What Cramer is watching Wednesday — bracing for more declines after Fed's unsubtle shift in attack on rising prices

Published Wed, Apr 6 20229:31 AM EDTUpdated Wed, Apr 6 202210:22 AM EDT

What I am looking at April 6, 2022 Lael Brainard's unsubtle switch to deal with the 5% wage gain versus 9% inflation versus no slowdown. The Federal Reserve Governor gave a hawkish speech Tuesday , leading us at the Club to believe we must get more conservative and protect ourselves from what could be more declines. Daily inflation running at a 40-year high is as harmful as not having a job. Market expectations are for rate increases at each of the remaining six meetings this year, possibly totaling 2.5 percentage points overall. Deutsche Bank trying to out negative everyone, says U.S. will be in recession in 2023. The first major bank to forecast negative growth ahead, Deutsche cited inflation trending around 8% that will push the Federal Reserve into an aggressive tightening cycle. Fed Chairman Jerome Powell wants to be former Fed head Paul Volcker, who is remembered for aggressively attacking inflation in the early 1980s. Oh boy … staking out most negative position … October 2018 scenario when Cleveland Fed Reserve President Loretta Mester said continued tightening was fine and downplayed stock losses. Most effective paradigm? Nasdaq down, small-cap hideous. We have runaway inflation and bonds will no longer be inverted (this happens when short-term debt have higher yields than long-term debt with same risk profile). The sale of bonds will be done with alacrity as an anti-inflation stance is now paramount among the doves who are now velociraptors. Brainard changes everything? Stock futures dipped for a second day this morning and rates soared to new heights over fears Fed policy will slow economy. Minutes from the Fed's most-recent meeting in March are slated for release Wednesday afternoon. Investors will look for more clues to Fed strategy. Surging interest rates push mortgage demand down more than 40% from a year ago. Russian sanctions are doing nothing. Russia's Chechnya plan — we let that happen. Coal and oil sanctions but Russia has giant reserves. Do we not see that? Rent prices still going higher ... Incredibly ill-advised offer by JetBlue (JBLU) for Spirit Airlines (SAVE), topping previous offer brought by Frontier Group (ULCC), owner of Frontier Airlines. JetBlue is offering $3.6 billion in cash, compared to deal Spirit agreed to with Frontier for $2.9 billion in cash and stock. Regulators will most likely block everything. They are still smarting from last round of buyouts … They wish they hadn't allowed: Southwest Airlines (LUV) buying ATA Airlines 2008; United (UAL) merging with Continental in 2010; Frontier and Midwest airlines combining in 2009; Alaska Air Group (ALAK) acquiring Virgin in 2016; American Airlines (AAL) and US Air merging in 2013. Raymond James calls JetBlue offer an "indecent proposal" and downgrades shares to hold from buy. Manufacturer Masco (MAS) price target lowered to $56 from $65 at Loop Capital. Main issue is paint can't keep up with raw costs ... Credit Suisse starts Masco with an underperform last night. Company needs to keep raising prices. Uber Technologies (UBER) looks to create travel "superapp" by adding planes, trains and rental cars. The Covid-19 lockdowns in China are really bad for supply chain. China services sector tumbled in March at fastest pace since the onset of the pandemic. Lior Ron from Uber Freight fears that companies are finally catching up in the supply chain JUST when rates go up and inventories filled. Hard landing ... Sherwin-Williams (SHW) price target lowered to $300 from $345 at Loop Capital. CarMax (KMX) downgraded to neutral from buy at Bank of America. DocuSign (DOCU) price target raised to $105 from $82 at Baird — pandemic play. Capital One (COF) price target lowered to $165 from $180 at Wells Fargo. Citi says Analog Devices (ADI) revenue target is too aggressive. Monster Beverage (MNST) price cut to $90 from $92 at BMO Capital. Citi (C) price target lowered to $67 from $73, cites Russia could hit results. Large bank preview: Consumer will be strong but will be dominated by hard landing versus soft landing. Morgan Stanley assumes with equal weight at Johnson & Johnson (JNJ), Pfizer (PFE), Merck (MRK). Assumes Bristol-Meyers Squibb (BMY) with underweight rating. Stifel likes Occidental Petroleum (OXY), initiates with a buy ... says "attractively valued" even after 99% gain in shares this year ... says "best in class" 2022. Rivian (RIVN) two positive notes from Baird and RBC ... ramping up production nicely. Ford (F) owns 11.4%, can sell in May ... Rivian management reiterated it is well positioned to deliver on 25,000 annual production guidance. The CEOs of oil companies, including Chevron (CVX), Devon (DVN) and Exxon (XOM), are set to testify Wednesday before a House panel about what they're doing to control energy costs. (Jim Cramer's Charitable Trust is long CVX, DVN, F. See here for a full list of the stocks.) As a subscriber to the CNBC Investing Club with Jim Cramer, you will receive a trade alert before Jim makes a trade. Jim waits 45 minutes after sending a trade alert before buying or selling a stock in his charitable trust's portfolio. If Jim has talked about a stock on CNBC TV, he waits 72 hours after issuing the trade alert before executing the trade. THE ABOVE INVESTING CLUB INFORMATION IS SUBJECT TO OUR TERMS AND CONDITIONS AND PRIVACY POLICY , TOGETHER WITH OUR DISCLAIMER . NO FIDUCIARY OBLIGATION OR DUTY EXISTS, OR IS CREATED, BY VIRTUE OF YOUR RECEIPT OF ANY INFORMATION PROVIDED IN CONNECTION WITH THE INVESTING CLUB. NO SPECIFIC OUTCOME OR PROFIT IS GUARANTEED.

US Federal Reserve Governor Lael Brainard attends a "Fed Listens" event at the Federal Reserve headquarters in Washington, DC, on October 4, 2019.

Eric Baradat | AFP | Getty Images

What I am looking at April 6, 2022

Lael Brainard's unsubtle switch to deal with the 5% wage gain versus 9% inflation versus no slowdown. The Federal Reserve Governor gave a hawkish speech Tuesday, leading us at the Club to believe we must get more conservative and protect ourselves from what could be more declines. Daily inflation running at a 40-year high is as harmful as not having a job. Market expectations are for rate increases at each of the remaining six meetings this year, possibly totaling 2.5 percentage points overall.

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What Cramer is watching Wednesday — bracing for more declines after Fed's unsubtle shift in attack on rising prices

What I am looking at April 6, 2022

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