Market Streak Snaps, Walmart and FedEx Messages to Investors, J&J's $8.9B Settlement 4/5/23

Jim Cramer (0:00)

It's Jim Cramer here. You're listening to the opening bell of CNBC's Squawk on the Street. Don't miss a minute of the action.

Carl Quintanilla (0:08)

Good Wednesday morning. Welcome to Squawk on the Street. I'm Carl Quintanilla with Jim Cramer at post nine of the New York Stock Exchange. David Faber has the morning off after several days of softer than expected data. ADP now comes in light ahead of Friday's jobs number. Futures give up some ground. And yields fall 10 year now defending 330 That's close to a six month low. Our roadmap begins with the macro picture.

ADP coming in below expectations. Walmart affirming its guidance and FedEx cutting some costs.

J&J upping its offer to nearly $9 billion to settle these cancer lawsuits related to its baby powder.

And the president's warning on AI, calling it potentially dangerous and urging big tech to keep it safe.

Let's begin with the markets after the Dow and the S&P snapped those four day windstreaks. Jim, some discussion about whether directionally market is now using bad news as bad news.

Jim Cramer (0:59)

Yeah, I mean, I think yesterday was one of those days where we just said, well, be careful what you wish for.

Maybe we have more bank failures. Jamie Dimon's note and the jolts, the job openings made people say, well, wait a second.

Maybe we have to have a real rough patch before we finally get to the promised land. Then you have Mester last night, who literally is like a little pilot. She's just, you know, she's very powerful, very smart, by the way. So she speaks with a level of certainty that makes you think the rates are going higher. Ignore everything that's happening. Then you come in, it's the same old, you watch the tape, the crawl underneath, same old banks being attacked again for new reasons. And you say to yourself, wow, I don't wanna get ahead of the game. So maybe I take some profits. And that's what I see happen.

Carl Quintanilla (1:44)

Jim mentions Mester, of course, saying that rates probably need to go above five and then hang out there, sort of painting this picture of what some are calling now a restrictive pause. Take a listen.

Loretta Mester (1:56)

Precisely how much higher the Fed funds rate will need to go from here and for how long policy will need to remain restrictive will depend on how much inflation and inflation expectations are moving down. And that will depend on how much demand is slowing, supply challenges are being resolved and price pressures are easing.

Carl Quintanilla (2:19)

Although after PCE and ISM and Joltson will find out about services today, is there any doubt those things are slowing down?

Jim Cramer (2:26)

I don't think there's any doubt at all.

And obviously credit's harder to come by.

I think that what you're seeing when you see these big caps that tech stocks go up, that's people saying, listen, I know that they'll do okay because they don't need to borrow any money.

But small and medium sized businesses were waiting. Now, Paychex is the largest payroll processor of them and they say small and medium sized businesses are still doing quite well. Cintas, biggest provider of uniforms, saying business is still really well. But I just, I got to take, Carl, I mean, I think that Ms. Mester's a little off the mark based on what we've seen in the last four weeks. And the last four weeks, I think, do matter. I think there's a lot of sense of how bad are the loan losses? How bad is the held to maturity? Even though the Fed window is open, who's next? This who's next drum beat every day. I mean, look, if I worked at First Republic, I would say, oh my God, every day. I mean, Barry Stern, like yesterday, was saying some great things about how First Republic has this really loyal client base. But there was a defection yesterday of a major group of people who handled wealthy people from First Republic went to another bank. And I say to myself, okay, are the rats, well, not rats, are the big brokers fleeing the ship? And that's what those guys are. Those assets go out the door every day. So, I mean, that's the one. It's like, we almost want to say, okay, just please get a lifeline so we can move on.

Carl Quintanilla (3:55)

It is a cloudy picture. For example, we got a double upgrade of First Citizens, got an upgrade of Zion today.

Jim Cramer (4:02)

Wow, and that was under the category of enough. I can't, I mean, that's how we all feel. We come in and it was like, okay, enough, all right? Do we have to have a new metric that explains why Zion's is not good?