Rough Start, Rate Expectations, Disney’s Activist Moves 01/03/24

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Jim Cramer (0:30)

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

Carl Quintanilla (0:37)

Good Wednesday morning. Welcome to Squawk on the Street. I'm Carl Quintanilla with Jim Cramer, Post 9 of the New York Stock Exchange. David Faber has the morning off. Stocks look to add to yesterday's New Year's Hangover, worst day for the Nasdaq at least since October.

A news flow does heat up today with ISM, Joltz and some Fed minutes. A roadmap begins with a rough start to the year for stocks is the Santa Claus rally in Jeopardy. Rate expectations. Barkin now says a soft landing is conceivable, but adds that hikes are still on the table and Disney's activist moves showing up, shoring up some support in its battle against Tri-Anne's Nelson Peltz.

Let's begin though with the tech sector. A day after the Nasdaq did post its worst daily performance since October and the worst start to the year since 2016, Apple, Jim of course was a big part of that, got placed the blame squarely at Barclays on that note of course.

Jim Cramer (1:27)

Yeah, we got another note today from Davidson just talking about lack of innovation. One of the themes that I saw right at the end of the year was that if you don't have newness in tech, which is kind of an odd term, then you just don't have what people want. And the Apple note today is kind of indicative of where I think people are waiting for innovation. Maybe Genevieve AI will help. I know they bought some cards from Nvidia. But my problem with all this, Carl, is that, all right, we've heard it time and again. And this time it's that the service revenue will not be able to make a difference.

I trimmed all of the Magnificence 7, I didn't know Tesla yesterday, Magnificence 6

But I did it because there's a certain level where I had a 1, 200% gain in Nvidia. So I sold some of that, and they're like, wow, not a really big deal, 1, 200% gain. But it was just because these things had become way too big a part of the portfolio. I looked at Apple and I said, well, okay, well, I have Apple forever. But I was just being, I didn't look at the stocks, I just literally took the percentages. But I think that, can Apple fall 20 points? Yeah, it can fall 20 points. It just sells at 29 times earnings. I remember when it was, I used to argue in favor of when it was a 16 to 18 times earnings, and people said, no, that's too expensive.

So things got a little wacky at the end of the year. Apple was up almost 50% last year.

And I think that it's okay to find something that's cheaper. Like someone upgraded, we had a Verizon upgrade.

Carl Quintanilla (3:02)

Yes, key today, yeah.

Jim Cramer (3:03)

Well, I mean, look, you can do that.

I think the problem with any of these upgrades, and I saw there was a lot of, B of A put out this great piece about what people bought this year at the beginning. They bought healthcare, utilities, energy, consumer staples, real estate. My problem is you buy the consumer staples, and I totally get that. What do you do now?

What do you do now? Do you wait for General Mills to report at Kelenova? I mean, I think that in the end, what happens is the Mag-7 goes down over time because it became too big. But Carl, to replace it with something else, you better have good industrials, maybe like Union Pacific is up so much, good industrials that do better if we get the rate cuts. Or else what's gonna happen is you're just gonna go back to them after they come down.

Carl Quintanilla (3:47)

It's interesting you mentioned the rate cuts because Eddie Ardeni, who's been quite constructive on stocks for a long time now, note yesterday saying that wouldn't be surprised if the market stalls in the first half, in part because of election messes, geopolitics, the idea that we're hoping for more from the Fed that we might get.

Jim Cramer (4:06)

Look, I'm with Ed. I've been with Ed, actually, you know, I used to, I had Ed speak at a conference and I think Ed is the most thoughtful of the people who talk. The reason why Ed is so thoughtful is he's just, there's no politics, there's no dogma. He's dogma-free. And I worry, and it was selling some of these, make seven, because what is gonna happen? Why do you not wanna be all in? Well, because there are people who are calling for a Fed rate cut as early as March. I don't know why we think Jay Powell should do that. And we have a straw poll in two weeks.