4 takeaways from the Investing Club's 'Morning Meeting'

Published Thu, Jul 14 20222:33 PM EDTUpdated Thu, Jul 14 20222:50 PM EDT

Every weekday the CNBC Investing Club with Jim Cramer holds a "Morning Meeting" livestream at 10:20 a.m. ET. Here's a recap of the key moments. 'Closer to the bottom than a top' Morgan Stanley vs. JPMorgan Bright spots: BMO on AMD, JPM on QCOM Quick mentions: Costco, Constellation Brands and oil 1. 'Closer to the bottom than a top' Starting off with a broader market view, Bank of America slashed its S & P 500 price target to 3,600 from 4,500, the lowest year-end target on Wall Street. The index's 52-week low was 3,636 last month. Wednesday's close was 3,801. In a recession (which we think we're basically in), the S & P 500 typically drops about 31%. The index, as of its prior close, was down about 21% from its January all-time high. Jim Cramer said during Thursday's "Morning Meeting" that we are "closer to the bottom than a top" in the market. It's understandable that investors are concerned right now given the multiple macroeconomic headwinds including Russia's war in Ukraine, China's Covid lockdowns and an aggressive Federal Reserve to fight inflation, all of which can weigh on corporate earnings. "But I do want to keep in mind that we've had the inputs for inflation coming down pretty furiously here, and that is going to lead to numbers that are going to surprise," Jim said, while reiterating his call for the Fed to raise interest rates 100 basis points at its July meeting. The market seems to be coming around to that idea. 2. Morgan Stanley vs. JPMorgan Club holding Morgan Stanley (MS) surprised on the downside missing on second quarter earnings due to weaker investment banking activity. We were disappointed to see the $200 million regulatory expense related to the use of unapproved personal devices and record-keeping requirements. "That is just dead-weight loss," Jim said, adding he didn't like Morgan Stanley as much as he did Wednesday. "The upside for Morgan Stanley has been that they have 'Mr. Clean' [balance sheet] and they ain't no 'Mr. Clean' anymore, so you can expect what we pay for the earnings won't be as much." However, this doesn't mean we'd sell the stock. We like Morgan Stanley's recently announced $20 billion share buyback program and 11% dividend increase. JPMorgan Chase (JPM), the biggest bank by assets, also missed on revenue and reported a 28% drop in second-quarter profit. The bank also announced it suspended share buybacks to meet regulatory capital requirements. While CEO Jamie Dimon's economic "hurricane" comments threw markets for a loop last month, Thursday morning's post-earnings call was much more sanguine. "I know that people are very discouraged. I know the market is just a nightmare, but I think we have to take them piece by piece. Morgan Stanley is better than JPMorgan." 3. Bright spots: BMO on AMD, JPM on QCOM Jim said if you think the market can rally, Advanced Micro Devices (AMD) is a buy. "You have earnings going higher and the stock down 46% (year to date) in a market where the average stock is down 21% from the high," he explained. AMD has a few things going for it. Its products continue to boom in performance, power efficiency and utility, while benefitting from competitor Intel (INTC) missteps. BMO Capital upgraded AMD to outperform. Another bullish analyst call was an upgrade on Club holding Qualcomm (QCOM). JPMorgan added the semi stock to its focus list. We believe Qualcomm's low price-to-earnings multiple does not properly reflect its share gains with Samsung smartphones and a growing automotive business. 4. Quick mentions: Costco, Constellation Brands and oil Another company that's been holding up despite an economic slowdown is Costco (COST), which is one of the Club favorites. Costco was upgraded by Deutsche Bank. The multinational corporation boots strong membership and brand loyalty. The Investing Club loves Constellation Brands (STZ). We are bullish on the beer maker because it is gaining market share in a category that tends to be resilient in a recession. Jim said you shouldn't avoid oil. Our thesis for buying oil stocks is for their dividend yields and their ability to act as a hedge against inflation, which should serve investors better than holding cash. (Jim Cramer's Charitable Trust is long MS, AMD, QCOM, COST and STZ. 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.

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