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Jim Cramer on rate hikes, jobless claims and an oversold bounce

Published

1 year ago

December 29, 2022

We have had a grim run this year, particularly in the Nasdaq Composite , and Thursday and Friday may be your last days to be able to offset the wins you may have taken already. I think there have been plenty of gains taken this year simply because the Federal Reserve has given us a 4.3% yield on the 2-year Treasury, meaning risk-free gains over the next couple of years. I watch the 2-year Treasury like a hawk and it is signaling that the Fed will be done raising rates at about 4.25%. Still higher, but not insanely higher. I know a lot of people want to think that the unemployment claims of 225,000 for the week ended Dec. 24 are triggering a rally Thursday, but that’s kind of ridiculous. Wake me when it’s 325,000. Remember “in place” numbers don’t change the Fed’s mind on slowing the pace of rate increases. However, we have finally, finally gotten oversold, with the S & P Oscillator at minus 5.3% Thursday — and the Oscillator has never been wrong in 2022. We are doing a little buying with the Oscillator this low. We have waited for what seems like forever to do some buying, but the odds simply haven’t favored the bulls during tax-loss selling time. We bought some shares of Ford Motor (F) with a 5% yield on the belief the stock can make a comeback. The automaker has been troubled by supply chain issues, which seem to have been resolved, along with commodities prices that have now peaked and ongoing issues with warranties. So why did Ford’s share price, down nearly 45% year-to-date, get so low? The obvious: High interest rates, expensive car payments (except for credit unions) and the fear of a recession. I think that the stock adequately discounts all 3 of those factors. It’s so tempting to get out ahead of what, I fear, is still another strong employment number because there’s still lots of hiring and not a lot of firing. There’s still jobs in tech, amazingly, despite the pasting that it has taken. There’s so few layoffs in even the most redundant of fintech and enterprise software firms, especially companies that measure and analyze data or help you develop the tools to do so. The public ones are bouncing hard today but I sure don’t trust them. So, enjoy the oversold bounce. But remember without an upcoming weak employment number we will have to hear endless chatter about how 2023 will have more rate hikes than we thought. Steel yourself, though. In 6 months, I believe these numbers will have a very different tune to them as the rate hikes kick in and the tech giants, at last, run out of money and time. (See here for a full list of the stocks in Jim Cramer’s Charitable Trust.) As a subscriber to the CNBC Investing Club with Jim Cramer, you will receive a trade alert before Jim makes a trade. Jim waits 45 minutes after sending a trade alert before buying or selling a stock in his charitable trust’s portfolio. If Jim has talked about a stock on CNBC TV, he waits 72 hours after issuing the trade alert before executing the trade. THE ABOVE INVESTING CLUB INFORMATION IS SUBJECT TO OUR TERMS AND CONDITIONS AND PRIVACY POLICY , TOGETHER WITH OUR DISCLAIMER . NO FIDUCIARY OBLIGATION OR DUTY EXISTS, OR IS CREATED, BY VIRTUE OF YOUR RECEIPT OF ANY INFORMATION PROVIDED IN CONNECTION WITH THE INVESTING CLUB. NO SPECIFIC OUTCOME OR PROFIT IS GUARANTEED.

A ‘help wanted’ sign is displayed in a window of a store in Manhattan on December 2, 2022 in New York City.

Spencer Platt | Getty Images

We have had a grim run this year, particularly in the Nasdaq Composite, and Thursday and Friday may be your last days to be able to offset the wins you may have taken already.

Source: CNBC

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