Our Nvidia downgrade — plus, Cramer is looking to add to this position
Every weekday, the CNBC Investing Club with Jim Cramer holds a “Morning Meeting” livestream at 10:20 a.m. ET. Here’s a recap of Tuesday’s key moments. 1. Stocks are lower on Tuesday after a hotter-than-expected consumer price index pushed bond yields up. This comes after big back-to-back gains following last Thursday’s post-election market rout. Jim Cramer pointed out that oil dropping below $90 per barrel for the first time since August, amid hopes of de-escalation in the Iran war, could make October the “last bad CPI” print. Much of the increase in consumer inflation is due to elevated energy prices. If they continue to come down, maybe that limits the Federal Reserve to a quarter-point interest rate increase next month rather than a half-point hike. 2. We’re lowering Nvidia to our hold-equivalent 2 rating from a 1. Portfolio director Jeff Marks said the reason for the downgrade is that we are unwilling to say Nvidia’s two-session drop of nearly 10% this week makes it a buy. We’re in a holding pattern until it becomes clearer what may happen after the board investigates Huang’s affair with an accused Chinese spy. Jim said that putting Huang on leave during the investigation is standard practice for this kind of situation. It’s an orderly process, he added, that allows space to get to the bottom of things. However, he added, Nvidia is not proceeding in an orderly fashion, which is why the stock is dropping so much. 3. Even before this weekend’s Huang revelations, worries about a slowdown in the data center buildout following key Democratic midterms wins were adding turbulence to the market. We want to get smaller in data center and bigger in non-tech names, Jim Friday at the CNBC Investing Club’s Annual Meeting and again Tuesday. That includes bulking up our newest position, Constellation Brands . The Modelo and Corona beer maker should benefit as lower oil prices leave consumers with more money to spend. Jim said he’s not ready to add more Constellation shares just yet. He wants to see the stock decline so we can improve our average cost basis before any meaningful rally occurs. 4. Stocks covered in Tuesday’s rapid fire at the end of the video were Take-Two Interactive , Hims & Hers , and On Holding. (Jim Cramer’s Charitable Trust is long NVDA, STZ. See here for a full list of the stocks.) As a subscriber to the CNBC Investing Club with Jim Cramer, you will receive a trade alert before Jim makes a trade. Jim waits 45 minutes after sending a trade alert before buying or selling a stock in his charitable trust’s portfolio. If Jim has talked about a stock on CNBC TV, he waits 72 hours after issuing the trade alert before executing the trade. THE ABOVE INVESTING CLUB INFORMATION IS SUBJECT TO OUR TERMS AND CONDITIONS AND PRIVACY POLICY , TOGETHER WITH OUR DISCLAIMER . NO FIDUCIARY OBLIGATION OR DUTY EXISTS, OR IS CREATED, BY VIRTUE OF YOUR RECEIPT OF ANY INFORMATION PROVIDED IN CONNECTION WITH THE INVESTING CLUB. NO SPECIFIC OUTCOME OR PROFIT IS GUARANTEED.
