3 recent tech trends show the Fed’s inflation stimulus is working

Cramer says 3 recent tech trends show the Fed's anti-inflation efforts are working

CNBC’s Jim Cramer said Thursday that based on his conversations with CEOs, tech companies are feeling the Fed’s pressure against inflation.

“While some of these tech companies have lines of business that may be somewhat immune to higher borrowing costs, they’re few and far between here,” the “Mad Money” host said.

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

Here 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 In other words, last year’s hiring tug-of-war has been replaced by unemployment fears. Cramer said this bodes well for the Fed’s drive to eliminate inflation, including wage inflation.
  2. Not every tech company product is irreplaceable, despite what one might say. Although tech firms tout their products as must-haves, no company wants to spend tons of money on a completely unnecessary upgrade to their digital systems during a bad economy, Cramer said. At the same time, it doesn’t matter if a company is irreplaceable, he added. “Fantastic growth stocks sell at ever-decreasing price/earnings ratios because they are the best houses in bad neighborhoods.”
  3. The best tech companies have to reinvent themselves on the fly. Cramer pointed to Salesforce’s shift to prioritizing profitable growth and returning capital to shareholders over growth as an example of that adjustment.

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

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

Disclaimer: Cramer’s Charitable Trust owns Salesforce stock.

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

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