Cramer's game plan: Increased volatility could turn positive with help from Trump, Fed
- CNBC’s Jim Cramer clues investors in to what he’ll be watching in the week ahead as stocks try to recover from a dramatic sell-off.
- The “Mad Money” host has his eye on earnings from Bank of America, Netflix and more.
Friday’s volatile trading session may have helped stocks pare their losses from earlier in the week, but CNBC’s Jim Cramer said it would take more than a market rally in China to mount a sustainable recovery.
“When the stock market falls as hard as it’s been falling for the past week, it doesn’t take much to give us a bounce,” the “Mad Money” host said. “But, listen, we won’t get [a] sustainable rebound until it’s based on something domestic, something here, which is why we had that intraday sell-off before the late-afternoon bounce.”
And the concern that initially spurred the sell-off — the idea that the Federal Reserve’s policy could cause an economic slowdown — was still very much intact among investors, Cramer warned.
With that in mind, he turned to his game plan to lay out how investors should look at the week ahead:
Monday: Bank of America, J.B. Hunt Transportation Services
Bank of America: Bank of America CEO Brian Moynihan has a leg up on his competition as he prepares for the big bank’s earnings report on Monday, Cramer said.
“He has the advantage of knowing that anything even hinting at a possible slowdown that he says will put the kibosh on his stock,” he said. “Bank of America’s stock is cheap, but as we saw from J.P. Morgan, that doesn’t mean it can’t go lower.”
J.B. Hunt: Cramer doesn’t normally listen to trucking company J.B. Hunt’s conference call, “but we’re not in normal times,” he said.
“We keep hearing that there’s a shortage of truckers in this country and it’s making transportation more expensive, so let’s go directly to the source to find out what the heck is going on,” he said.
Tuesday: UnitedHealth Group, Johnson & Johnson, Goldman Sachs, Morgan Stanley, IBM, Netflix
UnitedHealth and Johnson & Johnson: Both holdings in Cramer’s charitable trust, health care giants UnitedHealth and Johnson & Johnson will report earnings Tuesday morning.
“UnitedHealth is the best-run health insurer in America. I bet they can raise numbers,” Cramer said. “As for JNJ, it’s been trading like it’s got earnings risk, but they’ve got the best pipeline in the business and that’s what matters most. I hope it pulls back and you can get a chance to buy into further weakness.”
Goldman Sachs and Morgan Stanley: Neither one of these investment banks is “getting anywhere near the respect” it deserves, Cramer said ahead of their earnings reports. He expected good results from both, but admitted he’s miscalculated investment bank earnings in the past.
“I honestly can’t believe that Goldman Sachs, my alma mater, is the cheapest in the entire group. I do hope that David Solomon, the new CEO, … sketches out a vision for how to restore growth, and that Stephen Scherr, the new CFO, is polished enough to paint a positive picture of falling expenses and rising revenue,” Cramer said. “This stock has sold off in the wake of its conference call for ages. Maybe the new team can break that pattern.”
IBM: With shares of IBM hovering around their 52-week lows, Cramer hoped that even a modest quarterly report would help the stock recover.
“To me, IBM doesn’t seem to have much downside. It does sport a 4.5 percent yield here,” he said. “I just don’t know if the company’s gradual embrace of faster-growing, strategic-imperative businesses will produce blowout numbers, which is what this stock really needs. But this low, … I think it’s probably going to be OK no matter what.”
Netflix: Streaming colossus Netflix will also issue its quarterly report, the first since the company’s slowing subscriber growth disappointed investors in June.
“Unless those numbers pick up from the last quarter, this stock’s not going anywhere,” Cramer warned. “That said, Netflix is down more than $80 bucks from its highs, and it was down $100 yesterday. Long-term, this might be a good buying opportunity.”
Wednesday: Abbott Laboratories, United Rentals
Abbott Laboratories: Calling Abbott “one of the steadiest companies on Earth,” Cramer said he anticipated good earnings results and even raised guidance from the sprawling biotechnology company.
“I think Abbott’s the best place to be of all of these stocks, believe it or not,” he said.
United Rentals: While he liked the company, the “Mad Money” host worried that weakness in the construction space might have affected business at United Rentals, which loans construction equipment to builders.
“That would confirm my view of a looming Fed-mandated slowdown,” Cramer said.
Thursday: Nucor, PayPal, American Express
Nucor: The Trump administration’s tariffs on imported steel should have improved business at Nucor, which is gearing up for its Thursday earnings report, Cramer said.
“This steelmaker really should be making a fortune given that the tariffs on imported steel have now kicked in, so if the numbers aren’t great, I think it’ll be surprising to Wall Street,” he said.
PayPal: PayPal’s stock has tanked from $93 to $74 a share in the span of one month before recovering to $79 on Friday, making Cramer all the more curious about the company’s upcoming earnings report.
“I told ActionAlertsPlus.com club members that you had to buy the weakness, something I’ll stress again at TheStreet.com’s Boot Camp, which I’m running all day tomorrow in New York City,” Cramer said Friday. “We want CEO Dan Schulman, on that conference call, to tell us more about his monetization efforts — remember Venmo? — not to mention how the recent acquisitions have been working out.”
American Express: Cramer will also watch payments play American Express as the company report earnings.
“There’s been a pronounced pattern here where the stock goes down on the numbers no matter what they are and then bounces back up upon further reflection,” he said. “Could happen again.”
Friday: Honeywell, Schlumberger, Procter & Gamble, VF Corp.
Honeywell: Cramer-fave and charitable trust holding Honeywell will report earnings on Friday and give investors an explanation of what the company will look like after its impending spin-offs.
“I bet we’ll like what they have to say,” Cramer said.
Schlumberger: Oilfield service play Schlumberger, on the other hand, has been a tough holding for Cramer’s charitable trust, the “Mad Money” host said.
“I figured that the dramatic run in oil prices would somehow be reflected in this stock,” he said. “I was plain wrong. The business is just bad, as a surprising number of countries and companies simply refuse to increase their drilling budgets even though oil’s gone up so much. It’s been a severe disappointment.”
Procter & Gamble: An earnings announcement from consumer goods giant Procter & Gamble should give investors a sense of whether activist investor Nelson Peltz’s involvement has helped the company.
“Will the company announce something new and different, or will Peltz’s addition the board of directors make no impact on the company’s sluggish earnings? If there’s any additional growth, or, even better, a restructuring, the stock could fly,” Cramer said.
VF Corp.: Cramer preached caution when it came to Friday’s earnings report from VF Corp., the apparel manufacturer and parent of North Face, Vans and other high-profile brands.
“The apparel stocks, especially the luxury-related ones, have hit a wall, in part because of worries about trade barriers, … but also because of fears that the numbers can’t possibly be as good as they were last year at this time,” he warned.
Tuesday and Friday will be the most jam-packed days of the week earnings-wise, but Cramer will also keep an eye on the geopolitical overlay that’s been weighing on stocks.
“The bottom line? No matter what happens, I expect heightened volatility, but after a week of seemingly endless selling until today, it can be volatility to the upside, as long as the president cools the rhetoric and the Federal Reserve at least acknowledges some nascent weakness in the system,” he said.
WATCH: Cramer's game plan for a huge earnings week
Disclosure: Cramer’s charitable trust owns shares of J.P. Morgan, UnitedHealth Group, Johnson & Johnson, Goldman Sachs, Abbott Laboratories, Nucor, PayPal, Honeywell and Schlumberger.
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