In his appearance on CNBC’s Squawk on the Street on Monday, Jim Cramer discussed the reasons behind the recent market turmoil. Cramer emphasized that markets haven’t yet priced in the full brunt of the policies that are coming out of the White House. With Peter Navarro’s anti-China agenda now setting the tone, Cramer warned that corporate earnings and valuations are being fundamentally redefined, and made a bold prediction at where the S&P 500 index could potentially find its bottom:
“I think that the way you want to look at it is what multiple do you put on the new earnings estimates for the S&P. And I think that the S&P people thought it would be 270 to 280; now it’s going to be 230. I think you have to put a worst case, 14 times, because markets have tended to bottom at 14 times earnings and that gives you a 36% downside from here. […] We’re still at 20, that’s the problem. You take it down to 14, where it’s historically bottom, you multiply it by 230, and you get S&P 3220, and that should be your bottom.”
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Cramer then painted a picture of the economic path ahead, noting that the current President’s stance is no longer about deal-making but about generating revenue. He warned viewers that without a change in course, the economy could be heading straight toward a recession:
“You’ve got this dichotomy. I mean, this is a man who’s not talking about negotiating. He’s talking about raising a lot of revenue. In the interim, we’ve got inflation because there’s bargaining, but everybody has to pay higher prices and ultimately a recession if there is not some sort of accommodation made.”
While discussing if the current environment is reminiscent of 2007, Cramer rejected the comparison, but acknowledged that capital is fleeing the US markets which might indicate a loss of confidence in American economic leadership:
“Look, there are signs that the U.S. has lost its supremacy. I want to take that off the table if we decide to change our view. See, let’s say I tell people, I think it’s time to really bail. It’s really dangerous. And then the market drops 50 percent. And then the president switches. Can I tell people, oh, now it’s fine, all clear? No, that does not work. It’s not 2007. And by the way, 2007, it took six years to get back. Eighteen months is the average of the last other five bear markets. Eighteen months. “
Our Methodology
To make our list of the stocks that Jim Cramer talked about, we listed down the stocks he mentioned during CNBC’s Squawk on the Street aired on April 7th.
For these stocks, we also mentioned the number of hedge fund investors, as of Q4 2024. Why are we interested in the stocks that hedge funds pile into? The reason is simple: our research has shown that we can outperform the market by imitating the top stock picks of the best hedge funds. Our quarterly newsletter’s strategy selects 14 small-cap and large-cap stocks every quarter and has returned 373.4% since May 2014, beating its benchmark by 218 percentage points (see more details here).
9.Apple Inc. (NASDAQ:AAPL)
Number of Hedge Fund holders: 166
Apple Inc. (NASDAQ:AAPL), the giant iPhone maker, is facing some big risks in recent months due to much of its production being tied to a complex global supply chain. The company was mentioned as a prime example of how firms have historically tried to bypass tariffs, such as routing production from China through countries like Vietnam, but are now in the direct line of fire from White House policy. Here’s Cramer’s input regarding the stock:
“[talking about bringing production back to the U.S.] And I think for the point of view of our viewers, they have to understand that Apple is the paradigm of what Navarro is trying to fix. They bring it back here, they are fine. If they don’t; look out. They are not going to be able to make their numbers.”
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