We keep getting the wrong numbers. We see West Texas Intermediate (WTI) crude oil having a hard time staying above $80 a barrel and natural gas down 30% in the last 3 months. Oil below $80 a barrel still means gasoline is up 15% and natural gas is up 17% year-over-year. But we would all agree that these are not gigantic gains because the last 3 months have been quite tame. Agriculture? Wheat is up 2% this year, while cotton is down 6%. Corn and soy are up 23% and 20% for the year, respectively, but they are up 2% and 4% over the last two months. We learned that we have had 6 straight months where existing home sales are weaker, while month-over-month contract signings declined across the country. A decline in signings usually means that the buyers won’t step up any more, and that means the sellers will give up soon and break price. Year-over-year pending transactions fell by 37.8%, further evidence of the downturn. We don’t know how many people have crypto currencies, but its down $2 trillion year-over-year. The S & P, 500 , the primary method of 401k/IRA savings, is down nearly 20% year-to-date. Commodities are tame. Your savings are being crushed. We know that the consumer price index for November rose a surprisingly low 0.1%, a big drop off from October’s 0.4%. We have had almost no issuance of initial public offerings, with the number down 82% from this time last year and only 71% of deals greater than $50 million. Paltry. At $7.7 billion, total proceeds are down almost 95% from this time last year. . Everything seems to be going the Federal Reserve’s way. Except, of course, wages. We just saw in The Wall Street Journal Tuesday that it’s incredibly easy for individuals laid off from tech jobs. Seventy-nine percent got new jobs within 3 months of starting their search. There are still billions of dollars in companies that managed to raise a ton of money in different verticals. There was a terrific article on CNBC.com Wednesday , by Hugh Son, about how there are many fintech companies that are struggling and that many won’t make it because they were predicated on interest rates staying lower. As weak as fintech is, I think that most enterprise software companies that wanted to tap the public markets are even weaker, while the ones that are public are a disaster. As are so many of the initial public offerings from the class of 2021. But they, too, have the wherewithal to not have to fire people yet. There is simply almost no slack in the system — and until we get some I can’t see the Fed stopping their rate increases. Why bother? Why not hike a couple of more times to be sure that all of the wealth creation from the pandemic gets wiped out? It was, in many ways, artificially bought with free money. But, if you are on the Fed, you know this: If you do not wipe out what was made with free money, or at least do it as best you can, then we are going to see little progress on halting rising prices. The Fed knows that until there is slack, there will be no trade down. There will be no people who stay at home all the time, bringing the price down of going out. It will all come together for the Fed in 2023. Of course, we have to have more than a month where unemployment is above 4%. If I were the Fed, I would wait until we had 6 months of rising unemployment. The market right now is saying that 2023 will be more like 2022 than we realize. I think that’s a possibility for the first few months. But if we see unemployment rise to 4%, then we will know the Fed will have to wait a bit before it hikes further, or it will just pause altogether because that’s its best hope for a soft landing. So, while we watch our portfolio and you watch yours, remember what matters: Wages. Until they are brought down, the value of the high multiple-to-earnings stocks will keep getting hammered, while the value of the high multiple-to-sales stocks will most likely keep falling until the Fed finishes rate increases. Grim? No, just a recipe for being really selective because, never forget, even with rates this high money still goes into stocks. It just doesn’t go into the same stocks — and with issuance so low, the ones it goes into, rally far higher than you would ever think possible. (See here for a full list of the stocks in Jim Cramer’s Charitable Trust.) 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.Traders work on the floor of the New York Stock Exchange during morning trading on December 06, 2022 in New York City. The Dow Jones opened low this morning continuing its downward trend dipping more than 400 points as the stock market closed on Monday.
