What Cramer is watching Thursday — Cisco's China problem, Kohl's follows retailers down

Published Thu, May 19 20229:14 AM EDTUpdated Fri, May 20 20229:54 AM EDT

What I am looking at May 19, 2022 The beginning of the true impact of inflation on the economy from Walmart (WMT) and Target (TGT) shows who has been eating rising costs. It also shows that the Federal Reserve is being short-sighted and ill-advised by not having an intra-day 100-basis-point increase to shock the system. Inflation is everywhere … can there be a demand destruction? China and Cisco (CSCO), the first one to report April results and they are pretty shocking. The networking company has orders that, had they been filled, would have given it a solid quarter, but its reliance on supplies from China crushed it. Cisco still has plenty of demand, but the magnitude of the forecast cut makes this long-standing Charitable Trust name a very problematic holding. CEO Chuck Robbins on CNBC today — he comes rain or shine but there is a lot of rain. All things considered, the quarter looked OK to us when you factor in China and the decision to stop all operations with Russia and Belarus. Why ride Costco down ? Why ride anything down? Because you can't be devoid of retail as a sector and Costco has a club membership — even if shares are down huge from their high now. Anything China is now suspect. Anything made there. Anything imported from there. New reason to high grade. Stifel cuts Costco price target to $515 from $565. Dollar stores rely on China and ports and the port queue has grown even longer … The projections of retail include freight prices, which is just such a bear. Walmart and Amazon (AMZN) hired too many workers and I wonder if Target did, too. This is at the crux of the issue. Home Depot (HD) has right table of employment. Kohl's (KSS)— April was a horrendous month, not the only one. The retailer reported adjusted quarterly earnings of 11 cents per share, below consensus 70 cents. Management cuts fiscal year 2022 EPS to $6.45-$6.85 from $7.00-$7.50. "Engaging with interested parties," so still for sale. Chief merchandising and chief marketing officer both resign ... they want fully financed final bids. Oddity: Chicken prices have been cut in half , according to Wingstop (WING). Why this food stuff could save us from the terrible declines in Ukraine, where the Russians are destroying farm equipment. Deere (DE) reports tomorrow and shares are down 80 points from their high (16 times earnings). Better value with Agco (AGCO) at 10 times. Citi raises price targets for Exxon Mobil (XOM) and Chevron (CVX). Retailer TJX Companies (TJX) price target raised to $78 from $74 at Baird. This is the best one. Burlington Stores (BURL) and Ross Stores (ROST) will go higher. Citi downgrades three stocks in U.S. rails: Union Pacific (UNP), Norfolk Southern (NSX) and CSX Corp (CSX). Analyst says more cautious approach needed, given "near-term risk in decelerating freight and economic environment." Spirit Airlines (SAVE) board rejects hostile takeover bid from JetBlue (JBLU). There is no chance regulators would approve of this. NONE. Average gas price in the U.S. now over $4.50 a gallon. True inflation over last year. The refiners are in one of those moments that might be best in show. Truist cuts price targets for Royal Caribbean Cruises (RCL) and Carnival (CCL) $17 to $15. Analyst says some consumers responding to deals, but not near level wanted by cruise lines. Thor Industries (THO) cut to sell from neutral at Davidson — ugly. Under Armour (UAA) downgraded to hold at Morgan Stanley. Analyst Kimberly Greenberger takes price target to $11 from $14. Last-quarter miss put CEO Patrik Frisk in box … couldn't turn the company ... can anyone? Nvidia (NVDA) target price lowered to $300 from $350 at Oppenheimer. This is multiple compression again ... Should have upside but doesn't matter. When will it? Financial results on May 25. Still at 29 times earnings … The VIX (CBOE Volatility Index) is way up. Wedbush says reduced estimates and lower multiple weighs on the price of Tesla (TSLA). Shanghai lockdown has been an "epic disaster." Children's Place (PLCE) sales down 35% versus March 2021. Earnings and sales missed expectations for quarter, cut its outlook. Adjusted EPS $1.05 missed Street consensus $1.41. (Jim Cramer's Charitable Trust is long AMZN, CSCO, CVX, NVDA, WMT. 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.

The logo of Cisco Systems is seen at their headquarters in Issy-les-Moulineaux, near Paris, France.

Philippe Wojazer | Reuters

What I am looking at May 19, 2022

The beginning of the true impact of inflation on the economy from Walmart (WMT) and Target (TGT) shows who has been eating rising costs. It also shows that the Federal Reserve is being short-sighted and ill-advised by not having an intra-day 100-basis-point increase to shock the system. Inflation is everywhere … can there be a demand destruction?