Inflation could push the Fed to a rate hike in August

CNBC’s Jim Cramer said Monday that the Federal Reserve could raise interest rates in August, ahead of its next scheduled meeting in September, if this week’s economic data shows inflation isn’t slowing.

“The Fed is still in charge of this market. A week ago, it looked like they might relax, but after Friday’s red-hot jobs number and the passage of the [Inflation Reduction Act]I’m worried they’ll cut the boom for us even before September arrives,” he said.

“If both numbers are scorching, we will have a surprise meeting in August,” he predicted, referring to Consumer Price Index and Producer Price Index data due this week.

The Senate on Sunday approved the Inflation Reduction Lawa Democratic-backed package aimed at combating climate change and expanding health care coverage.

The legislation, among other provisions, allows Medicare to negotiate prices with pharmaceutical companies and establishes a minimum tax of 15% for large corporations.

The July jobs report saw stronger than expected numbers last week, which means the central bank may have to continue on its way to aggressively raising interest rates.

“If I were Chairman Jay Powell…I would have a hard time not calling a special Fed meeting this month to hit us with another 75 basis point rate hike.” Cramer said. One basis point equals 0.01 percentage point.

Investors are also looking at the University of Michigan Consumer Confidence Index this week to shed more light on how consumers are dealing with inflation.

Cramer also previewed this week’s earnings list. All earnings and revenue estimates courtesy of FactSet.

Tuesday: Emerson Electric, Ralph Lauren, Plug Power, Unity Software

emerson electric

  • Third Quarter 2022 Earnings Release at 6:55 am ET; conference call at 9 am ET
  • Projected EPS: $1.29
  • Projected revenue: $5.10 billion

Cramer said he expects Emerson to do well in the long term after selling its InSinkErator disposal business to Whirlpool, but is still curious about how the company is doing in the short term.

ralph lauren

  • First Quarter 2023 Earnings Release at 8 am ET; conference call at 9 am ET
  • Projected EPS: $1.71
  • Projected revenue: $1.40 billion

Although Ralph Lauren is a high-end store, it could still face the same excess inventory that other retailers face, he said.

power plug

  • Second Quarter 2022 Earnings Release After Close; conference call at 4:30 pm ET
  • Projected loss: 21 cents per share
  • Projected revenue: $159 million

Plug Power will benefit from the Reduce Inflation Act because of the bill’s hydrogen tax credit, which could help the company become more than a niche fuel cell producer, Cramer said.

drive software

  • Second Quarter 2022 Earnings Release at 4:05 pm ET; conference call at 5 pm ET
  • Projected loss: 21 cents per share
  • Projected revenue: $300 million

Cramer predicted hit stocks could drop further from Nvidia’s preliminary release financial results on monday revealed that the game is weak.

Wednesday: CyberArk Software, Wendy’s, Disney, Dutch Bros

Cyber ​​Ark Software

  • 2022 Second Quarter Earnings Release Between 7:00 and 7:10 am Eastern Time; conference call at 8:30 am ET
  • Projected loss: 30 cents per share
  • Projected revenue: $138 million

The company should report strong results as cybersecurity companies tend to be insulated from economic turmoil, Cramer said.

Wendy’s

  • Second Quarter 2022 Earnings Release at 7 am ET; conference call at 8:30 am ET
  • Projected EPS: 22 cents
  • Projected revenue: $540 million

Cramer said he’s concerned about how inflation might be hurting Wendy’s performance.

Disney

  • Third Quarter 2022 Earnings Release at 4:05 pm ET; conference call at 4:30 pm ET
  • Projected EPS: 98 cents
  • Projected revenue: $20.99 billion

“He’s too hated for me to believe he can stay down,” he said.

dutch brothers

  • Second Quarter 2022 Earnings Release After Close; conference call at 5 pm ET
  • Projected EPS: 5 cents per share
  • Projected revenue: $182 million

The company is a beloved brand, but it will have to convince investors that its shares are worth buying, Cramer said.

Thursday: Warby Parker, Toast, Rivian

warby parker

  • Second Quarter 2022 Earnings Release at 6:45 am ET; conference call at 8 am ET
  • Projected loss: 2 cents per share
  • Projected revenue: $150 million

“I’m betting that, like other recent IPOs, it’s going to go up in the quarter,” Cramer said.

Toast

  • Second Quarter 2022 Earnings Release at 4:05 pm ET; conference call at 5 pm ET
  • Projected loss: 12 cents per share
  • Projected revenue: $651 million

He said he’s surprised so many small companies like Toast are seeing their shares rise, even without news, suggesting they should never have gone that low in the first place.

Rivian

  • Second Quarter 2022 Earnings Release at 4:10 pm ET; conference call at 5 pm ET
  • Projected loss: $1.63 per share
  • Projected revenue: $335 million

The electric vehicle maker will likely benefit from the Inflation Reduction Act because of the bill’s extension of income tax credits for consumers who buy electric vehicles, Cramer said. He added that he still prefers Tesla.

Disclosure: Cramer’s Charitable Trust owns Disney stock.

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