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The current macroeconomic environment makes it difficult for CNBC's Jim Cramer to recommend even a best-of-breed stock like Emerson Electric, he said Wednesday after a solid trading session in the stock market.
An old-line manufacturer involved in the industrial automation, fluid handling, climate control and oil and gas spaces, Emerson has been at the center of a bull-bear dispute on Wall Street.
The bull thesis argues that Emerson's energy exposure could eventually benefit it once oil prices bottom, and that its top-notch management should be able to weather any oncoming storms while boosting margins. The bear thesis, however, forecasts slowdowns in Emersons automation, energy and China-tied businesses and increased uncertainty in 2019.
Even though his charitable trust used to own shares of Emerson, Cramer, host of "Mad Money," sympathized with the bear case.
"A lot of things need to go right for this stock to make sense — we need a deal with China, we need oil prices to rebound, we need the global economy to reaccelerate," he said. "If Emerson were genuinely cheap, … I'd feel more confident, but it sells for 15 times next year's earnings estimates. That's a slight premium to the average stock in the . "
"Between the oil exposure and the China exposure, I think it's too soon to buy an industrial like Emerson Electric, even though I like this company so much, even as it's one of the best of the best," Cramer concluded. "It just swings too much with the on-again, off-again trade talks. I recommend staying on the sidelines for now. Emerson reports on Feb. 5. I hope they tell a good story, but hope is not part of the equation."
It "infuriates" Cramer to watch hedge funds take control of the stock market by making decisions based on a single variable: the price of oil.
Oil prices, which are "almost entirely hostage to the trade talks with China," declined on Wednesday, reflecting the notion that "no news is bad news," Cramer said Wednesday.
But after the Dow Jones Industrial Average surged in the first hour of trading on some strong earnings reports, the fact that oil's morning reversal was able to drag the Dow and the S&P 500 lower rattled the longtime stock-picker.
"This is a rough environment for individual investors who prefer to own stocks, not rent them, because the hedge funds are in control," Cramer explained, adding that the morning's "breathtaking" decline was linked solely to the price of crude.
"This kind of action infuriates [me]," he said. "First off, 90 percent of the companies in the S&P 500 actually benefit from lower oil — their stocks should be going up, not down, when the price of crude drops. [...] It makes a mockery of everything investing is supposed to be about."
This obsession with oil prices can cause such dramatic market swings that it discourages regular, individual investors from buying stocks, the "Mad Money" host warned.
Click here to read more.
Federal regulators should investigate rapid sell-offs like the one that occurred in the U.S. stock market on Christmas Eve, Cramer said Wednesday.
"When stocks went into free-fall on thin volume the day before Christmas, that should have prompted officials at the exchanges, maybe [the] Treasury [Department], [the] SEC, to ask what the heck happened," he argued.
Unlike any kind of sports league, where referees' mistakes often incite outcry from the fans, the stock market isn't always subject to similar scrutiny — and that directly impacts its integrity, Cramer said.
Even though federal bodies like the SEC are tasked with regulating stock market activity, it seems to him like those treacherous trading days tend to slip under their radar. Sometimes, it feels like "the government has abdicated its responsibility entirely," he said.
Click here for his full take.
"Turns out that story was a lot more provocative than I actually anticipated," Cramer said Wednesday. "It's kind of exactly what I was going for, though. The whole point was to start a discussion, to figure out how Apple's stock can get its mojo back and possibly put its technology to work to revolutionize and innovate the health-care industry on behalf of you, the customer."
The feedback to Cramer's suggestion ranged from supportive to downright negative. But with Apple clearly making moves into health care — as demonstrated by its talks with Medicare, its research collaboration with Johnson & Johnson and CEO Tim Cook's goals for the company — Cramer thought the topic was well worth revisiting.
Click here for his full analysis.
In Cramer's lightning round, he rattled off his responses to callers' stock questions:
Visa Inc.: "I think [CEO] Al Kelly's doing great. I liked the previous guy, too. He did a good job, too. But here's the problem: of the fintech stocks, ... I prefer Mastercard, then I prefer PayPal, and then I prefer Visa. Now, PayPal I really like — it's in my charitable trust — but Mastercard's gotten a little cheaper right now. But ... I think Visa's terrific. "
Caterpillar Inc.: "It yields 2.6 [percent]. I doubt it's going to go to 3 percent. I think Caterpillar's going to do fine. It's caught in this whole web of China trade talks. China isn't that important to them, although it's important. I like Caterpillar. I would buy a little ahead [of its earnings report], but then I would wait to see what happens because this is one wild market."
Disclosure: Cramer's charitable trust owns shares of Apple, Johnson & Johnson and PayPal.