Every weekday, the CNBC Investing Club with Jim Cramer does a live “morning session” at 10:20am ET. Here’s a recap of Monday’s key moments: Falling oil is good news We want to confirm that inflation has peaked Quick mentions: JNJ, LLY, LIN Disney’s real problem is its balance sheet 1. Falling oil it’s good news. data from China overnight, along with news that the country’s central bank cut interest rates in a surprise move. Wall Street turned positive after last week’s strong rally, which was spurred by economic data suggesting inflation is peaking. West Texas Intermediate crude, the US oil benchmark, also fell 4% to below $90 a barrel, which is good news for several reasons: First, the Nasdaq, very tech tends to move in the opposite direction to oil, so losses in crude oil could support tech names as well as consumer-related stocks. Jim Cramer believes that peak oil in June was what drove inflation lower, as gasoline fell as crude prices fell. This, in turn, led to a cooling of the consumer price index (CPI) in July. The drop in oil also suggests that the stock market doesn’t want to stay down, as a drop in crude prices can help propel stocks higher. Great for the bulls, bad for the bears, Jim said. 2. We want confirmation that inflation has peaked Although lower-than-expected CPI and Producer Price Index (PPI) readings last week make us optimistic that inflation has maxed out, we want to confirm that it won’t fire again if we lower our guard. We want to see at least one more month of progress to show that the fall in oil and the softer-than-expected key inflation readings from July are no fluke. Some things we’re looking at to gauge whether inflation has really peaked are used car and rental prices, as well as health care and food costs. Of course, we’re also watching to see if companies across all sectors are still experiencing supply chain issues as these have put upward pressure on prices. The Federal Reserve may need to continue raising rates until companies that are experiencing supply chain issues begin to see excess inventories. “If there are still supply chain disruptions, then what happens with oil ultimately won’t matter. You have to slow supply chain disruptions,” Jim said. 3. Quick Mentions: JNJ, LLY, LIN We took advantage of the pullback in shares of Johnson & Johnson (JNJ) late last week and bought another 50 shares on Monday. We now own 425 shares of J&J, raising its portfolio weighting from 2.02% to 2.28%. We remain bullish on J&J and firm in our belief that the company will have limited exposure to the Zantac litigation that sent drug stocks lower last week. We also have some quick interpretations of two other names in the club: We think Eli Lilly’s ( LLY ) new drug Mounjaro, approved for type 2 diabetes and in trials to treat obesity, will be an absolute hit, and us back bullish on LLY stock. JPMorgan expects peak annual sales of $25 billion for the drug, further cementing our faith in the company. BMO Capital wrote Monday that it expects the passage of the Inflation Reduction Act to help spark new projects and investments in sustainable hydrogen, carbon capture, sustainable aviation and more. Since Linde ( LIN ) has its hands in some of these areas, we think the bill could help the company, and perhaps the stock, see some profits. 4. Disney’s real problem is its balance sheet Hedge fund manager Daniel Loeb bought a stake in Club Holdings Disney (DIS) and urged, in a letter to CEO Bob Chapek, that the company spin off ESPN, among other recommendations. We believe the problem with Disney is not ESPN, but Chapek’s $71 billion acquisition of Fox’s entertainment business, which took place under former CEO Bob Iger. This has hurt the company’s balance sheet without adding much value, Jim said. “Netflix would have been a better buy… Clear the budget, at least for something that would actually help you.” Overall, the Club is confident in Chapek’s direction for the company and will be watching for any updates on Loeb’s involvement with Disney and his suggestions. (Jim Cramer’s Charitable Trust is long DIS, LIN, LLY, JNJ. See a full list of stocks here.) As a subscriber to the CNBC Investing Club with Jim Cramer, you’ll receive a trade alert before Jim makes a trade. Jim waits 45 minutes after sending a trade alert before buying or selling a share in his charitable trust portfolio. If Jim has discussed a stock on CNBC TV, wait 72 hours after issuing the trade alert before executing the trade. THE INFORMATION IN THE ALTERNATE INVESTMENT CLUB IS SUBJECT TO OUR TERMS AND CONDITIONS AND PRIVACY POLICY, WITH OUR DISCLAIMER. NO OBLIGATION OR FIDUCIARY DUTY EXISTS OR IS CREATED BY YOUR RECEIPT OF ANY INFORMATION PROVIDED IN CONNECTION WITH THE INVESTOR CLUB. NO SPECIFIC RESULTS OR BENEFITS ARE GUARANTEED.
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