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 Friday’s key moments. Banks could benefit from bigger rate hike Eli Lilly’s quarter saw misses, new drugs Quick mentions: STZ, AMZN, MRVL 1. Banks could benefit from bigger rate hike Nonfarm payrolls increased 528,000 for July and the unemployment rate dipped to 3.5%, according to the Bureau of Labor Statistics. The numbers beat Dow Jones estimates of 258,000 and 3.6%, respectively, with the latter now back to its pre-Covid pandemic level and tied for the lowest jobless rate since 1969. The 10-year Treasury yield surged and stocks fell following the release. The red-hot labor market and still- high inflation suggests the Federal Reserve has more work to do, depending on where the data comes in over the next six weeks. So, the market now sees a third-straight central bank interest rate hike of 75 basis points in September, more aggressive than the 50 basis points that had been expected before the jobs number. There’s no Fed meeting scheduled in August. Another 75-basis point hike by the Fed, while a possible drag on the overall stock market, would be great for the banks because they could charge more on loans and “perhaps the strong labor market, leads to fewer than expected defaults on loans,” said Jeff Marks, the director of portfolio analysis for the Club. “I think that’s kind of like the total nirvana situation.” We wouldn’t be surprised to see Wells Fargo (WFC), one of our largest Club holdings, go higher. If it goes to $50 per share, we would likely let some shares go. Remember, we’ve been saying lately don’t be greedy and take profits when you can on bounces — because this year’s bear market has taught us that anything can happen. 2. Eli Lilly’s quarter saw misses, new drugs We believe that investors wrongly focused on Eli Lilly ‘s (LLY) shortfalls after the company reported its latest quarterly results before the opening bell on Thursday. We acknowledge that the company missed estimates and cut its full-year forecast. However, the issues that they dealt with were explainable – for example, there were foreign exchange headwinds and a new accounting practice. There was nothing shaking our faith in the underlying business. The focus should be on Lilly’s new type-2 diabetes drug Mounjaro, which seems to be doing exceptionally well. The company said it’s seeing lots of volume come in from new customers to the drug class. That means demand for Mounjaro isn’t cannibalizing demand for Trulicity, another type-2 diabetes drug — it’s instead taking market share from competitors. We also learned that the Food and Drug Administration (FDA) accepted Lilly’s Alzheimer’s treatment drug for review under its accelerated approval pathway. We’ve trimmed our position on LLY a couple times at $330, and it’s been down since then. But before we upgrade our rating back to a 1, we’re asking ourselves: What is the right price to buy LLY? Do the drugs have any visibility when people hear about them? What is the economy doing? 3. Quick mentions: STZ, AMZN, MRVL We are looking to buy more shares of Constellation Brands (STZ) if the economy picks up, since people tend to go out more when their wallets are full. However, if growth continues to slow, we like our position in Constellation Brands — home to Mexican beers Corona, Modelo and Pacifico — as a recession-resistant play. Despite higher prices due to inflation and slowing economic growth, people are still going out after being cooped up during the height of the Covid pandemic. And, Corona, Modelo and Pacifico beers are popular in the summer. Amazon (AMZN) is acquiring iRobot for $1.7 billion , the companies announced Friday. We believe Amazon’s purchase of the Roomba-maker makes sense, especially given that the robots would pair well with Alexa, Amazon’s virtual assistant offering, and the concept of the connected home. The e-commerce and cloud behemoth appears to be doing a sweep of deals — including also recently agreeing to buy primary health-care provider One Medical. As for Marvell Technology (MRVL), one Investing Club member recently asked us how long our investment horizon is. We believe MRVL is a multiyear story due to the advancements in data infrastructure markets like the cloud, 5G and automotive connectivity. (Jim Cramer’s Charitable Trust is long AMZN, LLY, STZ, MRVL, WFC . 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.
from Investing – My Blog https://ift.tt/PTp5cJR
via IFTTT
No comments:
Post a Comment