• Subscribe
  • Log In
  • Home
  • Daily Diary
  • Asset Class
    • U.S. Equity
    • Fixed Income
    • Global Equity
    • Commodities
    • Currencies
  • Sector
    • Basic Materials
    • Consumer Discretionary
    • Consumer Staples
    • Energy
    • Financial Services
    • Healthcare
    • Industrials
    • Real Estate
    • Technology
    • Telecom Services
    • Transportation
    • Utilities
  • Latest
    • Articles
    • Video
    • Columnist Conversations
    • Best Ideas
    • Stock of the Day
  • Street Notes
  • Authors
    • Bruce Kamich
    • Doug Kass
    • Jim "Rev Shark" DePorre
    • Helene Meisler
    • Jonathan Heller
    • - See All -
  • Options
  • RMPIA
  • Switch Product
    • Action Alerts PLUS
    • Quant Ratings
    • Real Money
    • Real Money Pro
    • Retirement
    • Stocks Under $10
    • TheStreet
    • Top Stocks
    • Trifecta Stocks
  1. Home
  2. / Investing
  3. / Transportation

Jim Cramer: Trade Wars and Tariffs May Soon Be Baked Into Pricing

Earnings have been strong, and analysts will soon start to concentrate more on actual weakness than shadow-boxing weakness.
By JIM CRAMER Jul 23, 2018 | 06:52 AM EDT
Stocks quotes in this article: MSFT, SWKS, C, JPM, PEP, ABT, DHR, UNH, GE, HON, VFC

We're going into the heart of earnings season with results that have, once again, defied the skeptics simply because there's so much good and so little bad.

Let's start, rather than finish, with the elephant in the room. While there are certainly some real losers with tariffs and trade -- more to come this week for certain -- we have struggled to pin the tail on the bears, as good companies have addressed the issues head on and so few can be considered knocked for a loop by current events.

Certainly, far more are willing to talk about tax code positives. I am not saying that TNT (tariffs and trade) is stable and can't blow up. We all know that is not true, as long as President Trump appears erratic on these issues, or, more accurately, often at odds with his staff. I think that, for example, chief economic adviser Larry Kudlow may not be correct -- already! --when he talks about the possibility of a surprise in trade talks with Europe over cars. That said, if the Europeans come bearing gifts -- including dropping all auto tariffs -- I think we could go to all-time highs.

What's most important about TNT is that the longer it drags on, the more the analysts will get bored of "quantifying" the damage and potential damage and will start saying it is baked in. They will concentrate more on actual weakness than shadow-boxing weakness.

Fortunately, we have enough earnings from all different sectors to start making judgments. Let's begin with tech: The world is divided between cloud tech and non-cloud tech, especially telco -- Microsoft (MSFT) versus Skyworks Solutions (SWKS) is the most withering example. In many ways Microsoft delivered the perfect quarter, because it offered you sharply better than expected cloud in Azure, fabulous social with the still-red-hot LinkedIn and then gaming galore.

China? Hardly a focus so far, except for blast-zone stocks like Skyworks. Even as the company reported a strong upside surprise, the reliance on China and cellphone was just too powerful a gravitational force. Even 5G couldn't save a legitimate estimate beat from sunsetting the stock. I think these two, Microsoft and Skyworks, are the metaphor for the weeks to come.

Wouldn't you know it, just like all anyone cared about with the banks for ages was net interest margin on the short end, now all we care about is net interest margin from the long end. That's why the decline in price of the 10-year boosted the banks, not their earnings. The cognoscenti has spoken: They are paying too much for your money and not getting enough on your loans. JP Morgan (JPM) reacted best to last week's rate rise with Citigroup (C) not far behind. Both ActionAlertsplus.com names remain ridiculously inexpensive, but no one will care unless 3% on the 10-year is breached soon.

Soft goods? More Pepsico (PEP) than not. People like what they see so far. Can it last? I think the stocks just got too low, but any higher and we will backslide if rates go higher.

Health care names? Good pin action and then limited follow through. I think Johnson & Johnson JNJ deserves more of a boost than it has gotten. Same with Abbott Laboratories (ABT) . These were really good quarters. UnitedHealth Group (UNH) now looks like it will be the weakest of the insurance quarter, because the company beat itself up on the call. Danaher (DHR) is the surprise healthcare so far, especially with the offloading of dental.

Industrials? Ex-GE (GE) , we've been seeing some really good action led by anything aerospace. If it weren't for power, GE would have been fine. But that may be like saying to Mrs. Lincoln, "but how was the play?" I am calling it a work in progress. Of course, Steve Tusa over at JP Morgan has a new negative thread -- the accounts receivables of regular GE offloaded onto capital. Boy, was their accounting squirrelly, something you would never know as long as things stayed strong. As we all know, they didn't.

Can you believe, though, how much money Honeywell (HON) is making and how deft relatively new CEO Darius Adamczyk is about telling the story, break-up and all? A tour de force for certain.

Retail is a question mark. It could be resolved, however, by the positive commentary and forecast boost last Friday from V.F. Corp (VFC) . Wow, nice quarter.

That's pretty much it for the generalizations. But, with the possible exception of the industrials, I think the course is well-blazed and these results and their aftermath will serve as a template for things to come.

Get an email alert each time I write an article for Real Money. Click the "+Follow" next to my byline to this article.

Action Alerts PLUS, which Cramer co-manages as a charitable trust, is long C, JPM, DHR, MSFT, PEP, ABT, DHR, HON, UNH.

TAGS: Investing | U.S. Equity | Regulation | Markets | Transportation | Earnings | China | Economy | Politics | Risk Management | Stocks

More from Transportation

J.B. Hunt's 18 Wheelers Are Ready to Roll Again

Bruce Kamich
May 17, 2022 1:15 PM EDT

Let's see what the charts and indicators look like.

At the Copa, Is It Takeoff or Landing?

Bruce Kamich
May 13, 2022 10:50 AM EDT

I found several 'interesting' things on this airline's charts.

Royal Caribbean: Don't Go Down With the Ship

Paul Price
May 11, 2022 7:00 AM EDT

All of the major cruise lines are suffering from their own form of long Covid, and they largely lacked a government lifesaver. Here's why even the best of the businesses looks like a sinking stock ... for now.

Transportation Is Still Iffy With XPO Logistics

Bruce Kamich
May 10, 2022 10:31 AM EDT

Here's what the overall picture shows.

Lyft Tumbles to Our Price Target: Here's Its Likely Next Destination

Bruce Kamich
May 4, 2022 2:29 PM EDT

The share reached our target Wednesday with a dramatic downside price gap.

Real Money's message boards are strictly for the open exchange of investment ideas among registered users. Any discussions or subjects off that topic or that do not promote this goal will be removed at the discretion of the site's moderators. Abusive, insensitive or threatening comments will not be tolerated and will be deleted. Thank you for your cooperation. If you have questions, please contact us here.

Email

CANCEL
SUBMIT

Email sent

Thank you, your email to has been sent successfully.

DONE

Oops!

We're sorry. There was a problem trying to send your email to .
Please contact customer support to let us know.

DONE

Please Join or Log In to Email Our Authors.

Email Real Money's Wall Street Pros for further analysis and insight

Already a Subscriber? Login

Columnist Conversation

  • 01:44 PM EDT STEPHEN GUILFOYLE

    Stocks Under $10 Portfolio

    We're making a series of trades here.
  • 03:07 PM EDT PAUL PRICE

    Why Is Walmart Down Big Today?

    Besides its poor earnings report Walmart was way...
  • 07:14 PM EDT PAUL PRICE

    A New, Very Scary Movie

  • See More

COLUMNIST TWEETS

  • A Twitter List by realmoney
About Privacy Terms of Use

© 1996-2022 TheStreet, Inc., 225 Liberty Street, 27th Floor, New York, NY 10281

Need Help? Contact Customer Service

Except as otherwise indicated, quotes are delayed. Quotes delayed at least 20 minutes for all exchanges. Market Data & Company fundamental data provided by FactSet. Earnings and ratings provided by Zacks. Mutual fund data provided by Valueline. ETF data provided by Lipper. Powered and implemented by FactSet Digital Solutions Group.

TheStreet Ratings updates stock ratings daily. However, if no rating change occurs, the data on this page does not update. The data does update after 90 days if no rating change occurs within that time period.

FactSet calculates the Market Cap for the basic symbol to include common shares only. Year-to-date mutual fund returns are calculated on a monthly basis by Value Line and posted mid-month.

Compare Brokers

Please Join or Log In to manage and receive alerts.

Follow Real Money's Wall Street Pros to receive real-time investing alerts

Already a Subscriber? Login