Key Points
- CNBC’s Jim Cramer is taking a more defensive approach as rising oil prices, higher interest rates, and geopolitical tensions create a tougher backdrop for stocks.
- Cramer’s Charitable Trust has raised cash to 15% and is reducing data-center exposure in favor of health care while waiting for better buying opportunities.
CNBC’s Jim Cramer said Tuesday that elevated oil prices, rates and geopolitical uncertainty call for a more defensive approach to the market, even as many companies continue to deliver strong results. “We simply aren’t in an environment that’s conducive to big capital gains, especially during September, which is historically the weakest month of the year,” the ” Mad Money ” host said. Stocks fell on the first trading day of September as inflation concerns pushed bond yields higher, raising questions about the Federal Reserve’s next move. West Texas Intermediate crude jumped 5% to above $90 per barrel after the U.S. military launched new strikes against Iranian targets near the Strait of Hormuz following attacks on two oil tankers in the critical shipping route. Against that backdrop, Cramer said his Charitable Trust , the portfolio used by CNBC’s Investing Club, is making three moves to reduce risk. The Club raised its cash position to 15% , a level Cramer called “extremely high.” The larger cash cushion protects against further volatility, and more dry powder is always good to have in volatile times to take advantage of better buying opportunities. “We want it that high because without a true end of the war, you don’t know when the Iranians will provoke the president,” Cramer said. The Club is reducing its exposure to data-center stocks and shifting more money toward health care. It exited its remaining Corning position Tuesday after trimming the stock last week, and also cut its Broadcom position last Monday to buy more Cardinal Health . Cramer said the shift doesn’t reflect weakening AI fundamentals. He pointed to Dell’s strong results Tuesday evening as evidence that underlying demand remains robust. Instead, he said data-center stocks face mounting pressure from higher rates and political opposition to new projects , while health care has proved more resilient. “The AI trade is very rough because of the macro backdrop, not the micro, meaning anything company-specific,” Cramer said. “The micro’s still strong, but for now it doesn’t seem to matter.” The Club continues to own Nvidia and Apple , but Cramer said persistent selling in technology is difficult to ignore, particularly after the group’s substantial gains. Cramer isn’t rushing the Club to buy every dip. He wants to see whether investor sentiment becomes considerably more negative before putting more money to work. “When we sense that everyone feels like us and there are many more negative people than there are right now, we’ll be happy to put some of the trust’s cash to work,” Cramer said. “When you have a volatile situation with oil and a president who’s volatile himself, along with volatile interest rates, you need to be a little more concerned about the volatility, as this market gravitates from exuberant to negativity, and the dip buyers, especially those involved with artificial intelligence, go unrewarded.” Sign up now for the CNBC Investing Club to follow Jim Cramer’s every move in the market. Disclaimer Questions for Cramer? Call Cramer: 1-800-743-CNBC Want to take a deep dive into Cramer’s world? Hit him up! Mad Money Twitter – Jim Cramer Twitter – Facebook – Instagram Questions, comments, suggestions for the “Mad Money” website? madcap@cnbc.com
