The transports sector has been out of gas the past 10 trading days and investors are still suspicious that a recession is coming in due time. FedEx, the global shipping company that is connected to everything from supply chain to e-commerce to China, is a better signal about the industry than the index itself because it is “most emblematic of what’s happening right now on the market,” Cramer said.
The company, which has been unstable lately, will deliver its latest earnings report in two weeks. Cramer said investors may be concerned about weak results and weak guidance. If the stock goes down, the sellers would feel vindicated, he said.
“Before I would make a big commitment to this market I need to see FedEx reverse directions, which would signal that a slowdown is finally priced in and the market de-risked and ready for a swing,” he explained.
The host said he’s not looking at FedEx for a read on fundamentals but as a referendum on a looming recession. Cramer added he’s not too worried that the economy could fall into recession, thanks to Federal Reserve Chair Jerome Powell’s policy of patience.
“I think this decline in FedEx is based on the rearview mirror, when the Fed was still intent on strangling the life out of the economy,” he said. “But Powell saw the slowdown coming and he’s changed his tune. He’s with the good guys.”
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