Today, the stock market has been a great success and investors should take advantage, said Jim Cramer at his Crazy money viewers on Wednesday. After months of optimistic comments on the economy, Federal Reserve Chairman Jay Powell made a sudden escape, changing his mind about the pace of interest rate hikes.
Cramer said for weeks that the Fed saw the economy badly, ignoring the slowdown in housing, auto, oil and retail. However, today, Powell's shares are in line with Cramer's "one and and wait" strategy for interest rates – ie, a new rate hike, then a pause to evaluate. economic data – the news that led to a magnificent recovery.
The shares managed to move from bearish to bullish, said Cramer, with Salesforce.com (CRM) leading the charge, up 10.2%, taking the remaining FANG shares. Amazon (AMZN) closed up 6% and Apple (AAPL) closed the day up 3.8%. Other economically sensitive stocks, such as transportation and industries, also rebounded, which is exactly what should be happening in a bull market.
Investors are not yet on the run, warned Cramer, as tariffs and trade will continue to make headlines and it is likely that President Trump will increase Chinese tariffs by 10 percent. % to 25% if no agreement can be reached.
However, to date, investors are no longer fighting the Fed. Powell has revealed himself to be a flexible leader, Cramer concluded, and we should all celebrate this victory.
On the subject of real money, Cramer said the Fed should crack down on non-bank loans now. Get more of his ideas with a free trial subscription to real money.
What actions can hold?
Can technology stocks organize a sustainable rally? Cramer said it depends on the stock. In the case of DXC (DXC) technology, the answer is probably "No".
DXC was created almost two years ago after the merger of the former computer consulting firm and its merger with Computer Sciences Corp. The DXC stock has gone up 59% in their first 18 months, but these last two months have gone from $ 96 to just $ 62 a share.
Initially, DXC realized its numbers by reducing costs. The company then attempted to boost growth by abandoning its slower-growing public sector business, Perspecta (PRSP). As revenues continued to fall, investors began to worry that cutting costs was hurting DXC's ability to conquer new business.
Yesterday, DXC detected an analyst upgrade, citing low-cost valuation of the company. But Cramer reminded viewers that stocks are not cheap when revenues are down. He felt that the stock could see a short-term rebound as the global market picks up, but in the long run, tech investors want growth that DXC just does not have.
Executive decision: Qualcomm
For its "Executive Decision" segment, Cramer has been meeting with Steve Mollenkopf, CEO of Qualcomm (QCOM), a share down 25% from its September highs. Shares currently report 4.4%.
Mr Mollenkopf explained that the next 5G revolution would start next year and that mobile operators could offer a service ten times faster than 4G service for only 1/30 of the price. This means that every company with Internet-connected devices will benefit.
The launch of 5G will begin in the US and South Korea in the spring, said Mollenkopf. Europe will start in the middle of the year and China will follow in the second half. There are many activities in the world in preparation for this deployment.
Mollenkopf added that the United States is well positioned to play a leading role in 5G, but that governments around the world are interested in the huge opportunities it offers.
When asked to take stock of the ongoing legal battle between Qualcomm and Apple, Mr Mollenkopf said the two companies were continuing their efforts in view of a resolution.
Cramer and the AAP team are adjusting some of their weaker names to this market strength. Find out what they say to their investment club members and join the conversation with a free trial subscription at Action Alerts PLUS.
Linde and Praxair
Investors looking for winners in an uncertain environment need all the help they can. Fortunately, our government is happy to help by allowing a growing number of companies to merge with their competitors.
For Cramer, nothing is better for a company than being part of a perfectly legal oligopoly. That is why he is a fan of the Linde Industrial Gas supplier (LIN), who has just been granted permission to acquire Praxair (PX). The merger gives the Linde a 32% market share, with the United States having only three major players in the field.
We have already seen this trend in airlines. In the past, air travel was very competitive and the airlines would shut down like clockwork. But the government then approved a number of airline mergers, which controlled 70 percent of domestic flights under the control of only four carriers. In fact, many flights currently have no competition.
The same goes for bottles and cans, where Ball Corp (BLL) was allowed to swallow its competitors, culminating in a duopoly. Ball's shares are up 31% for the year.
As for Linde, said Cramer, the company deserves a multiple bonus of 20 times its profits and he thinks the stocks are only going up.
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