Stocks could be hostage to the Fed and inflation, says Jim Cramer

CNBC Television
13 May 202410:20

TLDRJim Cramer discusses the impact of inflation and the Federal Reserve's actions on the stock market, suggesting that while stocks might be held hostage by these factors, technology could potentially liberate them. He expresses concerns about inflation but remains hopeful about the cost-reducing potential of artificial intelligence. Cramer highlights the benefits of AI innovations like the AI supercomputer introduced by Biohive and the advancements in drug development. However, he also acknowledges that in the short term, AI cannot address all current inflationary issues, such as housing and car prices. He advises investors to focus on stocks and companies not heavily influenced by interest rates and cautions against the negative impact that rising inflationary numbers could have on the bond market, potentially leading the Fed to maintain higher rates. Cramer emphasizes the importance of not ignoring the near-term economic challenges and the need to invest wisely in the current climate.

Takeaways

  • 📉 Jim Cramer discusses the potential for stocks to be influenced by the Federal Reserve's actions and inflationary pressures.
  • 🚀 He expresses optimism about the role of technology, particularly artificial intelligence, in reducing costs and potentially combating inflation.
  • 🏠 Cramer is concerned about housing prices remaining high but acknowledges the impact of companies like Amazon in reducing the prices of goods and services.
  • 📈 Despite the Dow dipping and the Nasdaq advancing, Cramer highlights the importance of the crucial price index and its influence on the market.
  • 💊 He mentions Biohive 2, a new AI supercomputer, which could accelerate scientific and healthcare work, possibly speeding up drug discovery and development.
  • 📈 Cramer is hopeful about AI's long-term benefits but acknowledges that in the near term, it won't have an impact on current inflationary issues.
  • 🤖 He talks about the capabilities of AI, such as the advanced ChatGPT 4.0, which can perceive emotions and perform tasks like singing stories with correct intonation.
  • 🏢 Cramer questions whether AI can address the shortage of goods like housing and the high costs associated with them, suggesting that AI's impact on these areas may not be immediate.
  • 📈 He advises investors to focus on stocks and companies that are not heavily influenced by interest rates, which can be detrimental during periods of high inflation.
  • 🚗 Cramer discusses the challenges in the automotive industry, noting a shift away from the expected move towards electric vehicles.
  • 💡 In summary, Cramer is excited about the potential of AI to be a game-changer in the future but cautions that current inflationary concerns need to be managed in the short term.

Q & A

  • What is Jim Cramer's primary mission for his show 'Mad Money'?

    -Jim Cramer's primary mission for 'Mad Money' is to make viewers money and level the playing field for all investors, promising to help them find a bull market somewhere.

  • What does Jim Cramer suggest could potentially free stocks from the hostage situation created by the Fed and inflation?

    -Jim Cramer suggests that the stealth forces of technology, particularly artificial intelligence, could potentially free stocks from the hostage situation created by the Fed and inflation.

  • How does Jim Cramer view the impact of Amazon on drug and grocery prices?

    -Jim Cramer views Amazon as a force that can bring down the prices of drugs and groceries, which is a positive development in the market.

  • What is the significance of the AI supercomputer introduced by BioHive 2 as mentioned by Jim Cramer?

    -The AI supercomputer introduced by BioHive 2 is significant because it can speed up the work of scientists and healthcare professionals, potentially reducing the time to discover and develop new treatments from years to months, or even days to hours.

  • What is Jim Cramer's perspective on the impact of high immigration on housing prices?

    -Jim Cramer believes that high immigration contributes to higher housing prices because it increases the demand for housing. However, he also notes that immigration helps keep wage inflation down.

  • How does Jim Cramer describe the current state of the stock market in relation to the upcoming CPI report?

    -Jim Cramer describes the current state of the stock market as being on the verge of significant changes due to advancements in technology, but he also acknowledges that in the near term, the market is facing inflationary pressures that may drive up interest rates, which could be influenced by the upcoming CPI report.

  • What does Jim Cramer suggest investors should do in light of the current inflationary environment?

    -Jim Cramer suggests that investors should stick with stocks and companies that are not hostage to interest rates, particularly growth stocks, which tend to perform poorly when interest rates rise.

  • What is Jim Cramer's opinion on the potential of generative AI to solve problems?

    -Jim Cramer is hopeful about the potential of generative AI to solve many problems and bring about game-changing possibilities, but he emphasizes that this is a long-term perspective and that in the near term, it won't have an impact on the current inflationary concerns.

  • How does Jim Cramer respond to a caller's concern about rising credit card debt in relation to investing in Visa?

    -Jim Cramer reassures the caller that concerns about rising credit card debt are more relevant to banks than to Visa, as the company continues to issue more cards and is in a strong position. He advises the caller that it is a good level to invest in Visa.

  • What advice does Jim Cramer give to a caller who is a new member of an investing club and considering increasing their position in Eaton?

    -Jim Cramer advises the caller that Eaton is a great stock but trades erratically. He suggests waiting for a decline in the stock price to buy more, emphasizing the importance of timing the purchase to take advantage of price drops.

  • What is Jim Cramer's view on the gig economy stocks and whether there is room for them to run?

    -Jim Cramer believes that there may be potential for gig economy stocks to continue rallying, but he emphasizes the need to assess each company individually and consider their current performance and future prospects.

Outlines

00:00

📈 Market Insights and AI's Role in Inflation

The first paragraph introduces the show 'MAD MONEY' with Jim Cramer's mission to make money for viewers and level the investment playing field. It discusses the current market situation, where stocks are influenced by Federal Reserve inflation concerns but may be impacted positively by technology's stealth forces. There's an emphasis on artificial intelligence's potential to reduce costs, exemplified by Amazon's ability to lower drug and grocery prices. The summary also touches on the significance of the AI supercomputer, Biohive, and its potential to accelerate drug discovery. However, it acknowledges that while AI holds promise for the future, it currently has no impact on pressing issues like housing prices and rents, which are influenced by high immigration and increased demand for housing.

05:00

🚗 Navigating Near-Term Economic Challenges

The second paragraph delves into the challenges posed by near-term inflation, which is affecting various sectors such as cars, insurance, homes, apparel, and rents. It highlights the difficulty of investing in stocks during times of high interest rates and the potential negative impact on the bond market. The speaker expresses optimism about AI's long-term benefits to productivity and inflation but acknowledges the current inflationary pressures that AI cannot immediately alleviate. The paragraph also includes a discussion about Visa's stock, suggesting it's a good time to buy despite concerns about credit card debt. It ends with advice on focusing on stocks and companies not heavily influenced by interest rates and touches on the gig economy stocks and a buyback big shot that might be of interest to investors.

10:03

📞 Viewer Interaction and Show Engagement

The third paragraph focuses on viewer engagement, providing contact information for Jim Cramer and the show 'MAD MONEY.' It invites viewers to follow on social media, tweet questions with a specific hashtag, send emails, or call a dedicated number to interact with the show. This section emphasizes the interactive component of the program, encouraging audience participation and highlighting the various ways viewers can connect with the host and the show.

Mindmap

Keywords

💡Stocks

Stocks refer to shares in the ownership of a company. In the context of the video, the speaker discusses how the performance of stocks could be influenced by the Federal Reserve's actions and inflation rates. Stocks are a central theme as they represent the investment vehicles that viewers are likely interested in.

💡Fed

The 'Fed' is short for the Federal Reserve, the central banking system of the United States. It plays a significant role in regulating monetary policy, which in turn affects interest rates and can influence stock market trends. The script mentions the Fed in relation to its potential impact on stocks due to inflation.

💡Inflation

Inflation is the rate at which the general level of prices for goods and services is rising, and subsequently, purchasing power is falling. The video discusses concerns over inflation and its potential to affect the stock market negatively by increasing costs and potentially leading to higher interest rates.

💡Artificial Intelligence (AI)

AI refers to the simulation of human intelligence in machines that are programmed to think like humans and mimic their actions. In the script, AI is highlighted as a potential solution to reducing costs and increasing efficiency, which could counteract inflationary pressures.

💡Amazon

Amazon is mentioned as an example of a company that has the potential to reduce prices of goods like drugs and groceries through its vast distribution network and market power. It serves as an example in the discussion of how technology can influence pricing and potentially impact inflation.

💡Housing Prices

Housing prices are the costs associated with purchasing a home. The video script expresses concern about housing prices remaining high despite the potential for technology to reduce costs in other sectors. Housing prices are a significant component of the Consumer Price Index (CPI), which is a key measure of inflation.

💡Consumer Price Index (CPI)

The CPI is a measure that examines the weighted average of prices of a basket of consumer goods and services, such as transportation, food, and medical care. The script discusses an upcoming release of the CPI and its potential impact on the stock market and interest rates.

💡Interest Rates

Interest rates are the cost of borrowing money and are set by central banks like the Federal Reserve. The video discusses how changes in interest rates can affect the stock market, with higher rates potentially leading to a downturn in the market as they increase the cost of borrowing and investing.

💡Gig Economy

The gig economy refers to a labor market characterized by the prevalence of short-term contracts or freelance work as opposed to permanent jobs. The script touches on stocks related to the gig economy and their recent performance, indicating the sector's relevance to investors.

💡Buyback

A buyback, or share buyback, is when a company purchases its own shares from the market, which can increase the stock price and is seen as a sign of confidence in the company's financial health. The speaker mentions the power of buybacks in relation to stock performance.

💡Eaton

Eaton is a multinational power management company that provides energy-efficient solutions. In the script, it is referred to as a 'great stock' with erratic trading behavior, suggesting it as a potential investment opportunity for those who can navigate its price volatility.

Highlights

Jim Cramer discusses the current state of the stock market and its potential hostage situation to the Federal Reserve and inflation.

There is a hopeful perspective on how technology, particularly artificial intelligence, could reduce costs and potentially combat inflation.

Amazon's potential to lower drug and grocery prices is seen as an example of technology's impact on the market.

The introduction of a new AI supercomputer aimed at accelerating scientific and healthcare work is mentioned.

The transformative power of AI in drug discovery and development, potentially reducing years to months or even days, is highlighted.

Rising rents, a significant factor in the CPI, are unlikely to decrease due to high immigration and increased housing demand.

The caller Miles in Louisiana asks about investing in Visa amidst rising credit card debt, to which Cramer responds that it's a good level to invest.

Tom in New York shares his positive experience after joining an investing club and seeks advice on increasing his position in Eaton.

Cramer advises on investing in stocks and companies not heavily influenced by interest rates during times of economic uncertainty.

The power of buybacks in the stock market is discussed, suggesting that it's a significant factor for investors to consider.

Cramer reflects on the gig economy stocks and their recent rally, questioning if there's still room for growth.

The potential of generative AI to solve numerous problems in the future is acknowledged, but its current impact on immediate concerns like inflation is questioned.

Cramer draws a parallel between the delayed impact of video ads on the internet in the past and the current promises of AI, noting the time lag in realizing their full potential.

The importance of focusing on near-term inflationary numbers that may influence interest rates and the bond market is emphasized.

A cautionary note is given on not getting carried away with the potential of AI until it can tangibly address current high costs like cars, insurance, homes, and apparel.

The discussion includes the caller's experience with AI advancements like ChatGPT 4.0 and its impressive capabilities, such as perceiving emotions and singing stories.

Cramer emphasizes the need to stick with stocks and companies that are less sensitive to interest rate fluctuations in the current economic climate.

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