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C save you some money. My job is not just to teach, but to entertain, educate. Call me. 1-800-743-CNBC. Of course, tweet me at Jim Cramer. Slow down. No, I'm not talking about my speaking slower. Not going to happen. Or a Fed mandate to slow down. I'm talking about the speed of events, which is happening way too fast.
The parade of negative news is sending stocks lower with an unbelievable velocity. Like today, where the Dow plunged 741 points, the S&P plummeted 3.25%, the Nasdaq nose-dived 4.08% and I've got to tell you, what it is is this. Hard to avoid. It just doesn't matter. See, the die has been cast, so to speak.
And many of the world's central banks are in slow down mode to stop inflation. Incredibly, it's like no one expected it, even though it was obvious that inflation is a global problem, not just an American one. Now, I know that the Fed's just getting serious about inflation. Very late, I know. Right as we got our first set of Federal Reserve regional reports that were negative and housing starts missed big.
They're way too late to the game. But where does that get you? I I'm not a Monday morning quarterback. By the way, it's also like they're not four quarters and then it's over. This is a long game. Unfortunately for stocks, the two indicators that matter the most to the Fed might just be housing prices, which badly have jumped 20% year-over-year and the Fed did nothing about it.
That's got to stop. And unemployment, which I would bet has to raise to 5%, maybe even more to break the cycle of wage inflation. Oh, and from the Fed's perspective, it doesn't hurt that the clients in the stock market have already done more to undermine the wealth effect than anything else, especially because of your dwindling 401K.
The pessimism is incredible, palpable even. Including pessimism about stocks as measured by the bull-bear ratio, which is about as negative as I can ever recall. Amazing, when things get this negative, the proprietary S&P oscillator I follow is now at minus 10, the level it's bounced off consistently for years.
Then the crowd is usually wrong. But the pessimist crowd this time has been right. So far. Lots of people are skeptical that the Fed can't win the battle against inflation. Spend a lot of time on that tonight. I learned years ago that you don't fight the Fed and you don't fight the tape, which is heavily influenced, of course, by the Fed.
This tape says everything is vulnerable. Again, something that's highly unusual, because there should be a bunch of areas that have stabilized and they haven't. The skepticism about the Fed's power seems at low ebb. That says if J Powell can be a little less like George Bailey from It's a Wonderful Life and a little more like Harry Po- Henry Potter, the bad guy, then there would be more conviction that inflation will be tamed without creating too much havoc.
But it's not doesn't look like it's going to happen. Enough with the Jimmy Stewart stuff, man. Start getting tough. Many constant stocks are sinking, but I want to run them down, so you can decide what might be worth picking at, might be worth throwing away. The market simply can't always be this negative.
Here's why. First, if the Fed does slow the economy, then it means there'll be fewer price increases. But will there be price rollbacks? I don't think so. That's why Procter & Gamble rallied today. If the consumer's feeling more strapped, she shops more places like Walmart. Again, why it's harder. I happen to like Johnson & Johnson.
You know, yeah, Walmart and Procter were both up and that's because people feel they give you value. I happen to like Johnson & Johnson, Eli Lilly, too. Neither has much price sensitivity, both have pipelines with many blockbuster drugs. Drugs that will mature during this tightening cycle. But you all will trust on those.
I'm talking my book, but that's okay. We write many books about these. Second, we need to accept the fact that many stocks should go lower. But we need to ask ourselves if every stock should go lower. And we need to know whether it's going lower because of earnings or if it's just being punished because it's part of an asset class that is suddenly out of favor or even hated.
So, let's use real life instances. One that was one, Sarah Eisen show. Rodney McCollum from McCollum from Kroger. He had very strong sales, strong earnings and lots of business being done in their own private labels, which are much more lucrative than name brands. Of course, we'll pay less for stocks if the Fed truly plans to destroy the economy.
But we're more likely to trade down to Kroger's cheaper private label brands in that scenario. Their private label brands have the accent. They're like Costco's, you know, Kirkland brand. Kroger stock should have been up today, not down, but it's been overwhelmed by the market wide weakness. I mean, I listened to Rodney and I just said to myself, you know what?
That sounds like a darn good stock, but when when it's got to the rain has to stop before I'll buy it, right? You can't just go in and say, "Hey, that sounds like a good stock." Even though it sounded really terrific when I when I listened to to him, I said, "Ooh, I'll put that one away. Maybe I'll buy it later for the trust." Third, I just spent five days on the West Coast and I have up-to-date information a bunch of companies that are doing quite well, even as their stocks are doing quite awfully.
You shouldn't be worried about the earnings of an AMD, of a Broadcom or Palo Alto Networks, the earnings. I've got fresh numbers, not warmed-over projections and they include business from China. These stocks are getting kicked to the curb harder than a lot of others. Now, that we know nothing about.
Seems wrong to me, even as I know that Adobe guided down the semi. Let's talk about China for a moment. These days it's become the conventional wisdom to accept that China's willing to stay offline, totally crushing its economy for long stretches of time, because they won't use our better vaccines to stop COVID.
Factories remain shut, business is terrible. It's a country that seemingly existed to put people to work. The longer this lockdown lasts, it doesn't get better. It just gets less likely that Xi Jinping will stay president for life. If China were to reopen, almost every tech on your screen, including the ones that have nothing to do with China, would soar higher.
They'd be rocket ships, not cement colossus. Now, this is a philosophical moment for me and you. Because for many of the global techs, their businesses might fall down a bit, but their valuations are dropping like flies. Hedge fund managers cannot possibly stay long tech through this downturn. They either have to short or step away from, okay?
They have to chase short-term performance. But you and me, regular investors, get a chance to buy some high-quality stocks at prices that are cheap, but might go lower. And that's something we talk about every day. Took us a lot of time in our 10:20 meeting for Investors Club owning, but we do our morning meeting.
We spent a lot of time just talking about pain. Taking pain. Now, there are some areas that remain extremely dangerous. You've got the cohort that thrived during the worst days of the pandemic. Watch these stocks every day. You will not believe what happens. DoorDash, Airbnb, Etsy, Carvana, Affirm, Wayfair, Shopify, Roblox, Roku, PayPal and Block, formerly known as Square.
These are just plain old black holes now. I have no idea when they'll stop going down. I've rarely seen stocks act this badly in my life other than in the Great Recession. A silly comparison given that they're pristine balance sheets, aside from Carvana, and the dot-com bust, also absurd given that these are real companies, some of which have real earnings.
The multiple compression here, what people will pay for those earnings, is stunningly dark, very hard to fathom. If these were crummy companies with no hope to ever turn a profit, then these declines would make sense. But maybe they don't. I don't see it that way, though. That said, these stocks are kryptonite here.
Oh, and I understand, as bad as those stocks I just mentioned, almost every SPAC or IPO from the last 18 months is far worse. Those There's 600 of those. Do you know that I'm willing to say that of all those 600, probably 95% it's not too late to sell? Finally, let's try to fathom this. Last night we left here and decided that the Fed had done what was necessary to get things started and crush inflation.
There was a lot of joy. There were many buyers of tech up the quarter of four. Even at 4:00, I saw buyers of tech. They were all over the place. That close yesterday was strong and healthy. It looked like things were better. But then shortly after 4:00 a.m. this morning, and I watch this stuff like a hawk, our markets were hit with wave upon wave of selling of tech stocks from overseas.
It was buy road selling. They weren't trying to get good prices. They were either running ahead of lower prices here or more likely they were just scared sellers from overseas who were trying to dump everything tech. Either way, they didn't have much discretion and they set the tone for today's disaster.
Where were they yesterday from 3:00 to 4:00 p.m. where there were nothing but buyers with tech? Well, the answer is, if they were in Europe, they were closed. Couldn't take advantage of those higher prices. So, bang them down before before most of us woke up. We know, for instance, that the Swiss Central Bank owns a ton of our tech stocks.
Maybe they were selling between 4:00 and 5:30 at this morning. Maybe the Swiss were just bolting. Makes sense. Many of these companies have giant buybacks. They could have worked with the CFOs of those companies to get better prices, but the sellers just didn't care. What Central Bank really would care about better prices when the dollar appreciation has made up for so much pain?
In short, things are happening so way too fast. Traders should take action every data point. Investors, they will need to take action on data points that truly change the fundamentals, but they're all lost. Bottom line, as much as the Fed wants a slower economy and even a lower stock market, the repricing of all equities is creating small opportunities.
But until things slow down with the tape, those opportunities would and could lead to more pain. So, if you do buy, do not buy so aggressively. Stay away from the black holes. Don't touch the the half a league 600 that have been introduced to you in the last 18 months. And accept the fact with the oscillator at minus 10, it should probably let up, but it may not be over.
How about Joel Joel in Texas? Joel. Hey, Mr. Cramer. Thank you for taking my call. What do you think about Ford? Well, look, I think Ford is very inexpensive at 11. It's got a good yield, but the problem with Ford is they have warranty issues and they have what I regard as being commodity issues. The commodity issues are being clearing up.
But the the amazing thing about Ford is well as cheap as it is because it's not Tesla, it is not going to get the price earnings multiple it deserves. I wish that the insiders would start buying already cuz you know, it's yields 3 and 1/2. We sold some in the 20s for the charitable trust. Thank heavens.
All right, the repricing of all equities is creating some opportunities. But until things slow down with the tape, many of these opportunities just aren't yet worth taking. On Mad Money tonight, the Fed announced a 75 basis point hike yesterday and the banks seem to shrug off the news or actually send themselves down.
I'm breaking down why that might be a group that is worth buying. It's 1990-1992 for them. Then four candidates have emerged as we start a long interest rate cycle and I'm revealing who they are and who's worthy of listening to. And Ferguson makes tools to heat up your home. It'll be a real life test of how the economy's doing and how your house is doing.
But can it heat up your portfolio? I'm talking the company's top brass. Want you to stay with C.
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