Welcome to crane america! Other people want to make friends i’m just trying to make you some money. My job is not just entertaining but to educate, teach put in perspective, call me 1, 800, 743, cbc or tweet me at jim cramer. Okay, we know inflation’s raging right. Now we hear from all the companies that buy raw materials from fatty oils. You eat to light sweet crude, that you burn natural fruit or natural gas it’s all sword in price. This morning we got a consumer price index number that uh. Actually it documents it documents. What i call the house of pain, inflation with 5.4 increase. Despite the headline, the average is barely reacted down. Hey it took down 107 points, hasn’t been slipping, 0.35 percent now it’s, not declining 0.3 and most of the time the nasdaq was in the block i mean you know this is important, because we certainly saw this one coming still prices for almost everything the consumers buys Have gone up from used cars because automakers don’t have enough semiconductors to boost production of new ones, to packaging, to freight, and so many so many other ones. So, okay, what do we do? What do you do when you see the biggest inflation spurt in 13 years? Do you run for the hills? Do you panic? Do you dive? Do you get under the desk because they’re shooting you? Oh simple, bye, bye, bye, you buy big tech because it is immunized against the two scourges that wall street’s worried about rising raw costs and the possibility of interest rate hikes from the fed.
If jay pal suddenly gets cold feet and decides to tape or even tighten out of the mythic plan, i don’t think powell’s going to change the stance. But there are a lot of money. Managers disagree and they’re more important than i am, and when we see a number like this well what they sell a lot of other things, they’ll still sell and they buy because they want to be in house of pleasure. Let me put it like this: there are some huge patterns to keep repeating themselves in this market and if you get a sense of them – and i know i can help – you see them it’s much easier to pick – winners it’s the world view it’s the stock whisperer. This spring we had a furious rallying industrials. You heard lots of people talk about the market pivoting from growth to value, but that was a canard. That was a dumb way to look at it that confused you, that was just wall street gibberish. The reality was that beating down cyclical stocks or industrials were coming back thanks to a resurgent economy. Take a look. This is the prototypical one. Freeport mick, moran, fcx largest copper mine on earth is freeport. Really a value stock. Well, wait a second! It was certainly a value stock here when it was traded. 12 bucks. Last august – okay, you got me, but then it rallied to 46 hardly value. Yet the people on tv kept saying it’s value value here: stupidity here more actually it’s a boom and bust stock, that’s hostage to the broader economy and i’ve known that and i’ve lost a lot of money on it.
When i got too, i got too complacent, which is what people did when i was up there see as long as the fed was eager to keep interest rates. Low freeport in its compadres could keep climbing, but then on may 12th we got a similarly hot cpi number and the industrials all got obliterated. They really haven’t recovered. Since then, money has flowed back into the highest growth stocks. Why? Because money managers figured that the fed would have to slam the brakes on the economy to stamp out inflation and hyper growth. Tech stocks are actually what works best during a slowdown because they do well anyway, it’s all about anticipation here, not a concurrent reaction. This has a real bad feel to me sure enough. We got the same scenario this morning, albeit with a slightly higher cpi number and what happens. Those same tech stocks were from the get go because people remember the pattern from may 12th, at least at first before giving up their gains. You know, sky high inflation was pretty baked in the last hour was what i call sloppy. I think the techs can resume their climb in the near future. Now i want to look at some of the winners today, okay, because they really tell you a lot i’m going to start with alphabet, the parent of google all right. Now we don’t talk about this gem of a stock nearly enough, even as it’s up 45 for the year, some of that’s, because the principles, the principles are painfully shy.
Some of us prac, because they don’t particularly care about ginning up good publicity. They don’t think it does anything for them. Think about what happens to alphabet when there’s inflation, oil and gas prices have skyrocketed right. You agree, but does alphabet have an energy problem. I want you to do this after the show not now go to the google search page, you visit a dozen times a day check out the bottom. No one looks at it carbon neutral since 2007. I don’t think they have an energy problem. Does alphabet have a problem with plastic and packaging, so sky high no way see they got an asset light brain heavy business model? How about rising freight costs? Oh man, they hobbled. So so many companies are short truck drivers like all those consumer package goods place. Do they have to deal with the port slowdown? Maybe they got some important materials waiting on ships from china? I don’t know where, where one of the chief ports has been struck by kovid, of course, not alphabet, barely ships, anything are they bothered by the forced measure of the kiliman paint? Now they don’t paint anything i’ve been out there i mean a lot of the walls. Are even they’re not even painted it’s what i call a bonanza of non inflation, then there’s microsoft, which broke out today for much the same reason i mean you think something could happened here. No, it was more of a celebration of nothing as microsoft is barely any meaningful raw cost.
Now we know that niagara, the the packaged food company had to cut numbers this morning. Why large part because of rising costs, especially for edible fats and oils. Now i am not seeing that kind of pressure at microsoft, maybe in their cafeteria now we’ve heard many companies talk about a shortage of truck drivers. I doubt microsoft has any drivers except for maybe people, you know guys shut them. People around the campus, how about apple it’s, got a fabulous brand, perhaps maybe the best in the world best customer service. You know it’s got the highest score, all that stuff goldman sachs reported today and they spoke lovingly of their partnership with apple on their credit card. Then later, in the day, it was reported that these two have a buy now pay later plan. Oh, do people love buying out pay later and it’s in the works. I think apple’s got a lot of upside with minimal downside. I like outbid microsoft, though it makes lots of hardware which means raw costs are an issue mostly materials, but apple’s customers love their products so much that the big wireless carriers have to subsidize the costs as they fight each other for market share. Do you notice t mobile’s up again today? Have you noticed that att never does anything? I wonder why that is randall steven, no, never mind that’s the old days, not much in the way of supply issues at apple they’ve been loyal and large customers for tons of expensive materials, but their products are seen as necessities, not luxuries, which brings me full circle To the actual winner today to pepsico raymond laguardia, smart fella this morning, the soda and snack maker reported a monster truly monster recorder.
I was quite surprised when i saw it. I saw at 603, am, i said, got ta, be a mistake, got to go through this? No mistakes: it did have plenty of inflation throughout its entire supply chain. So then, how the heck could pep have a good quarter simple, because the other thing, besides tech, that works, are beloved brands that allow them to raise prices ever so slightly and pass those higher costs onto the consumer. The stuff will still sell and that’s a big reason why pep could value two percent today and, unlike the moves in alphabet, microsoft and apple, that was going to have some staying power tomorrow, i believe numbers have to go higher. Still not everyone is like pepsico many companies can’t afford to pass their higher costs on to the consumer, because people will rebel and that’s going on all over the country. By the same token, not everyone can handle a sudden rise in interest rates, which is what many money managers are betting on too, even as i think, it’s very unlikely, so here’s the bottom line. If you want one industry, that’s immune to both inflation and a fed induced slowdown, well, it’s, big cap tech. Meanwhile, we’ve heard from a dozen companies so far in the last few weeks of the kind of pre earning season and nearly all of them talked about how they had to spend lots of time and money going where going digital. So, if you’re really worried about this red hot inflation number, why not just buy the digitizers don’t miss a second of mad money.
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