Cramer's game plan: Washington headwinds could overwhelm earnings

  • "Mad Money" host Jim Cramer shares his earnings game plan for next week as Washington issues weigh on stocks.
  • Cramer flags four potential headwinds that could threaten the rally from the nation's capital.

CNBC's Jim Cramer has accepted the fact that issues in Washington can indeed weigh on Wall Street, especially going into the weekend.

"Hate him or like him, President Trump is creating a level of uncertainty that breeds selling on any rally, as we know there could be big news flow on Saturday and Sunday," the "Mad Money" host said as stocks slid into Friday's close.

Much of Friday's decline was fueled by the stocks of J.P. Morgan and Citigroup, even after the big banks issued strong earnings reports. The main problem? Washington-related weekend jitters.

The market could handle one point of uncertainty from the White House, Cramer argued. But investors were facing several critical questions heading into the weekend:

  1. Will Trump force out top Justice Department officials for not firing Special Prosecutor Robert Mueller, sparking a constitutional crisis?
  2. Will the president launch missiles at Damascus, targeting Syrian leadership for a gas attack on its people?
  3. Will Trump announce trade sanctions against China? Will China retaliate in kind?
  4. Will former FBI Director James Comey manage to rattle the president in an ABC interview promoting his new book, "A Higher Loyalty: Truth, Lies, and Leadership?"

"Even the best of earnings — and these have [happened] with Citi and J.P. Morgan — may not be enough to forestall an angry president," Cramer said. "With that in mind, why don't we take a look at the earnings calendar and see what Washington is up against?"

Monday: Bank of America, Netflix

Bank of America: The bank, which has the largest deposit base in the country and is therefore the biggest beneficiary of the Federal Reserve's interest rate hikes, will report earnings.

Shares of Bank of America were hit with the rest of the bank stocks on Friday, presenting a possible entry point for investors.

Netflix: After the close, streaming giant Netflix will report earnings. After all of Wall Street's upgrades and price target raises, Cramer was hoping for a blowout quarter.

"The now-worldwide entertainment company has so many supporters on Wall Street that you'd think it would stop going higher after every reiteration or number bump. But the same thing happened last time around with Netflix and the stock still flew when we saw the quarter," Cramer said. "What can I say? It probably happens again."

Tuesday: UnitedHealth Group, Goldman Sachs Group, IBM

UnitedHealth: After speaking with its CEO, Cramer regards UnitedHealth as a "great" company with a multiyear trajectory and "an incredibly consistent track record of surprising Wall Street with good numbers."

"If you can get it in the teens, where my charitable trust did recently, I think that's a terrific price," he said in anticipation of the company's earnings report.

Goldman Sachs: Cramer was actually glad that the bank stocks were cooling off ahead of Goldman Sachs' earnings report.

"The recent run in this stock, I am telling you, is unsustainable judging by what happened today with the stocks of J.P. Morgan and Citi," he said, noting that Goldman Sachs the company does well in times of volatility.

IBM: IBM, which also reports earnings, recently made it onto the list of leading cloud players, a good sign for a company that wasn't "part of the conversation" not too long ago, Cramer said.

"I think IBM is cheap and if it's in the $150s before the quarter, buy some," the "Mad Money" host said.

Wednesday: Morgan Stanley, United Rentals, Alcoa

Morgan Stanley: Wednesday brings more financial earnings with a report from Morgan Stanley, which Cramer expects to be strong thanks to healthy brokerage earnings.

"I'd buy Morgan Stanley if it pulls back ahead of the number," he recommended.

United Rentals: The equipment rental giant will also report, adding more color to Cramer's argument that United Rentals' stock is a better buy than Caterpillar's.

Alcoa: Cramer was particularly curious about what aluminum producer Alcoa's earnings report would tell investors about the effects of Trump's tariffs on aluminum imports.

"Be ready for the president to crow about this win," Cramer said. "We might hear rhetoric about how trade barriers and duties are working better than anyone thought. Of course, that's not something that any of the international companies who need access to China will want to hear."

Thursday: PPG Industries, E-Trade Financial Corporation

PPG: An earnings report from paints and coatings maker PPG will give the market a read on chemical cost inflation, Cramer said.

E-Trade: One of the best-performing stocks in the financial sector, the online investing service company will also report earnings against recently raised estimates.

"Have individual investors gotten more bullish about individual stocks?" Cramer said. "Let's find out."

Friday: Honeywell, General Electric, Schlumberger NV

Honeywell: Cramer wanted to hear more details about Honeywell's break-up plans from the company's Friday earnings report.

"I told club members of [Cramer's charitable trust] ActionAlertsPlus.com ... that they should be buyers of Honeywell on any weakness given how motivated the new CEO, Darius Adamczyk, is about stock appreciation," Cramer said.

General Electric: Cramer was hoping to hear a number of things from General Electric CEO John Flannery, including that his struggling industrial was planning to keep its dividend steady, raise some capital and spin off some under-performing segments.

"We also want to hear about long-term care costs being under control and unfunded pension plans benefiting from a higher short-interest-rate environment," he said.

Schlumberger: Schlumberger CEO Paal Kibsgaard has been consistently right in his calls on where oil prices would go, including last quarter when he said the commodity would bottom.

"But so far, we haven't seen the stock of Schlumberger benefit much from the bounce," Cramer said. "I'm betting this will be the quarter where we get a good service forecast."

Conclusions

"Here's the bottom line: we've got tons of earnings that I expect will be good, a real tailwind to the market," Cramer said. "But you know what? The headwinds of Washington may be too much for even these, some of the best companies in the world, to overcome."

WATCH: Cramer's game plan for earnings season's first full week

Disclosure: Cramer's charitable trust owns shares of J.P. Morgan, Citigroup, UnitedHealth, Goldman Sachs, Honeywell and Schlumberger.

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