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Eagle—you will lose. Tails—you lose. Oh, that's how a lot of very smart financial managers see this market. If the Fed tightens monetary policy too much, we will have a terrible recession and profits will evaporate . If the Fed doesn't tighten monetary policy enough, inflation will continue to run rampant and erode the value of your portfolio.
They scoff at the idea that there might be some golden-haired solution, a fairy tale, if you will. They are skeptical about days like today, when the Dow Jones gained 92 points. The mighty Dow Jones gained 92 points. The S&P rose 0.1%. The Nasdaq rose slightly by 0.01%. Sometimes I think they want him to fall.
Maybe they want you to lose money . Maybe they earned their money. I don't care if you do it. You see, hardly a day goes by that someone doesn't remind me of this sour dichotomy. And I laugh and tell them that I see things completely differently . Yes, I'm laughing because I see so many market segments that could be potential winners in 2023 .
It is difficult to take these supposedly sophisticated doomsayers seriously. You know what I was thinking? I was thinking about it. Maybe it's because Memorial Day is only 5 months away. They think they are like gardeners. They're like gardeners who decided not to plant because the weather conditions look terrible right now , especially in Chicago.
Not realizing that the current weather is temporary and it's a long damn season. For the most part, these bears like to focus on the big picture and the underlying averages. They have what is known as... They only look at macro data and the Fed, without doing any real research on individual companies.
They are trying to scare you from planting anything. They don't have the knee pads that I have, you know, we like to do that. They have nothing like that. They don't have scoops. Maybe it's because I've been gardening for 35 years straight. A beautiful, hopeful hobby, full of potential pitfalls, but I see varieties worth betting on every day.
Skeptics don't distinguish a potato from a tomato. And me? Jim doesn't have a better tomato sauce if I listened to these guys. It was easy. Bears only want to pull weeds. But I'm more focused on planting, planting some seeds for the sectors. Because there are many that could work next year. I'm going to break them down for you.
Because I'm in the mood for gardening. Firstly , it is healthcare. For the first time in recent times, we are not seeing any pressure from Washington regarding drug pricing. And we're not far enough... You know, we're far enough away from the next presidential election that these companies aren't being used as typical political piñatas.
At least not in 2023. Now, from top to bottom, eternal bears, or maybe tuna is their name. Eternal algae? I don't know. It feels like I'm trying to find a needle in a haystack. But, you know what? Choosing quality healthcare stocks is not the same as looking for a needle in a haystack. It's like shooting fish in a barrel.
Maybe with a machine gun. Eli Lilly has this ...Listen, let me give you one example. I... Listen to me, I'll give you one example. Listen. Munjaro. Not Kilimanjaro. Munjaro. Understand. This is not a cure for obesity. Just 15 mg will give you a 22.5% weight loss over 72 weeks, according to one phase III study.
A reliable weight loss pill. It's like a license to print money. In a couple of weeks, when everyone is making New Year's resolutions, how many millions of people will swear that they have to lose 10 pounds? They are going to buy this drug. So, it is not approved yet. So I want some top-down strategist who only looks at the bond market, the twos and tens, to scare me out of owning Eli Lilly.
Their biggest problem is, will they be able to produce enough to meet demand after approval? I call this a high- quality issue, so it's certainly a big position for a charitable foundation that you can follow. I write about it almost every day for the Investment Club , talk about it, and do everything with Jeff Marks except say, "I want the drug now." Next is Humana.
Humana just had an amazing quarter. Yes, amazing. This managed care company had a second-rate Medicare Advantage program last year. If you have Medicare, you need one of these supplemental plans because many doctors don't take Medicare. Hi, I'm Jim Cramer. Do you use Medicare? No. This is usually what happens when I go to the doctor now.
Last year, a real-money expert did an inspection of these things for me. And United Health won hands down thanks to a program that allowed me to see many doctors. But when she came back to me this year, she said, “You know what? Humana! Humana changed their tune. They had the best medical benefits business.
Holy God! Who would have thought that? And by the way, who cares if the Fed delivers a hard landing for the economy? Humana is n't even on the plane. Health insurance is recession-proof. Believe me, you all have one. An unheard of purchase for me. Humana? Humana? Then there is Johnson&Johnson. Oh, that's hard to find.
J&J. Wow, how did I come up with that? Who ever heard of J&J? Okay, these stocks are down. They reached a dead end. They were dragged down by all these non-pharmaceutical products that don't have much impact on pricing. Things like Neutrogena or baby powder, patches. Great name, great business . Bad manufacturers.
So, they're kind of ...You know what they are? Radish? I mean, they're actually really hard to develop. So J&J is spinning off the consumer division as a separate company that can consolidate a mature industry, while the rest becomes a fast-growing drug and medical device company. Should we avoid this because the Fed could be wrong?
Bears are certain to either overprice or underprice, but either outcome is acceptable if you own Brothers Johnson stock. Let's say you don't like healthcare. Have you considered the trillions of dollars the federal government spends on bridges, tunnels, and buildings, regardless of whether the Fed will cause a major slowdown?
Yes, it's already reserved. Do you know how much steel they will need? Nucor is the top steel producer in the country. They will be in this combination and the profit estimates are too low. Don't you think Deere and Caterpillar would have to work around the clock to meet the demand of the engineering and construction firms that build these things?
Their order books are crazy. Their gross margin is huge. Their natural competition has disappeared. This is what happened when America dominated. production. Oh, and let's not forget, you have another reason to buy a Deere. There is a food shortage in the world . That's why I recommended Corteva last night.
They produce genetically modified seeds and pesticides. Agriculture is insanely strong right now, but the bears want you to ignore that entire sector and instead focus on two-year Treasuries, which are obviously sending all the wrong signals. Oh, I guess I got scared. Have I ever seen twos and tens in my garden?
Maybe I...Maybe I picked the wrong varieties. If you think about all the government spending that will hit next year, these tragedies will tell you why it's terrible for the economy, because it's inflationary, and we have enough problems with inflation already. That's probably true, but it's completely irrelevant here.
Even if it's inflationary, it's still good for New Core, Caterpillar, and Deere. The real inflation in America is white- collar, and it will go down in 2023 because we simply won't need as many ...computer scientists, bankers, lawyers, advertisers, and, by the way, yes, even contractors, because housing will suffer from higher rates if the Fed overprices.
We just learned today that rents are finally falling pretty rapidly, which is something to watch. Do you know what is always worth planting? What is truly enduring? Profitable retailer promotions . Bears will tell you that retailer stocks should fall. Of course, I don't care. This is great for places like TJX, who are really ready to pounce on this soon-to-be carcass that is Bed Bath&Beyond.
Prices for all of these things fluctuate due to excess inventory in chains struggling to survive. The worse retail is overall, the more opportunities it gets. The same goes for Burlington. How about our Ollie's Bargain Outlet? I've never...never come across your mine. Hey, what does Mike Wilson's super bearish crystal ball say about Morgan Stanley?
Honestly, I don't care. I wonder if he belongs to Ollie's army like I do. I don't think he's in my battalion. Hey , by the way, you...I also don't see Nike in the deals. Great quarter tonight . Uh, by the way, about Morgan Stanley, it's one of my favorite financials for 2023. Its shares are quite cheap , its dividends are high, and its profits are growing rapidly.
Will Morgan Stanley's profits be eroded by inflation? Honestly, the more the Fed tames inflation, the more I want to stick with the company that's performing the best when we get 4% unemployment, a little bit higher from here, down and 4% inflation, pretty much from here. That's probably where we're headed.
What about Goldman Sachs? Whether the Fed overshoots or undershoots these figures in 2023, it's hard to imagine a worse year for IPOs and mergers than this one. However, Goldman defeated him anyway. What do the bears say about this, especially now that the company has gotten rid of a lot of deadwood, or at least wood that didn't burn well enough?
And then there is the aerospace industry. We are currently experiencing a huge travel boom. This is quasi... There is no shortage of aircraft, because only one company is fully certified to sell all types of commercial aircraft – Airbus. What will happen when Boeing gets permission to sell its entire product line?
Even if the Fed cuts rates to 7% and we have a serious slowdown, it may not be enough to bring down Boeing. Not when there is a shortage of aircraft. I wonder if FedEx, which just had a great quarter, needs more planes. A good number. So I see a lot of opportunities for next year. However, I am not going to join the technological trend.
I have repeatedly said that whether the Fed undershoots or overshoots these numbers, technology is likely to be hit the hardest. The bears are absolutely right to scare you away from technology. This garden will be empty. He remains under steam. This is still a gigantic, excessively large portion of the market.
And this is where the difficulties will begin to arise. And they will continue to emerge. But after all , there is a whole market beyond technology, and companies like Eli Lilly, Humana, J&J, Cat, Deere, TJX or Morgan Stanley. They will grow beautifully next year. They will end up in my mailboxes. So don't let the pessimists convince you that the entire class is fruitless.
They are just suckers. I have the Greens. Mark from Indiana, Mark. Hey, Jimbo. Mark is from Indiana, home of the number one boiler manufacturers. Hey, my question is about Kroger. I bought it as a defensive stock just before the latest earnings report was released. And since then, it has actually lagged the market by about 4%.
I'm wondering if you think this could be related to Albertsons' losses, and it is. I mean, you know, they say it's 700,000, whatever union jobs are there. I think I should like Kroger, I should like Albertsons. But we have a Ministry of Justice that is completely different from what people think. And the Federal Trade Commission (FTC) is completely different.
They are against the deal. So it doesn't matter. You can put two angels together and they can say it's ...the devil. Okay, there's a whole market outside of technology. Don't let pessimists convince you that the entire asset class is born barren. Today I am Mad Money. 2022 was definitely not the year of the IPO.
But who are the winners and who are the losers in this year's class? I'm taking a snapshot of the cohort. Then we'll take a closer look at the data, take a closer look at the year's financial winners, and reveal a few ideas that I think will work in 2023. And it's the best-performing S&P 500 sector so far this year.
But will the energy sector be able to exceed expectations in 2023? Oil doesn't give anything. I'll learn from Rusty Braziel of RBN Energy. So stay ? Tweet Kramer #madtweets. Email Jim at [email protected] or call us at 1-800-743- CNBC. Did you miss something? Visit madmoney.cnbc.com.
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