If the facts change, I have to change too. I learned that by reading legendary British economist John Maynard Keynes, and it has never steered me wrong. I was very bullish on this market because scary things are happening with artificial intelligence. And with a new Federal Reserve Chairman named Kevin Warsh in office, he wanted to lower interest rates to support growth in light of a frozen housing market and an underclass suffering from rising gas prices, declining health care, and reduced free food stamps. As I always do, I made this decision by visiting the top 20 public retailers in the United States, which know far more about spending habits than the government. These also include automotive and auto parts companies and ancillary home care businesses. The idea that we don’t need rate cuts is fanciful. But then the monthly jobs report released Friday showed that job growth unexpectedly surged in May, with nonfarm payrolls increasing by a seasonally adjusted 172,000 jobs, well above the Dow Jones consensus estimate of 80,000. Of course, this number does not differentiate between people who are employed and doing well and those who are employed and trying to stay there. In this country, work means self-sufficiency, and despite my attempt at self-sufficiency when interviewing Kevin Hassett, President Donald Trump’s chief economic adviser, that idea is irrefutable. But it wasn’t worth the effort, even though the true nature of the poor working class was obvious to everyone except those who only had wealthy friends and acquaintances. Knowing people at all economic levels is like knowing the price of milk or gasoline. It will help you perform your job well. A stronger-than-expected report eliminates the possibility of a rate hike this year, or even one at all, which greatly supports my bullish case. Without a dramatic shift in data center construction, the macro could have been overlooked. Costs for everything from labor and construction materials to power and site development are rising rapidly in data center construction. We thought we would see a profit in the near future, but now we have no idea when it will happen. Just a month ago, Amazon’s confidence in its return on invested capital was so clear that it felt there was no need to worry. I’m now worried that Amazon will need to issue stock because the benefits from AI are more elusive than clear. We also thought we would only have to deal with equity offerings from a few private companies like OpenAI, Anthropic, and SpaceX. But after Alphabet announced plans to raise $80 billion through a stock sale to fund its AI efforts, it appears that big tech companies including Amazon, Microsoft, and Meta may need to raise huge amounts of money for AI through stock sales. There is no way this market can handle so many stocks and maintain these levels. So we find ourselves going from the prospect of rate cuts in 2026 and a smooth trajectory to hyperscaler profitability to the possibility of rate hikes this year and an endless series of mega-capitalizations. Now, let me take a break and put on my hedge fund hat. I don’t like to do that, for various reasons. One is that if you’re going to do it, you might be better off becoming a hedge fund manager. And that’s how I retired. Because read “Confessions of a Street Addict.” Then you’ll understand why. The other thing is that I can’t do what a hedge fund manager does. When we saw Alphabet’s proposal succeed, we should have realized that without the money, we would be facing a huge deal. I have said many times that with so many deals I can’t think straight and it’s time to leave. In hedge fund parlance, “departing” means selling all the stocks you were long and going short, shifting your focus to stocks unrelated to data centers, like Johnson & Johnson or Procter & Gamble. This also means that stocks like Marvell and Nvidia, as well as AI stocks like Arm, Qnity, and Corning, will blow up. We do so because we understand that we get all sorts of stories about how data centers are hated across the country, too hard to build, too expensive, and forever a source of more capital. The hyper-escalator that was the source of the greatest stock story ever told is now the epicenter of the bear market. I can’t do that now. I can’t trade much, and I only talk about my position. That’s why the morning meeting (10:20 a.m. ET) is so important. Ask me what I can do, not what I can’t do. Rules protect everyone. Although I am in a position to influence prices, I do not personally take advantage of it. So what if you think you can get products from Microsoft or Amazon at any time? First, you need to imagine what will happen when the SpaceX contract is priced next Friday. There are many people who buy stocks at market price without any connection to E-Trade or Robinhood (or any other company that owns the stock). They are the ones who decide on the opening date. The stock should be worth $4 trillion unless SpaceX founder and CEO Elon Musk says the institution can profit from it. At this point, we don’t know where the supply is coming from, so the start time should be something like spring 1999. Such an opening actually creates liquidity that could be useful for the next five trades. Or the company will burn through all its money and the building will collapse, which is a very real possibility. The novelty of this deal does not help solve this case, as no one seems to know what will happen. I don’t care about all these tranches. All I care about is the first batch of stocks that hit the market. You can’t expect anything good. I hope it’s a day when President Trump doesn’t cause a manufactured mess. The real question here is how much money will be allocated to technology stocks and how much to non-tech stocks. Growth investors accustomed to the Rule of 40 (a software metric that assumes a company’s revenue growth and profit margins are at least equal to 40%) are fleeing technology investments to companies like healthcare and consumer companies that still maintain high organic growth. Therefore, you need to reposition yourself. I tried it. There is still work to be done. I like all of Healthcare, but I especially like Cardinal because there were no flies to begin with. We note that we entered the Intel position too early with our first purchase last week. But once the market absorbs all this supply, Intel will become the next Micron. Let’s talk about that possibility. At some point, Nvidia’s clients will have to say out loud how lucrative this is. I believe it will be humane. Once that deal is completed, the worst may be over. If I were a hedge fund manager, I would know how to restructure the entire shooting game. But I’m not. It’s very difficult, but I’ll do my best to explain it to you. Now, what will my posture be like tomorrow? It’s simple. Not an aggressive bear, but a chastened bull. I was reprimanded because I kept saying that if I get too many deals, I have to schedule them. But we’re bullish because the long-term effects of the Fourth Industrial Revolution aren’t that long-term. It’s happening now. It’s just that Microsoft doesn’t want to be left out. Amazon wants Amazon Web Services to remain its leading cloud platform. Meta may require a robust meta web service. And Alphabet wants to maintain its status as a front-runner. They will all be left behind unless they continue to spend heavily. But in the short term, there are many mouths to feed, but not enough to eat. The market could be overwhelmed. That is our own discovery. That’s not the best place. (See here for a complete list of Jim Cramer Charitable Trust stocks.) As a subscriber to Jim Cramer’s CNBC Investment Club, you will receive trade alerts before Jim makes a trade. After Jim sends a trade alert, he waits 45 minutes before buying or selling stocks in his charitable trust’s portfolio. If Jim talks about a stock on CNBC TV, he will issue a trade alert and then wait 72 hours before executing the trade. The above investment club information is subject to our Terms of Use and Privacy Policy, along with our disclaimer. No fiduciary duties or obligations exist or arise from your receipt of information provided in connection with the Investment Club. No specific results or benefits are guaranteed.
