Somebody better tell the consumer that the economy is slowing down. Someone better warn her what Fed Chairman Jay Powell said in Paris, that there are so many uncertainties that he's probably going to have to cut rates. Doesn't she know that the Fed is going to be more accommodative?
Maybe it's better that she not know. If she understood that she is swimming in a murky sea of worry about trade tensions, debt ceiling negotiations and global growth, she might as well be swimming in the Gowanus which was a beautiful color bright green and blue with wonderful looking bubbles the other day. I would rather swim with the sharks.
Today was one of the craziest days I can recall. We start the day with a sharply better than expected retail sales number, one so good that it made you feel darned good that you can't have a recession on the horizon when you get an increase of .4% when you were looking for far lower than that. At the same time you get a remarkable series of comments and numbers out of JPMorgan Chase (JPM) , the nation's largest bank, that the consumer is in remarkable shape. I finished this call and when I melded it with what Citigroup (C) said yesterday I have to admit that we might have something that I can't recall in my lifetime: a prudent consumer spending, but spending within her means, not taking down too much credit and paying it off on a regular basis. I felt like it was one of those Bailey Building and Loan moments from It's a Wonderful Life, no not the one where George kills himself and Potter takes over, that's the 2009 version. I am talking about a thriving Bedford Falls, where everyone has a job and Zuzu's petals reign supreme.
Boy does that ever dovetail with what we heard last night from one of the largest transportation companies in the country, JB Hunt (JBHT) , that business is just plain old strong even as the headlines said it was a disappointing quarter. I think that you have to believe that there's a ton of commerce going on. I love it when the truckers are doing well. That suggests there is no sign of a slowdown.
But just when it all seems like we are looking good for earnings season we get two spoilers: Arrow Electronics (ARW) , the most important tech supermarket says business is incredibly weak, particularly in Asia and it has to preannounce. At the same time an analyst from Wedbush said CarMax (KMX) , the gigantic used car dealer, has seen a pronounced slowing in sales on a month to month basis.
Who is right? Which market makes the most sense to follow? Are things good, or are things bad?
It doesn't matter.
As long as there's the possibility of trade wars - and you know I think they are here to stay unless China does something that shows good faith, a soybean buy, a corn deal, maybe even a purchase of $20 billion of some non Max planes from Boeing (BA) , and I would feel better. As Trump told the media "we have a long way to go" when it comes to making a deal with China.
Hmm, that doesn't sound like progress to me.
And that's where Jay Powell comes in.
I think that we are in a unique time in our country's financial history. We have a president who can't help himself and wants to cause turmoil in the name of, I don't know, making American great again and we have a Fed Chief who seems so anxious to make amends for that ill-timed rate hike back in December that he is willing to suggest that we could be soon faced with a tough debt ceiling fight or a difficult Brexit. Jeez talk about some recycled worries. They are right out of central casting. But Powell knows a slowdown, or the slowdown, or the prospective slowdown will be on him and he has to undo that mistake. It's almost as if he is running out of reasons to do so.
No matter. He doesn't' need reasons and that's what's so important about days like today. Arrow's preannouncement should have crushed tech. Instead tech didn't' do too much because if the Fed is going to keep easing why sell? How important is the big guy's words? Let's just say he can turn around the whole S&P and that's exactly what he did.
That means Alphabet (GOOGL) can rally on a tag team treason tale told by Peter Thiel and sanctioned by Donald Trump. That means Facebook (FB) can rally even as its Libra proposal was skewered by pretty much every politician and it is looking very dead in the water.
So what do we do? Again, as I keep insisting, it is case by case. You have to look at JP Morgan and marvel how good it is. You lump in how Goldman Sachs (GS) seems to have gotten so much more consistent and it is ready for the pending Apple (AAPL) credit card. But then again Wells Fargo (WFC) didn't deliver on its earnings and it went down because it simply missed its benchmarks.
You see companies like Broadcom (AVGO) and Micron (MU) and Intel (INTC) which had been doing so well because trade talks looked like they were getting a lift from a strong economy, but then you get the Arrow news, it is all bad, and no one wants any hardware or software including Microsoft (MSFT) .
What do you do when things are this all over the place?
I think you have to go back to a simple point, one I will return to again and again: when you have a Fed chief who is hellbent on cutting rates then you need to be in stocks that bounce when rates go lower and that happens to be most of the S&P 500. Yes it is true that a company like Wells Fargo does not make more money when rates go down, most companies do. When you see the transports go up off of JB Hunt and you see the consumer spending well as demonstrated by JPMorgan and the retail sales number and it doesn't deter the Fed from cutting rates, you have a pretty good market and you need to be looking for opportunities on days like today. Opportunities like IBM (IBM) which just inked a key deal with AT&T (T) that will help them cement 5G business together, good for both, For companies like Home Depot (HD) that's going down for no particular reason other than that its been up. Or a Mastercard (MA) or a Visa (V) both down, and both set to do well with such strong retail sales and good numbers from JPMorgan today and Citigroup yesterday.
Oh and you want irony? The two biggest negative calls of the day, CarMax and Arrow? Their stocks barely went down, a true tell of how difficult it is to sink a stock when it is floating in the great Salt-Powell Lake.
Look, here's the bottom line: you cannot fight the Fed when it is coming up with all sorts of flotsam and jetsam about why it must cut rates. And you can't fight the tape when it doesn't' go down big on bad news. Those are the rules. You don't like them? Then take profits. No one ever got hurt taking a profit but this isn't the kind of market it seems like it's worth running from. Instead it's one worth running to when the stocks of good companies go down.
(JPMorgan Chase, Citigroup, Alphabet, Facebook, Goldman Sachs, Apple, Microsoft, Home Depot and Mastercard are holdings in Jim Cramer's Action Alerts PLUS member club. Want to be alerted before Jim Cramer buys or sells any of them? Learn more now.)