Fear of missing out is driving markets higher, says Jim Cramer

About this video

• Video Title: Fear of missing out is driving markets higher, says Jim Cramer
• Channel: CNBC Television
• Speakers: Jim Cramer
• Duration: 10:58

Overview

Jim Cramer discusses the current market rally, attributing it to "fear of missing out" (FOMO) among investors, particularly individual traders, despite professional skepticism about overvalued assets. He reviews upcoming earnings reports and potential stock movements, touching on companies like Constellation Brands, McCormick, Dell, Honeywell's spinoff Solstice, PepsiCo, Delta Air Lines, Levi Strauss, and Fiserv, as well as broader economic concerns like the Federal Reserve's interest rate policy.

Key takeaways

• FOMO Driving the Market: The current market rally is largely fueled by individual investors and "home gamers" driven by the fear of missing out, even as professional money managers are concerned about overvaluation.
• Skepticism vs. Momentum: Professionals view many market segments, such as data centers and quantum computing, as overvalued or "bubbles," but are hesitant to short them due to strong upward momentum.
• End-of-Year Buying: As the year-end approaches, professional investors may engage in buying to show positive returns to shareholders, further contributing to market gains.
• Economic Indicators and Fed Policy: There's a tension between anecdotal evidence of economic weakness and the strong performance of certain sectors like data centers. Comments from Fed officials, like Austan Goolsbee, suggest a potential reluctance to cut rates if the economy remains strong, which could impact market sentiment.
• Company-Specific Outlooks: The video touches on several companies, offering mixed outlooks:
  • Constellation Brands: Facing challenges due to declining volumes and competition from hard seltzers.
  • McCormick: Seen as a potential trade-down option during a slowdown, but the packaged food group is generally out of favor.
  • Dell: Praised for its integration of AI technology and its stock performance after a previous dip.
  • Solstice (Honeywell spinoff): Potentially an overlooked gem with a pure-play aerospace component and building automation technology.
  • PepsiCo: Faces pressure from younger generations' health consciousness and the rise of weight-loss drugs impacting snack consumption, despite a solid snack franchise.
  • Delta Air Lines: Despite recent gains, still down for the year, and considered a tough stock to own due to potential risks.
  • Levi Strauss: Showing strong performance with a recent 52-week high, suggesting continued positive momentum.
  • Fiserv: Questioned regarding its valuation after a disappointing last quarter, with a recommendation to wait for further results.
  • American Eagle Outfitters: Suggested to "ring the register" after a speculative surge tied to a celebrity endorsement, as the underlying business performance is being scrutinized.