Moody’s Downgrades Banks, Pharma Stocks Surge, UPS Cuts Forecast 8/8/23

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Jim Cramer (0:31)

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 (0:39)

Good Tuesday morning. Welcome to Squawk on the Street. I'm Carl Quintanilla with Jim Cramer, David Faber, post-9 of the New York Stock Exchange. Pre-market giving up Monday's bounce, a hefty diet of bearish headlines. China trade data was weak, Moody's put some banks on review, UPS Datadog guidance also weak tenure.

Back below 4, our roadmap begins with another downgrade warning. Moody's cutting ratings of 10 small and mid-sized US banks, but put some bigger names on downgrade watch.

David Faber (1:04)

Plus, we're going to be focused on pharma. Jim and I were just talking about it. Eli Lilly courses out with earnings and a beat there, but really the real news, Novo Nordisk shares surging its trial data showing that its obesity drug, Wegovy, cuts risk of heart attack or stroke by 20%.

And we got some deal news, Charlie Ergen is going to merge Dish and EchoStar about 15 years after he split them up. We're going to talk to Mr. Ergen and EchoStar's CEO. That will be in the next hour on Squawk on the Street.

Carl Quintanilla (1:34)

Let's start, though, with this dip today, a day after the S&P and Nasdaq broke their four-day losing streak. Stocks are back in the red.

Financials, of course, going to be in focus today among some of today's laggards after Moody's cuts ratings on 10 banks, put some bigger names on downgrade watch, Jim. They are once again talking about interest rate and asset liability risk.

Jim Cramer (1:53)

Well, what I think is incredible is that we just went through the quarters. And with the exception of, honestly, of key, the quarters were good and a lot of them had inflows.

People felt there would be outflows. David, when you see these kinds of downgrades, don't you think late, late, late?

David Faber (2:14)

Yes, yes, yes.

Jim Cramer (2:16)

Good, good, good.

David Faber (2:17)

Done, done, done.

Jim Cramer (2:19)

Move on, move on, move on.

Carl Quintanilla (2:22)

You can't pay for this kind of analysis.

Jim Cramer (2:24)

No, you can't.

David Faber (2:25)

You really can't.

Jim Cramer (2:25)

It's important because financials represent a huge part of the market. And if we're going to have lending, we can't have as much lending. That's kind of what they're saying. My problem with it is that it doesn't jive with the facts.

It was entirely possible that we could have been in a situation where all these banks did poorly. But look, let's say JPMorgan, Bank of America, Goldman Sachs. I'm leaving out Citi because I wasn't sure about Citi.

I had Morgan Stanley and Wells Fargo. And they were all better than expected.

Carl Quintanilla (3:08)

I know, but we're talking about the M&Ts here.

Jim Cramer (3:10)

They were bad. Okay, so Zions was good. I actually liked Schwab was good. There were a lot of people who didn't like Schwab.

I liked Huntington Bank shares. That was a very good one. These are all guys I've had on. And I come back and I say, well, like, first Horizon I had on, that these are, they're not fatuous, but every one of those is lending. And almost all of them had big inflows. And this would have been fine if Comarica had big outflows. I would buy it, David. But it's like they didn't.

So, I mean, you know, we could do the one move over, but I'm just saying that the problem with it is that what was supposed to happen was they supposed to have big outflows, and then you're supposed to be worried about them.

David Faber (3:55)

Understood. But, you know, speaking of the broader market, before we get to some of this important news that we want to talk about as well from Novo Nordisk and the like, China concerned you at all?

This turnaround, you know, the action we've had, let's call it, in the last few trading days?

Jim Cramer (4:15)

Look, China is challenged.

David Faber (4:18)

More than challenged. I mean, those export numbers, Carl, were significantly down. Other than Russia, they...

Jim Cramer (4:25)

No, no, I mean, obviously, you know, overseas dropped 14.5 percent, imports down 12.4 percent. I mean, a surplus of a little over 80 billion. You know, Carl, look, I look at this and I think, why do we not put two and two together?