Cramer's game plan: With tariffs and rising rates raising uncertainty, it's time to be cautious

  • CNBC's Jim Cramer admits that tariffs and interest rates have made investing harder ahead of what looks to be a positive week of earnings reports.
  • The "Mad Money" host anticipates stocks to fall under some pressure depending on how the U.S.-China tit-for-tat trade war plays out.

As stocks turned positive towards the end of Friday's trading session, CNBC's Jim Cramer warned investors not to get too cheery about Wall Street shrugging off the escalating trade war.

"Many bulls were heartened that the stock market clawed its way back up and at one time was almost even, despite the tariffs. I question that logic," the "Mad Money" host said.

So, with the administration's hard-line stance on the U.S.-China trade dispute in mind, Cramer turned to his weekly game plan:

Monday: Trade in focus

On Monday, Cramer expected Washington's "tit-for-tat tariff situation" with Beijing to come into focus after President Donald Trump's Friday statement in which he revealed plans to place tariffs on up to $50 billion worth of Chinese goods.

China swiftly responded to the release, placing its own tariffs on a host of U.S. products including automobiles that were slated to take effect on July 6.

And while some market-watchers think the trade debacle with China could dissipate because of its negative impact on geopolitical relations and stocks, Cramer wasn't so sure.

"Trump believes that we need to stand up to China, even if it ends up hurting business here in the United States and sending the stock market down," Cramer said. "He figures the economy is strong enough to handle the pain. Basically, here's what he's thinking: if not now, when?"

The "Mad Money" host said Trump's seemingly unwavering position would likely continue to weigh on stocks as the market entered Monday's trading session. And even if news that China approved Qualcomm's purchase of NXP Semiconductors turns out to be true, he didn't expect the president to budge.

"Get used to it. Select stocks accordingly, maintaining a higher-than-normal cash position," Cramer recommended. "When we go higher, do some trimming."

Tuesday: FedEx, Oracle

FedEx: Cramer anticipated a "gangbuster report" from e-commerce beneficiary FedEx, saying that he felt the estimates were too low for how the delivery company is actually faring.

Oracle: The "Mad Money" host was more concerned about Oracle. Shares of the technology play have been hovering at their lows while other tech stocks near their highs, and a J.P. Morgan analyst report downgraded the stock on Thursday due to increasing competition.

"I worry that Oracle will have trouble retaining customers as we keep hearing of client losses from the companies who compete with them," Cramer said ahead of Oracle's Tuesday earnings report.

"At the same time, the stock is dirt cheap," he continued. "It's entirely possible that if Oracle shows any momentum whatsoever, the stock goes higher. If they don't, then it might not go down that much. You know what? I'm calling that a decent risk-reward."

Wednesday: Winnebago Industries, Micron Technology

Winnebago: With both Thor Industries and Camping World Holdings recovering from some early 2018 weakness, Cramer wanted a "gut check" from competing RV maker Winnebago's report.

"Last night we heard Bob Martin of Thor Industries talk about the industry and he made it sound like the world's largest RV manufacturer still has a little inventory to work off," he said. "If Winnebago confirms that, be careful: both stocks head lower."

Micron: This chipmaker's third-quarter earnings report is important because it will give investors a more definitive take on whether Micron's key markets — flash and dynamic random-access memory chips — are truly slowing, Cramer said.

"Not long ago, Micron's CEO, Sanjay Mehrotra, came ... on this show and I thought he told a fabulous, multi-year tale of proprietary growth, very different from the boom-and-bust of the old DRAM business cycle," the "Mad Money" host said. "That's because Micron's chips are used far more extensively thanks to the rise of the internet of things."

And while oversupply concerns linger among analysts, Cramer thought that, for the moment, "Micron's more in control of its destiny than ever."

Thursday: Darden Restaurants, Kroger, Red Hat

Darden: Cramer wasn't sure how strong the Olive Garden parent's earnings would be after some weakness last quarter, saying his charitable trust has been paring back its position in the stock.

Kroger: Since Amazon's acquisition of Whole Foods almost exactly one year ago, Kroger's stock and the underlying company have been struggling under the weight of their rivals.

"Kroger's engaged in a slew of initiatives to become more competitive," Cramer said. "In the meantime, though, the supermarket industry just keeps getting more competitive. Let's just say I don't expect a great quarter."

Red Hat: "Cloud king" Red Hat will report earnings after the bell. The company, which helps businesses move their operations to the cloud, has reported a series of strong quarters, so Cramer expected another set of good results.

"The stock has a tendency to get hammered even on excellent results," he said. "If it happens again, I'd pounce on this thing into weakness."

Friday: Oil summit

A key meeting between the Organization of the Petroleum Exporting Countries, commonly known as OPEC, and other non-OPEC oil producers like Russia could determine the trajectory of oil prices, Cramer said.

"The wild card? This is the first OPEC meeting where President Trump is mad about oil prices," he said. "Will he make a call to the Saudis on Thursday, reminding them that they're our friends? That's the only thing that could drive oil to the low $60s, down from $64.50, where it's trading now. Remember, it was in the $70s before Russia and Saudi Arabia talked about boosting production."

Conclusions

The "Mad Money" host admitted that investing has gotten a little more difficult since the Fed raised interest rates and the U.S.-China tariff debacle escalated.

"So here's the bottom line: next week we've got some major international jitters that will bookend what should be a very positive earnings backdrop," he said. "Remember, though, with the rate hikes and the tariffs, the game got a little harder this week, which means we need to be a bit less eager to pounce when stocks go down and a bit more ready to curb our enthusiasm when stocks go higher."

WATCH: Cramer's tariff-tinted game plan amid positive earnings

Disclosure: Cramer's charitable trust owns shares of J.P. Morgan, Darden Restaurants Inc. and Amazon.

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