, wonder drugs, quantum computing, the companies themselves are hype or are hyped by others. And when disappointment almost never hits unless the people who own these stocks took something off the table. Well, I got to tell you, sell, sell, sell, sell. But the bottom line companies and even the Fed should not make predictions unless they know that the predictions are well within reach. No one ever held it against you for being too conservative with your, your guidance. And if you don't have enough visibility to make a good prediction, just say mom, we'll know exactly what you mean. Let's go to Richard in California.