The Band-Aid was finally ripped off, and the U.S. finally saw some job growth on Friday. The nonfarm payroll report showed an addition of 271,000 jobs in October. Jim Cramer said it was fantastic for the American people, but a mixed blessing for stock portfolios.
The news of job growth in the U.S. indicated to Cramer that the Federal Reserve will certainly feel compelled to raise interest rates before year end, thus creating bad news for stocks.
With this in mind, Cramer went down the list of stocks and events he will be watching next week to demonstrate the repercussions of how such positive economic news can play out in the stock market.
Macy's: This company has one powerful enemy right now—the weather. When Cramer sees people walking around in shorts in November, that's never a good sign for retail and he thinks Macy's will say so.
Overall, Cramer was stunned by the jobs report, as it could give a green light to the Fed to raise interest rates soon.
But does that mean it is time to sell stocks? No.
Cramer had a warning for investors on what to expect in reaction to the blowout jobs number.
The one bank on Cramer's radar with the most leverage to higher interest rates is Bank of America, and he says it is still way behind the market.
The group that will be penalized the hardest is healthcare. At this point, Cramer thinks these stocks are over-owned. Ultimately, Cramer expects more volatility down the road for international companies that could be hurt by a strong dollar.
"All I can tell you is that the big boys will be buying banks and selling health care stocks for the next month, and you have to adjust accordingly or accept the consequences of the brutal rotation that has just begun to occur," Cramer said. (Tweet This)
With most of earnings season in the rearview mirror and the price of crude oil stabilized in the mid $40s, Jim Cramer decided it was time to pick among the rubble of oil stocks. The first group he looked at was companies that were able to best navigate through the commodity collapse in the past 18 months.
"Even though the oil stocks have rebounded nicely from their late-August lows, the group is still down dramatically," the "Mad Money" host said.
When Cramer researched the cohort, he found that there was a very clear division between two groups of companies. First was the traditional integrated oil giants like Exxon or Chevron, and the second were the oil companies that decided to break themselves up in the last few years to separate core exploration and production operations—think Phillips 66 or Marathon Oil.
Back when the price of black gold was soaring, many companies assumed the price would stay high, and therefore thought it would be a great idea to break up to unlock further value. But then oil prices dropped dramatically and it turns out that breaking up may not have been the best strategy.
"Given where we are right now, I would much rather own the stock of a big integrated oil like Exxon or Chevron, rather than the remaining exploration and production focused arms of the broken up Marathon or Conoco," Cramer said. (Tweet This)
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Back on October 21st, investors learned that Lam Research is buying competitor KLA-Tencor for $10.6 billion in cash and stock. Cramer considered this to be a terrific deal that could create greater breadth and scale for the company to possibly rival the industry's top dog Applied Materials.
Lam Research is a semiconductor capital equipment maker, and its products are typically used for front-end wafer processing. According to Lam's management, the acquisition could produce $250 million in annualized cost synergies, and it's expected to be additive to the company's earnings and cash flow 12 months after the deal closes.
Could this just be the beginning for a stock on the run?
To learn more about the transaction, Cramer spoke with Lam Research Corporations CEO Martin Anstice.
"As I have said many times, our approach for non-organic as well as organic investments is to preserve the substance of competitiveness in our industry and create situations where we can innovate better and more for the success of our customers," Anstice said.
In the Lightning Round, Cramer gave his take on a few caller favorite stocks:
Pfizer: "Pfizer is precisely the wrong stock if the Fed is about to pull the trigger on high rates. $31 is the new price target, though I do like the company longer term, but only if it buys Allergan."
Lannett Company, Inc: "No man! Were you on that conference call? That was the conference call from hades. They made that acquisition and it was terrible. Sell, sell, sell. Boooo."