Cramer's Morning Take: CPI Report 7/11/24

Jim Cramer (0:01)

Jim Cramer here to share with you a sample of my take on the market from today's CNBC Investing Club morning meeting.

Today is a day when smaller cap stocks are shining, and most important, companies that do well when interest rates come down. Jeff, you know that this CPI is really in control today. You don't buy the semis when you get a great CPI number, you buy Best Buy and Stanley Buckingham.

Jeff Marks (0:29)

Yeah, I mean, look, if you would have told me CPI would be down 0.1% month over month, and the S&P would be down on that, I'd be very surprised. But what's happening as you call it out, it's a lot of rotation out of these big mega cap names that have just been up, up, up, and up. Apple, Amazon, Meta, Microsoft, NVIDIA, all the names that we've championed for years. And they're finally rotating into some other groups that do benefit more when rates come down, which they are today. Tenure falls below 4.2%. I mean, look, we bought Nextracker.

We started positioning that a couple weeks ago. They're one of the biggest beneficiaries, the solar stocks, of lower rates.

So you're seeing that play out today.

Jim Cramer (1:10)

People should recognize that correlation. It's a very important correlation.

Jeff Marks (1:13)

Stanley, Black, and Decker, that's another one we've been saying. We've had to be very patient in that.

But finally putting together a couple good days as rates come down.

Jim Cramer (1:22)

Well, I think that people have to understand we set up a portfolio, and I remember when I was at Goldman Sachs, Jack Sheppard, my partner, used to say, look, they can't all go up at once.

And the reason why is because they shouldn't.

We always want stocks that are levered to different things. Now we obviously own so much of the tech titans, probably more than anyone else on earth. We identified companies like Nvidia very early. But we also felt that at this stage in the rate cycle, it would be good to have some rate cycle beneficiaries. Because we predicted that you'll have a day where the big caps get killed, and you'll see these things shine. Now you and I were talking about Shug, which is the name, of course, we used for the guy who...

Jeff Marks (2:04)

CEO of Next Tracker.

Jim Cramer (2:05)

CEO of Next Tracker. And when I saw the rates go down, the first thing I said was, this is gonna be Next Tracker's day?

Jeff Marks (2:10)

Absolutely, absolutely, yeah. When we initiated, we pointed out interest rates and government policy, those are some two big swing factors. But as interest rates go down, should be good for them.

Should point out though, in relation to the cooler than expected CPI, you have odds increasing of a cut in September, December, but maybe even a third one this year as well.

Jim Cramer (2:32)

At the end of the month, or later in the year.

Jeff Marks (2:36)

Somewhere in between.

Jim Cramer (2:36)

Well, look, I've gotta tell you that when you look at the actual breakdown, I think Jay Powell will be foolish to move anything other than one.

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