Earnings and data should give clues to Fed moves
CNBC Jim Cramer Friday previewed next week’s schedule of economic and earnings data, which will provide fresh insights into Wall Street’s top concern: whether the Federal Reserve’s interest rate hike campaign will drive the US into recession .
“We want the Fed to talk about a great game, without having to do too much,” Cramer said on Friday’s episode of “Mad Money.” “Talking is better than acting. We want [Fed Chair Jerome Powell] scare the economy into slowing down under its own weight. We don’t want endless rate hikes… that will destroy everything in their path.”
Cramer’s comments on Friday came after the stock market ended consecutive negative weeks, with the S&P 500 now down 5.6% in December. The decline came as investors grow more concerned that the US economy will slip into recession next year. On Wednesday, the Fed high interest rates by half a percentage point to their highest levels in 15 years.
All earnings, revenue and economic data estimates are courtesy of FactSet.
Tuesday: New homes and profits from General Mills, FedEx and Nike
Housing Starts in November
- Seasonally adjusted annual rate: 1.41 million
The Census Bureau’s Tuesday morning report on residential construction is notable because of the spike in home prices during the Covid pandemic, according to Cramer. Building more houses is one way to lower prices and help cool inflation in general. However, he cautioned that concerns about the US economy make housing starts in November unlikely to be strong.
- Q2 2023 earnings before the bell; conference call at 9 am ET
- Projected EPS: $1.06
- Projected revenue: $5.19 billion
General Mills has a tough earnings setup, Cramer said, because shares are up 29% year-to-date despite a brutal year for the overall market. The company has been able to raise prices because its cereal brands are beloved, he said.
fedex
- Second quarter 2023 earnings after closing; conference call at 5:30 pm ET
- Projected EPS: $2.82
- Projected sales: $23.70 billion
When FedEx last reported, it detailed major cost-cutting plans that should help boost profitability. Cramer said that for any investor who thinks the Federal Reserve cannot ultimately raise interest rates as much as it projects, a post-earnings sell-off could create an opportunity to buy FedEx stock.
Nike
- Q2 2023 earnings at 4:15 pm ET; conference call at 5 pm ET
- Projected EPS: 65 cents
- Projected sales: $12.58 billion
Nike has received a number of analyst updates of late, which Cramer says is likely because analysts are trying to get ahead of the full-scale reopening of the Chinese economy. “I think they’re going to be right,” she said.
Wednesday: Carnival, Cintas and Micron earnings
- Q4 2022 Earnings Release Before Open; conference call at 10 am ET
- Projected loss: loss of 88 cents per share
- Projected revenue: $3.9 billion
Experiential spending has remained resilient despite concerns about the economic slowdown, and Cramer said he expects Carnival management to continue to sound optimistic.
ribbons
- Q2 2023 earnings before the bell; conference call at 10 am ET
- Projected EPS: $3.03
- Projected sales: $2.13 billion
Cramer said the business services company is an interesting barometer for the general state of small and medium-sized businesses. “If Cintas says business is better than ever,” Cramer said, it could suggest that the Fed should stay aggressive.
micron technology
- First quarter 2023 earnings after closing; conference call at 4:30 pm ET
- Projected loss: loss of 1 cent per share
- Projected revenue: $4.14 billion
Cramer said he will listen carefully to what the memory chipmaker has to say about inventory levels. If Micron indicates there is still a glut, Cramer said semiconductor stocks in general could see another leg lower. “I think the most likely outcome will be a glut, and you’ll see a lot of chip stocks for sale on Thursday.”
Thursday: Paychex and Carmax earnings
- Q2 2023 earnings before opening; conference call at 9:30 am ET
- Projected EPS: 95 cents
- Projected sales: $1.19 billion
Cramer said he thinks Paychex is an even better barometer of small and midsize businesses than Cintas. But as with Cintas, Cramer said that if Paychex talks about a healthy business environment, it could mean the Fed might need to issue a few more half percentage point rate hikes.
Carmax
- Q3 2023 earnings before the bell; conference call at 9 am ET
- Projected EPS: 73 cents
- Projected revenue: $7.34 billion
From an inflation and Fed policy standpoint, Cramer said Carmax is another company he expects to signal weak sales and falling prices.
Friday: Inflation data
November Personal Consumption Expenditure (PCE) Price Index
- Core MoM: 0.2% expected
- Core year-over-year: 4.6% expected
The core PCE is the Federal Reserve’s favorite inflation gauge. Excludes food and energy. Cramer said that if PCE data suggests inflation “keeps smoldering,” the Fed may need to keep its foot on the gas.