3 takeaways from our daily meeting: Defensive stocks, trimming semis, Meta downgrade
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by 0 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 Tuesday’s key moments. The defensives are the only place to be Semis and U.S.-China tensions Quick mentions: META, STZ 1. The defensives are the only place to be Stocks edged down Tuesday, while bond yields rose on investor worries over inflation and its ripple effect on corporate earnings and the broader economy. The S & P 500 fell 0.13%, while the Nasdaq Composite lost 0.36% in midmorning trading, both down for the fifth straight session. The yield on the 10-year Treasury climbed to 3.9%. West Texas Intermediate — the U.S. oil benchmark that had climbed more than 10% last week — fell nearly 2%, to $89.2 a barrel. Amid this ongoing market volatility, we maintain our position that investors should hold defensive stocks in their portfolios to weather the economic slowdown and a potential recession looming on the horizon. Key defensive Club names include pharmaceuticals like Johnson & Johnson (JNJ), AbbVie (ABBV) and Eli Lilly (LLY), as well as Procter & Gamble (PG) and Constellation Brands (STZ). 2. Semis and U.S.-China tensions We’re paring our exposure to semiconductors because the personal computer market is collapsing, on top of new U.S. export restrictions on companies that sell their chips to China. We took off 150 shares of Qualcomm (QCOM) after Monday’s sell-off and would have trimmed our positions in Nvidia (NVDA) and Advanced Micro Devices (AMD), if we weren’t restricted from doing so at this point. We’re holding off on touching our position in Marvell Technology (MRVL) for now, since its business is more with enterprises than consumers. However, we’ve downgraded all of our semis to a 2 rating. We also want to note that we don’t expect escalating tensions between Washington and Beijing to impact other U.S. companies that have business in China, such as Starbucks (SBUX) and Apple (AAPL), since they have products that are both made and sold in China. 3. Quick mentions: META, STZ Atlantic Equities downgraded Meta Platforms (META) to neutral, citing concerns with the company’s growth outlook due to macroeconomic headwinds and rising competition for advertising dollars. We think cost reductions could partly offset the anticipated softer topline growth. But given high decremental margins and greater challenges reducing costs than anticipated, we see an ongoing downside risk to earnings. Wedbush initiated coverage on Constellation Brands (STZ) with an outperform rating and $275 price target. We added to our position on Monday , ramping up the defensiveness of our portfolio, and believe that STZ could be one of the few companies that beats this earnings season. (Jim Cramer’s Charitable Trust is long AMD, AAPL, META, MRVL, NVDA, SBUX, STZ, QCOM. 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.
