Stocks discussed on the in-depth session of Jim Cramer's Mad Money TV Program, Friday, April 6.
After Friday's selloff, the market has become even more volatile and investors should be vigilant. "The key is to recognize that you're only human. Your sense of timing is going to be fallible. That's especially true with this current White House and a Federal Reserve that's now tightening. You can't presume anything other than a good chance that when you buy, you're going to be wrong," said Cramer. With that, he discussed the game plan for the week.
Investors will be focused on China's reaction of retaliation on Trump's proposal of placing tariffs on an additional $100B worth of Chinese goods. "I expect China will announce some more duties of their own as retaliation this weekend or early next week, and that's likely to cause more turbulence," said Cramer.
Ethan Allen (NYSE:ETH) analyst meeting and PPI.
Ethan Allen's analyst meeting can shed light on whether the administration will put tariffs on furniture imports. "We don't make as much furniture as we used to in this country. Why? Because it's so much cheaper to make this stuff in China. Unlike many retailers that rely on Chinese manufacturing for bargains, this company could, theoretically, be a huge beneficiary of any tariff on Chinese furniture imports," said Cramer.
The PPI along with CPI will give a good snapshot of the economy and Cramer expects to see little inflation which will give room to the Fed for more rate hikes.
BlackRock (NYSE:BLK) earnings: Are investors selling their holdings on market uncertainty? BlackRock's earnings can answer this question.
The big banks kick off the earnings season.
JPMorgan (NYSE:JPM), Wells Fargo (NYSE:WFC), Citigroup (NYSE:C) and PNC (NYSE:PNC) will report earnings and Cramer expects good numbers from them. "It's essential to this market that all four report good numbers. We want to hear about bountiful loan growth, steady reserves, possible increases in buybacks or dividends and a sense that deregulation is already producing some good results," said Cramer. The market needs new leaders to offset the declines in tech and other stocks due to trade war fears.
"Be on your toes, carry a lot of cash and let these endless panics give you better prices on the way down, better prices than you might otherwise deserve," concluded Cramer.
Trade war with China
As the trade war with China is in the news, what are the big managers buying? "These hedge funds are putting on what we call paired trades, betting against one company with huge Chinese exposure and going long a similar company with little-to-no Chinese business. The idea is that whatever the industry, the stock with China exposure is going to perform worse than the one without it. I want to make it clear that I am not advocating this strategy for you homegamers," said Cramer.
In industrial stocks, they would short Caterpillar (NYSE:CAT) which sells a lot of equipment in China and buy United Rentals (NYSE:URI) which is a domestic operator. In the coffee space, Starbucks (NASDAQ:SBUX) depends on growth in China. "I doubt the Chinese would ever retaliate against Starbucks because it's a huge employer that pays its workers well and has a highly respected brand. But if they get really, really angry, then you'll see managers go short Starbucks and go long, say, Dunkin' Brands (NASDAQ:DNKN) or McDonald's (NYSE:MCD)."
These strategies are risky for individual investors as Trump might get a deal with China and then these stocks will be crowded shorts.
Even when the markets are declining, there is always a bull market somewhere. The apparel stocks had a bad year in 2017 and they have started to recover in the past few months. Nike (NYSE:NKE) is up more than 30% since Q4 due to apparel and PVH (NYSE:PVH) has gained 50% in the last 12 months on strong global revenue from their premier brands.
Off the charts
Cramer went to the charts to get a reading on the fear gauge - the CBOE Volatility Index, with the help of technician Mark Sebastian.
The S&P500 and the VIX were rising in pairs in January which signaled a change in direction. The market went down in February and the S&P500 is testing the February lows again. As the VIX is nowhere near its highs, Mark thinks an upside rally may be near.
While Mark has a good track record, Cramer is not fully convinced as the Chinese are in partial control of the stock market volatility.
Viewer calls taken by Cramer
Blackstone (NYSE:BX): It has been a good investment and Cramer would stick with it.
PayPal (NASDAQ:PYPL): The stock is down a lot and Cramer still thinks it's a buy.
Take-Two Interactive (NASDAQ:TTWO): It's become crowded. Cramer likes e-sports but he wants the volatility to go down before one can buy again.
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