Jim Cramer’s top 10 things to watch in the market Tuesday: Wages too high, China reopening

My top 10 things to watch Tuesday, Jan. 3, 2023 1. Employment number Friday. Federal Reserve should move if we don’t get above 4% unemployment and wages don’t fall. Wage inflation seems to be the only thing that matters to central bankers. The Homestretch, our new audio feature to get you ready for the final hour of trading, starts Tuesday. Look for the alert. Here’s my Sunday commentary , detailing our worldview for the first half of 2023 and the stocks that will win in the new year. The overall market looks higher on the first trading day of 2023 after Wall Street on Friday closed out a terrible 2022. 2. China’s continued move toward reopening its economy after prolonged, strict anti-Covid measures has been good for Club holdings Estee Lauder (EL) and Starbucks (SBUX). Both stocks have soared over the past three months, with EL up 15% and SBUX up nearly 18%. Starbucks can be bought even up there. Club stock Wynn Resorts (WYNN), also closely tied to China, upgraded at Wells Fargo to overweight from equal weight (buy from hold) and pushes price target up to $101 per share from $74. Macao junkets could be back. 3 . Barclays raises price target on Club holding Eli Lily (LLY) by $5-per-share to $400. Is this the biggest stock for 2023? My reasoning: the company’s diabetes and possible weight-loss franchises; not to mention the promise of LLY’s experimental Alzheimer’s treatment. 4. Tesla (TSLA) delivered 1.31 million electric vehicles in 2022, up 40% year-over-year. But fourth-quarter deliveries of 405,278 fell short despite heavy discounting. I say it will force Elon Musk to sell SpaceX shares. Among the price-target cuts, JPMorgan takes TSLA to $125 per share from $150; keeps its underweight (sell) rating. 5. UBS downgrades PG & E (PCG) to neutral from buy, with a $17-per-share price target; just above where the stock closed Friday. Controversial. Analysts at UBS cite Fire Victims Trust and wildfire migration issues. I disagree with this call after meeting with the CEO. We’re watching power company Sempra (SRE) in the Club Bullpen. 6 . Wells Fargo downgrades health insurer Cigna (CI) to equal weight from overweight (hold from buy); lowers price target to $355 per share from $370. You are supposed to be buying these types of defensive stocks right here, not selling them. The Club likes and holds Humana (HUM). 7. Tiresome: Baird goes to outperform from neutral (buy from hold) on Block (SQ). Analysts call it a “premier large-cap growth franchise.” To me, 56 times earnings to rich in this market. So it doesn’t matter. As I wrote Sunday, these high multiple stocks, especially in fintech, face a rough year ahead. Investors don’t want to pay up. 8. Piper Sandler lowers Atlassian (TEAM) price target to $140 per share from $148. But analysts still expect developers to use it. I say this is the kind of toxic company that will remain suspect until proven otherwise. TEAM making money but expensive: 94 times earnings, so therefore not investible in a Fed tightening environment. 9. Barclays raises Exxon Mobil (XOM) price target to $129 per share from $111; keeps overweight (buy) rating. Similar moves on Chevron (CVX). Oil prices on Tuesday drop 1% and natural gas price plunge a whopping 10%. But both relatively outperformed the past 12 months. We own four energy stocks: Coterra Energy (CTRA), Devon Energy (DVN), Pioneer Natural Resources (PXD) and Halliburton (HAL). 10. Wolfe Research downgrades T-Mobile US (TMUS) to peer perform from outperform (hold from buy). Cites slowing subscriber growth and churn and spend for home internet. Heavy contrary call here. The stock was a rock ship over the past 12 months, up more than 20% compared to the S & P 500’s nearly 20% decline in 2022. (Jim Cramer’s Charitable Trust is long EL, SBUX, LLY, HUM, CTRA, DVN, PXD and HAL. 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.

1. Employment number Friday. Federal Reserve should move if we don’t get above 4% unemployment and wages don’t fall. Wage inflation seems to be the only thing that matters to central bankers. The Homestretch, our new audio feature to get you ready for the final hour of trading, starts Tuesday. Look for the alert. Here’s my Sunday commentary, detailing our worldview for the first half of 2023 and the stocks that will win in the new year. The overall market looks higher on the first trading day of 2023 after Wall Street on Friday closed out a terrible 2022.

2. China’s continued move toward reopening its economy after prolonged, strict anti-Covid measures has been good for Club holdings Estee Lauder (EL) and Starbucks (SBUX). Both stocks have soared over the past three months, with EL up 15% and SBUX up nearly 18%. Starbucks can be bought even up there. Club stock Wynn Resorts (WYNN), also closely tied to China, upgraded at Wells Fargo to overweight from equal weight (buy from hold) and pushes price target up to $101 per share from $74. Macao junkets could be back.