According to the Mad Money presenter, there are a number of factors that could be a cause for concern because they could throw up market volatility in September, the month that is the hardest on the stock markets anyway based on historical data. Jim Cramer has listed six things he is most worried about right now:
1. Corporate earnings expectations
Three U.S. companies, paint manufacturer PPG Industries and Sherwin-Williams, as well as construction company PulteGroup, also lowered their expectations for the current quarter this week. shrinking supply chains and rising commodity prices which may lead to weaker-than-expected results. The price of the three stocks did not collapse on the news because demand for their products is still strong, but the bad news is that supplier problems will not go away for the time being.
2. A Fed
Pressure on the U.S. central bank governor to tighten may intensify in September as inflationary pressures intensify. According to Jim Cramer, in light of the fact that companies are complaining in turn about rising raw material costs, it should be considered that inflation may be more stubborn than they think. The US central bankers are of the opinion that the rise in inflation is only temporary.
Jim Cramer said raising interest rates would be the “magic elixir” of breaking down inflation, but it would cut back on demand, leading to a collapse in corporate profits and, with it, stock prices.
3. The increase in yield
If yields rise, government bonds will face stronger competition for shares of companies that pay high dividends. Nowadays, dividend securities are not investors ’favorites and if bond yields go up, they will be even less so,” adds Jim Cramer.
Joe Biden’s huge $ 3.5 trillion stimulus package will certainly create jobs and boost the economy, but it comes at a time when there are more than 10 million job vacancies anyway, according to the latest July figures. The fact that companies almost have to fight for workers it will drive up wages, which is good for employees but not for companies (and thus their shares).
However, if the stimulus package does not go through Congress, investors who have tied their stock purchases to it will be disappointed, for example, cyclical stocks would have supported it.
5. The supply of shares spins up
New share issues, whether through SPACs or traditional IPOs, they throw out the supply of shares in the market. And such IPO cycles typically lead to a sell-off that puts stock prices at more attractive levels, Jim Cramer says. It doesn’t seem like anything is going to stop transactions right now.
6. Geopolitical risks
Jim Cramer remains concerned about China and the predictability of the Chinese president’s actions, for example in relation to Taiwan, which is critical in global chip manufacturing.
All six of the risks mentioned above are ones that markets can handle – if they come one by one, not all at once. Especially with current stock prices, which, moreover, tend to go down in September, Jim Cramer added.
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Source: Portfolio.hu – Üzlet by www.portfolio.hu.
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