Earnings and data should provide clues to Fed moves

CNBC’s Jim Cramer on Friday looked ahead to next week’s earnings and economic data calendar, which will provide fresh insight into Wall Street’s main concern: whether the Federal Reserve’s rate-hiking campaign will push the US into a recession.

“We want the Fed to talk a big game without actually having to do too much,” Cramer said on Friday’s episode of Mad Money. “Talk is better than action. We want [Fed Chair Jerome Powell] to make the economy slow down under its own weight. We don’t want endless rate hikes…which will destroy everything in their path.”

Cramer’s comments on Friday came after the stock market endured consecutive weeks of losses, with the S&P 500 now down 5.6% in December. The decline comes as investors are increasingly concerned that the US economy will enter a recession next year. On Wednesday, the Fed hiked interest rates by half a percentage point to their highest level in 15 years.

All revenue, revenue and economic data estimates are from FactSet.

Tuesday: General Mills, FedEx and Nike start construction and earnings

Housing construction begins in November

  • Seasonally adjusted annual rate: 1.41 million

The Census Bureau’s report on Tuesday morning’s housing is notable for the surge in house prices during the Covid pandemic, according to Cramer. Building more homes is one way to lower prices and cool inflation overall. However, he warned that concerns about the US economy make it unlikely that November housing starts will be robust.

General Mills

  • Q2 2023 earnings before the bell; Conference call at 9 p.m. ET
  • Estimated earnings per share: $1.06
  • Estimated Revenue: $5.19 billion
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General Mills has a difficult earnings record, Cramer said, because shares are up 29% year-to-date despite the market’s overall brutal year. The company has been able to raise prices because its cereal brands are popular, he noted.

FedEx

  • Earnings Q2 2023 after market close; Conference call at 5:30 p.m. ET
  • Estimated earnings per share: $2.82
  • Estimated Revenue: $23.70 billion

When FedEx last reported, it detailed significant cost-cutting plans that should help boost profitability. Cramer said for any investor who thinks the Federal Reserve won’t eventually hike interest rates as high as it projects, a post-earnings sell-off could create an opportunity to buy FedEx stock.

Nike

  • Q2 2023 results at 4:15 p.m. ET; Conference call at 5:00 p.m. ET
  • Estimated earnings per share: 65 cents
  • Estimated Revenue: $12.58 billion

Nike has had a slew of analyst upgrades lately, which Cramer says is likely due to analysts trying to come out ahead of the full reopening of China’s economy. “I think they will be right,” he said.

Wednesday: Revenue from Carnival, Cintas and Micron

carnival corp

  • Earnings release Q4 2022 before opening; Conference call at 10 a.m. ET
  • Expected Loss: Loss of 88 cents per share
  • Estimated sales: $3.9 billion

Experience spending has remained steady despite concerns about the economic slowdown, and Cramer said he expects Carnival management to continue sounding upbeat.

cintas

  • Q2 2023 earnings before the bell; Conference call at 10 a.m. ET
  • Estimated earnings per share: $3.03
  • Estimated sales: $2.13 billion

Cramer said the business services firm is an interesting barometer of the overall health of small and medium-sized businesses. “If Cintas says business is doing better than ever,” Cramer said, it could indicate the Fed needs to remain aggressive.

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Micron technology

  • Earnings Q1 2023 after market close; Conference call at 4:30 p.m. ET
  • Estimated Loss: Loss of 1 cent per share
  • Estimated Revenue: $4.14 billion

Cramer said he will listen closely to what the memory chip maker has to say about inventory levels. If Micron indicates there’s still a flood, Cramer said semiconductor stocks, which are capitalized, could see another decline. “I think the most likely outcome will be flooding, and you’re going to see a lot of chip stocks for sale on Thursday.”

Thursday: Earnings from Paychex and Carmax

Paychex

  • Earnings Q2 2023 before opening; Conference call at 9:30 a.m. ET
  • Estimated earnings per share: 95 cents
  • Estimated Revenue: $1.19 billion

Cramer said he believes Paychex is an even better barometer of small and medium-sized businesses than Cintas. But just like with Cintas, Cramer said if Paychex is talking about a healthy business environment, it could mean the Fed may have to make a few more half-a-point rate hikes.

Carmax

  • Q3 2023 earnings ahead of the bell; Conference call at 9 p.m. ET
  • Estimated earnings per share: 73 cents
  • Estimated Revenue: $7.34 billion

From the standpoint of inflation and Fed policy, Cramer said Carmax is another company he hopes will portend weak sales and falling prices.

Friday: inflation data

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