We recently published a list of Jim Cramer Warns of a 36% Market Drop & Reviews These 9 Key Stocks. In this article, we are going to take a look at where Walmart Inc. (NYSE:WMT) stands against other stocks Jim Cramer discusses.
In his appearance on CNBC’s Squawk on the Street on Monday, Jim Cramer discussed the reasons behind the recent market turmoil. Cramer emphasized that markets haven’t yet priced in the full brunt of the policies that are coming out of the White House. With Peter Navarro’s anti-China agenda now setting the tone, Cramer warned that corporate earnings and valuations are being fundamentally redefined, and made a bold prediction at where the S&P 500 index could potentially find its bottom:
“I think that the way you want to look at it is what multiple do you put on the new earnings estimates for the S&P. And I think that the S&P people thought it would be 270 to 280; now it’s going to be 230. I think you have to put a worst case, 14 times, because markets have tended to bottom at 14 times earnings and that gives you a 36% downside from here. […] We’re still at 20, that’s the problem. You take it down to 14, where it’s historically bottom, you multiply it by 230, and you get S&P 3220, and that should be your bottom.”
READ ALSO: Jim Cramer Got These 10 Stocks All Wrong and Jim Cramer Nailed These 11 Stock Picks.
Cramer then painted a picture of the economic path ahead, noting that the current President’s stance is no longer about deal-making but about generating revenue. He warned viewers that without a change in course, the economy could be heading straight toward a recession:
“You’ve got this dichotomy. I mean, this is a man who’s not talking about negotiating. He’s talking about raising a lot of revenue. In the interim, we’ve got inflation because there’s bargaining, but everybody has to pay higher prices and ultimately a recession if there is not some sort of accommodation made.”
While discussing if the current environment is reminiscent of 2007, Cramer rejected the comparison, but acknowledged that capital is fleeing the US markets which might indicate a loss of confidence in American economic leadership:
“Look, there are signs that the U.S. has lost its supremacy. I want to take that off the table if we decide to change our view. See, let’s say I tell people, I think it’s time to really bail. It’s really dangerous. And then the market drops 50 percent. And then the president switches. Can I tell people, oh, now it’s fine, all clear? No, that does not work. It’s not 2007. And by the way, 2007, it took six years to get back. Eighteen months is the average of the last other five bear markets. Eighteen months. “
