3 Recent Technology Trends Show Fed Inflationary Pressures Are Working

Cramer Says 3 Recent Tech Trends Show Fed Pressure Is Working Against Inflation

CNBC’s Jim Cramer said on Thursday that, based on his talks with CEOs, tech companies are feeling pressure from the Federal Reserve against inflation.

“While some of these tech companies have business units that may be somewhat immunized against higher borrowing costs, they’re very few here,” said the “Mad Money” host.

Cramer, who spent the week in San Francisco, said he speaks with “at least 20 CEOs” every time he visits the city. From his conversations this time around, he came up with three takeaways that led him to his conclusion.

There they are:

  1. Tech companies have no problem hiring talent. Cramer said the tech executives he spoke to said they had no trouble finding talent. In other words, last year’s wrangling over recruiting has been replaced by fear of unemployment. Cramer said this bodes well for the Fed’s quest to stamp out inflation, including wage inflation.
  2. Not every technology company’s product is indispensable, despite what they may say. While tech companies tout their products as must-haves, no company wants to spend tons of money on an ultimately unnecessary upgrade of their digital systems during a bad economy, Cramer said. At the same time, it doesn’t matter if a company is indispensable, he added. “Great growth stocks are being sold at ever-smaller P/E ratios because they’re the best homes in bad neighborhoods.”
  3. The best tech companies have to reinvent themselves on the fly. Cramer cited Salesforce’s shift to prioritizing profitable growth and returning capital to shareholders rather than growth as an example of this adjustment.

He also reiterated that all the problems tech companies are currently facing are part of Fed Chair Jerome Powell’s plan to cool inflation.

“The Fed wants to lower the price of all assets, including your homes and your portfolios. Jay Powell can only do that by making it more expensive to borrow money. That’s exactly what he’s doing,” Cramer said.

Disclaimer: Cramer’s Charitable Trust owns shares of Salesforce.

Jim Cramer shares his takeaways from his week in San Francisco with tech CEOs

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