For all those people who are quick to criticize Federal Reserve chair Jay Powell for not moving fast enough, let’s not forget that we’re in unprecedented times, Jim Cramer told his Mad Money viewers Monday. Two years ago, no one knew how long Covid would last, or what lasting effects it would have on our economy, least of all today’s armchair critics.
Powell is doing what is necessary, Cramer insisted, and told the markets today that he’s willing to get more aggressive on interest rates if needed. But with everything Powell is facing, it’s not surprising he’s been cautious until now.
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The pandemic has led to a work-from-home revolution that no one could have seen coming. Home builders continue to struggle to meet changing demands and everything that goes into a home has been caught in short supply. Changes in where people live has led to changes in what they drive, another market stopped in its tracks by semiconductor shortages a half a world away.
Add to that a war in Ukraine that’s interfering with food and energy supplies and it’s easy to see how Powell was asked to do the impossible. With so many variables and far too many unknowns, it’s impossible to get interest rates perfect. All we can ask for is what we got today, assurances that Powell will do whatever it takes to cool the economy without throwing us into a recession.
Get Ready for the Next Rally
Now that last week’s powerful rally has passed, Cramer said it’s worth taking a look at the factors that caused it. That way, investors can be ready for the next rally, so they can reposition and strengthen their portfolios.
Last week’s rally was caused by a combination of factors. First, the markets were already down big, making them a coiled spring that was ripe for a quick rally. As stocks go down, they get cheaper, which is how takeover deals like Anaplan (PLAN) – Get Anaplan, Inc. Report happen, sending up 27.6% in a single day.
Last week also saw a change in policy from China, which had been aggressively stomping out capitalism as of late.
That’s why it never pays to get too negative, Cramer reminded viewers. The universe of buyable stocks may be smaller, but it still exists. He recommended Macy’s (M.) – Get Macy’s Inc ReportDelta Air Lines (GAVE) – Get Delta Air Lines, Inc. Report and American Express (AXP) – Get American Express Company Report as just three names that are still buyable.
Where Are the Winners?
With the Fed raising interest rates, the menu of winning stocks is getting smaller, Cramer told viewers, but there is one unlikely name that’s winning big in this environment, and that’s Kroger (KR) – Get Kroger Co. Report.
Shares of Kroger are up 23% for the year, thanks to great execution and the continued trend of cooking more at home. When Kroger last reported, they delivered a 17-cents-a-share earnings beat that stemmed from a 4% increase in same-store sales.
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Kroger is the largest pure-play grocer, with 2,726 locations across 35 states, giving it scale that matters. The company also derives 20% of sales from its own private label brands, helping to boost margins.
Kroger has also bolstered its omnichannel strategy with stores and distribution centers supporting pickup, delivery and online sales, making the perfect recession-proof stock.
Executive Decision: Stifel Financial
In his “Executive Decision” segment, Cramer spoke with Ron Kruszewski, chairman and CEO of Stifel Financial (SF) – Get Stifel Financial Corp. Reportthe nation’s fourth largest equity research companies.
Kruszewski said Stifel is still not very well known, despite being a diversified company that includes a bank, wealth management, fixed-income and research divisions. The company has grown from 600 advisers in 2005 to over 2,300 advisers today.
When asked about interest rates, Kruszewski noted that Stifel will see a 50% rise in the net interest income with just three rate hikes, and most estimates now predict as many as six rate hikes in the pipeline. “Rate hikes are a good thing for Stifel,” he added.
Stifel is attracting some of the best talent in the business because it has a great culture that recognizes achievement, he said.
In the Lightning Round, Cramer was all-bulls, citing PPG Industries (PPG) – Get PPG Industries, Inc. ReportAppFolio (APPF) – Get AppFolio Inc Class A ReportBerkshire Hathaway (BRK.B) – Get Berkshire Hathaway Inc. Class B ReportStar Bulk Carriers (SBLK) – Get Star Bulk Carriers Corp. ReportVaalco Energy (EGY) – Get VAALCO Energy, Inc. Report. Plains All American Pipeline (PAA) – Get Plains All American Pipeline, LP ReportEnterprise Products Partners (EPD) – Get Enterprise Products Partners LP Report and Truist Financial (TFC) – Get Truist Financial Corporation Report.
Cramer: Fix the New Energy Crisis
In his “No Huddle Offense” segment, Cramer sounded off against President Joe Biden for not doing enough to address the global energy crisis. Too many of our allies are addicted to Russian oil and gas, despite the fact that the US is now the largest producer of oil and gas in the country.
How can that be? Needless regulations. America is awash in clean natural gas, but no one wants to take the risk of building an export terminal when they don’t know if pipelines will ever be built to feed them.
Then there’s oil. Why does America import Russian oil? Because the long-dated Jones Act of 1920 stipulates that American oil can only be transported on American-made ships with American crews, flown under an American flag. How many ships fit that description? Almost none.
Relying on Russian oil and gas is now a life-and-death situation for Europe, yet the White House is showing no urgency or willingness to take the simple steps it would take to fix it.
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