3 takeaways from Monday’s meeting: Market needs a break to rise, some possible buys
Every weekday CNBC Investing Club hosts a “Morning Meeting” live stream with Jim Cramer at 10:20 a.m. ET. Here’s a recap of Monday’s highlights. The Market Needs a Break to the Bottom Why Jim’s Two-Year Treasury Quick Investing Mentions: JNJ, LLY, AMZN, QCOM, DHR 1. As the market needs a break from the bottom, stocks were mixed on Monday, recovering from earlier losses of as much as 10- Treasury yields hit an 11-year high of 3.5 percent on the year, before pulling back somewhat. Jim Cramer said rising bond yields — especially the 2-year, which was already near 2007 highs and near 4 percent — indicated that the Federal Reserve’s expected 75 basis points rate hike at this week’s meeting Point interest rate hikes won’t be the last. This move of this magnitude will be the third consecutive meeting of 75. In addition to the Fed’s aggressive campaign to control inflation, stocks still face two other major challenges: Russia’s war in Ukraine and the Covid lockdowns in China, Jim said. “You can’t do all three at once. If you’re going to get down, you need some breaks,” he said, thinking the first to break would probably be the Fed. It’s worth noting that the S&P 500 was still about 6% off its mid-June lows, a year-to-date low. 2. Why is Jim buying the 2-year Treasury Jim stuck with his decision to buy the 2-year Treasury note because he believes the yield has become more competitive with stock returns. As a reminder, Jim cannot buy individual stocks with his own money for the financial journalists at CNBC. A key reason behind his confidence in the 2-year Treasury note is his belief that the Fed will not raise its key funds read rate above 4% as the economy shows further signs of slowing. So, if the Fed hikes 75 basis points this week that would bring the target range on federal funds to 3% – 3.25%. The club is in a holding pattern ahead of the Fed meeting – and because the S&P 500 Short Range Oscillator shows the market is not yet oversold despite last week’s crushing decline. Usually we wait for the oscillator’s oversold signal before we start thinking about buying. 3. Quick Mention: JNJ, LLY, AMZN, QCOM, DHR We have advice for new club members who may be looking to add to their portfolio. “I would buy Eli Lilly ( LLY ) and I would buy Amazon ( AMZN ) and do it right here without hesitation,” Jim said, adding that if he also picked up shares of Johnson & Johnson ( JNJ If he takes it, he does not already own one. He also said he would buy shares of Qualcomm ( QCOM ), which has an automotive investor day later this week. As for Danaher (DHR), the stock currently provides the best value in the club’s portfolio, Jim said. (Jim Cramer’s Charitable Trust is long JNJ, LLY, AMZN, QCOM, DHR. See here for a complete list of stocks.) As a subscriber to the CNBC Investing Club with Jim Cramer, you’ll receive a trade alert before That Jim Cramer trade. Jim waits 45 minutes after sending a trade alert before buying or selling stocks in his charitable trust 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 Investing Club information above is subject to our terms and conditions and privacy policy, along with our disclaimer. No formal obligation or duty exists, or is created, by reason of your receipt of any information provided in connection with Investing Club. No specific results or profits are guaranteed.