Jay Powell not only has a heart, he has a brain too! That was Jim Cramer’s insight from Wednesday’s Federal Reserve comments. Cramer told his Mad Money viewers that he was just surprised that so many people were surprised.
The Fed has recognized the obvious, continued Cramer. Yes there is inflation. Yes, inflation is bad and at some point the Fed will have to act to fight it. But right now, keeping people busy is more important than fretting over gradually rising prices.
Cramer said Powell knows what he’s doing and another six months of the stars quo made perfect sense. It gives the economy time to grow and reclaim more of the jobs it lost, while at the same time giving supply chains a chance to recalibrate.
In this environment, investors must take advantage of any weakness to buy companies with better than expected returns that can thrive in a low interest rate environment. That means that industrial and technology stocks are making large investments, at least for now.
Meanwhile, Cramer gave Powell a tip that he believed should be commended for a zero-tolerance policy against unemployment.
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Board resolution: Albertsons
In his first segment, “Executive Decision”, Cramer welcomed Vivek Sankaran, President and CEO of Albertsons (ACI) – Get the report, the grocery chain with stocks at new all-time highs, up 11.3% for the year.
Sankaran said the pandemic only accelerated the many changes Albertsons was already making in their stores, including offering better product variants and more private label products. Then they sped up their pickup and delivery options, which grew 200% over the year, and they were able to target their buyers with their loyalty program.
When asked about the condition of the consumer, Sankaran noted that the consumer is really strong. During the pandemic, people stayed home and cooked more, he said, leading to an increase in fresh produce, a move towards quality meat and higher spending on discretionary items like flowers.
On the subject of inflation, Sankaran said they see price inflation of 3% to 4%, but so far they have been able to offset those increases with productivity gains. There are still bottlenecks at some locations, but for the most part the supply chains have adapted to the new demand.
Board resolution: LyondellBasell
For his second segment, “Executive Decision”, Cramer also spoke to Bob Patel, CEO of LyondellBasell Industries (LYB) – Get the report, the chemical company with shares up 55% last year. LyondellBasell also offers a dividend yield of 4.2%.
Patel said the pandemic recovery is just beginning and while demand is rising here in the US, reopenings in Europe and Asia are yet to come. Additionally, the semiconductor shortage has hampered several industries, from automotive to home appliances, and it may take these industries another two years to meet demand.
LyondellBasell expects to operate in an environment of higher prices and higher margins for at least another year.
When asked about that winter’s storm and blackout in Texas, Patel stated that they are usually given six days notice if severe weather is imminent. That’s more than enough time to slow their factories down and do a clean, safe shutdown.
During the winter storm Uri, there was a sudden shutdown and a power outage that damaged the stoves. The sudden frost also burst many, many pipes, causing the entire Gulf Coast to be painstakingly repaired with failures that lasted 30 to 45 days for most facilities.
Finally, Patel said the pandemic showed the best and the worst in the plastics industry. He said that as many products as personal protective equipment and syringes rely on plastic, but more needs to be done to close the loop on plastic waste to ensure each item finds its way back to a recycling facility.
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