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Jim Cramer (1:01)
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Jim Cramer (1:16)
Long emails, leaving all the time in the world for the things you actually want to do. No offense Jim. Get a New Dell AI PC@dell.com AI PC how those ahead? Stay ahead. Hey, I'm Kramer. Welcome to Mad Money. Welcome to Kramer. My friends, I'm just trying to make you a little bit of money. My job is not just to entertain, but to teach. So call me at 1-800-743-CBC. Tweet me jim Cramer. If people were expecting the Federal Reserve to give us fireworks, they were sorely disappointed. Fed chief Jay Powell is not giving hyperbole. He's trying to balance price stability with job growth and right now the risk tilt against the ladder. As Powell told us today, the labor market is really cooling off. So the widely expected quarter point rate cut made a ton of sense, but the market was all over the place after we got this widely telegraphed news. Dow gaining 260 points as a dipping point 1%. Nasdaq declining point 3. 3%. It made you feel like the Fed somehow took us by surprise. But that was not the case. The market's reaction tells me two things. One, there are people who actually believe we get something bigger and and two, there are people who think that stocks are overvalued without big rate cuts. Given that Powell said, quote, there wasn't widespread Support for a 50 basis point cut today, end quote. We were going to see some sellers. Perhaps there were enough investors out there who thought the Fed would give in to the President and bless us with a 50 basis point cut. Those people are delusional. While we could have gotten more dovish language from Powell, of course a tad disappointing equity investors. No big themes are upended. No longer term gains are put on hold. In the end, everybody with half a brain new we get a quarter point cut. So it shouldn't have done nothing to the market. If anything, the market's while it actually 2pm statement. The 230 press conference created some interesting buying opportunities. Why is that? Because we around here do not trade cuts in rates. That's not what we do. We don't buy or sell stocks based on statements by Jay Powell. We're not that thoughtless. Of course we want to see how the bond market reacts. In bonds were all over the map, finishing down in price and up in yield, unfortunately. But it was nothing major. Almost kind of back to our regular programming. Almost because the President's going to hammer Powell for doing so little so late when he gets a break from some state dinner. So what's changed here? Honestly, not much. Just that people don't like to say that because that's not newsworthy. First, I think we can stick with technology and with artificial intelligence. The failings of companies that are involved in both. We had something very strange today. A story about how the Chinese government wants a full stop in buying Nvidia's artificial intelligence chips for some of the biggest clients. Those are the ones that are made for China. We thought they'd be welcome. They're very confusing, very fluid story now. I have to tell you that the Chinese narrative has become the defining story with Nvidia. And I think that that is dead wrong. There's lots of positions in Player. You could argue that this is a ploy, something that can change on the dime when the President talks with President Xi about the People's Republic. After all, the treasury won't get us 15% of China. Chip sales of nothing sold. 15% of nothing suboptimal. You could argue that Nvidia looks like it'll be shut out of that market is worth about $50 billion in sales per year right now. Nvidia has no China numbers. They're not in the numbers. So don't expect number cuts. That's why I don't think there was a Reason to sell here. Me. Well shocker. I say own Nvidia, don't trade it. And if you can get some in at the 160 level, oh boy, I'd be a buyer. And it is at the heart of AI. The new chips that are coming out are way ahead of the current ones. The Chinese government needs to be mindful not to shoot itself in the foot. Other countries will get these chips which will take AI to levels where it can truly surpass humans in many different kinds of problem solving and surpass all those Chinese companies too. And maybe now is the worst case scenario in China. Everyone knows that. I think that's your best chance to buy. Second, as I mentioned yesterday, the banks are still looking good as short rates go down. The they bought the short end of the yield curve and then which fell by the way because of the rate cut and then they lend long which higher. So when a long rates drop and long rates rise, the banks and short rates drop and long rates rise. Well I got to tell you that's when you buy the bank stocks. At tomorrow's noon CNBC investing club meeting. I'm going to talk about this. I'm going to tell club members that I intend to stick with the banks even though we have huge profits if you don't own it and still you can buy Wells Fargo Wells which is stalled here in the $82 range and you can get even more buying of Capital One if you own some of that. The credit card bank which will make a fortune now that it's merged with Discover. Very few defaults of Capital One, far fewer than I thought there would be at this point in the cycle. As Jay Powell said, households are in good shape and that's not about to change. Third, the market turn on the Travel Leisure stocks again. Oh God, they keep doing that. Even as I continue to tell you that Covid changed the industry permanently. Marriott was crushed today, which makes no sense at all, especially when American Express was up 3% to hit an all time high. Fourth, I don't see any real reason to get excited about the interest rate sensitive cyclicals including the housing stocks. Those are the stocks you'd buy if we heard that the Fed had very serious debate about whether a double rate cut. We didn't get that. Now for instance, we own Home Depot for the Travel Trust. It's been a big winner and I'm not surprised that it got ding today down 1%. You need to hear something about bigger cuts to get that stock higher and it didn't happen. It's going to be slower. It's still going to go higher though. I don't feel great about in general, even though Caterpillar an all time high today, unless they have something to do with the data center or with aerospace. I'm concerned, for example FedEx which reports tomorrow 25 basis point cut won't change things in time for this great shipping company. I'm even more concerned about United parcel with its 7.8% yield. That yields too high may not be sustainable if as management keeps saying otherwise fairly or unfairly, when you see that kind of high yield, that stock market is the stock market saying don't trust the difference dividend. Now there are plenty of critics who find something that Powell said and try to make it sound controversial. Ginning up stories is what I call it. There'll be some vicious white posts against this man when the President hears what he's done. But the simple fact is that the Fed's caught between a rock and a hard place. We really haven't gotten inflation under control. At the same time, the job market is deteriorating rapidly. At the moment, the Fed thinks the job situation is more worrisome. Besides, the Fed can't beat this new inflation because, well, a lot of it comes from tariffs. Remember, our president wants to ignore that his tariffs are causing the inflation. Powell can't do that. So don't ask how to cut rates five times. Powell has a reputation for being a prudent, prudent person. And that is something that all Fed chiefs want to be known for. We have Powell until May of next year. He'll cut rates further if jobs stumble or inflation comes down or both. But he doesn't want to get ahead of himself because nobody, and I mean nobody knows what the real impact of tariffs will be, except it's going to be negative. The bottom line, sorry, spectators who wanted something exciting instead. Here she goes from Powell and it's, well, if you ask me, exactly what we needed. Spencer, Michigan Spencer hi Mr. Kramer.