Inflation could push the Fed to hike rates in August

CNBC’s Jim Cramer said on Monday that the Federal Reserve could raise interest rates in August, ahead of its next scheduled meeting in September, if this week’s economic data shows inflation does not decline.

“The Fed is still in charge of this market. A week ago it looked like they might relax, but after Friday’s hot job numbers and the passage of the [Inflation Reduction Act]I fear they will reduce the boom on us before September even arrives,” he said.

“If both numbers are hot, we’ll have a surprise meeting in August,” he predicted, referring to consumer price index and producer price index data coming this week. week.

The Senate on Sunday passed the Cut Inflation Act, a Democratic-backed package aimed at tackling climate change and expanding health care coverage.

The legislation, among other provisions, allows Medicare to negotiate prices with pharmaceutical companies and imposes a minimum tax of 15% on large companies.

The July jobs report came in with stronger than expected numbers last week, meaning the central bank may need to build on its momentum by aggressively raising interest rates.

“If I were Chairman Jay Powell…I would be hard pressed not to call a special Fed meeting this month to hit us with another 75 basis point rate hike,” Cramer said. One basis point is equal to 0.01 percentage point.

Investors are also looking to the University of Michigan Consumer Confidence Index this week to better understand how consumers are coping with inflation.

Cramer also previewed this week’s earning list. All earnings and income estimates are courtesy of FactSet.

Tuesday: Emerson Electric, Ralph Lauren, Plug Power, Unity Software

Emerson Electric

  • Third Quarter 2022 Earnings Release at 6:55 a.m. ET; conference call at 9 a.m. ET
  • Projected EPS: $1.29
  • Projected revenue: $5.10 billion

Cramer said he expects Emerson to do well in the long term after selling its InSinkErator waste disposal business to Whirlpool, but he’s still curious how the company is doing in the short term.

Ralph Lauren

  • First Quarter 2023 Earnings Release at 8:00 a.m. ET; conference call at 9 a.m. ET
  • Projected EPS: $1.71
  • Projected revenue: $1.40 billion

Although Ralph Lauren is a high-end store, it could still face the same stock gluts as other retailers, he said.

Plug hole

  • Publication of second quarter 2022 results after closing; conference call at 4:30 p.m. ET
  • Expected loss: 21 cents per share
  • Projected revenue: $159 million

Plug Power will benefit from the Cut Inflation Act because of the bill’s hydrogen tax credit, which could help the company become more than just a niche fuel cell producer, Cramer said.

Unit software

  • Q2 2022 results release at 4:05 p.m. ET; conference call at 5 p.m. ET
  • Expected loss: 21 cents per share
  • Projected revenue: $300 million

Cramer predicted the downed stock could drop further as Nvidia’s preliminary financial results on Monday revealed the game is weak.

Wednesday: CyberArk Software, Wendy’s, Disney, Dutch Bros

CyberArk Software

  • Release of Q2 2022 results between 7:00 a.m. and 7:10 a.m. ET; conference call at 8:30 a.m. ET
  • Projected loss: 30 cents per share
  • Projected revenue: $138 million

The company is expected to report strong results as cybersecurity companies tend to be insulated from economic turbulence, Cramer said.

Wendy’s

  • Publication of Q2 2022 results at 7 a.m. ET; conference call at 8:30 a.m. ET
  • Projected EPS: 22 cents
  • Projected revenue: $540 million

Cramer said he was worried about how inflation might hurt Wendy’s performance.

disney

  • Third Quarter 2022 Earnings Release at 4:05 p.m. ET; conference call at 4:30 p.m. ET
  • Projected EPS: 98 cents
  • Projected revenue: $20.99 billion

“He’s just too hated for me to believe he can stay put,” he said.

dutch brothers

  • Publication of second quarter 2022 results after closing; conference call at 5 p.m. ET
  • Projected EPS: 5 cents per share
  • Forecast revenue: $182 million

The company is a beloved brand, but it will need to convince investors that its stock is worth buying, Cramer said.

Thursday: Warby Parker, Toast, Rivian

Warby Parker

  • Q2 2022 earnings release at 6:45 a.m. ET; conference call at 8 a.m. ET
  • Projected loss: 2 cents per share
  • Projected revenue: $150 million

“I bet like other recent IPOs, it’s going to go up in the quarter,” Cramer said.

Toast

  • Q2 2022 results release at 4:05 p.m. ET; conference call at 5 p.m. ET
  • Expected loss: 12 cents per share
  • Forecast revenue: $651 million

He said he was surprised that so many small companies like Toast were seeing their shares rise, even without news — suggesting they should never have fallen so much in the first place.

Rivian

  • Q2 2022 results release at 4:10 p.m. ET; conference call at 5 p.m. ET
  • Expected loss: $1.63 per share
  • Projected revenue: $335 million

The electric vehicle maker will likely benefit from the Cut Inflation Act because of the bill’s expansion of income tax credits for consumers who buy electric vehicles, Cramer said. He added that he still preferred Tesla.

Disclosure: Cramer’s Charitable Trust owns Disney stock.

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