Markets must hit 14% earnings growth forecast in 2026, says Jim Cramer

Jim Cramer (Host of Mad Money) 00:07.560

it's very beginning of the year we were in this three part segment on my twenty five questions for twenty twenty twenty twenty five OK i came up with four big macro questions one question for each of the eleven major sectors and of course ten tech specific questions so now that

Jim Cramer (Host of Mad Money) 00:21.000

you're nearly over let's talk about the answers first question does the yield on the ten year treasury go to four percent or five percent first or neither at the time the tenure was sitting at just over four point five percent this is one where we got a definitive answer because

Jim Cramer (Host of Mad Money) 00:35.080

the tenure went to four percent first given that so much wealth from housing to your portfolios related to the tenure we have to fall like a hawk what happened in twenty twenty five specifically the ten year broke below four percent briefly in that post liberation day washout

Jim Cramer (Host of Mad Money) 00:49.190

spring setting a fifty two week low of three point eight eight in april more recently out the fed started cutting short-term interest rates the tenure has touched the four percent level a couple times first in mid september then in mid october and then again in late november of

Jim Cramer (Host of Mad Money) 01:05.110

course the bulls would feel better if the tenure had formed below four percent and stayed there but that's not the case from benchmark deal currently sitting about four point one five percent don't let anyone scare you that's fine fine for stocks and there's a lack of consensus

Jim Cramer (Host of Mad Money) 01:19.670

about how much help we can realistically expect from the federal reserve next year not even the members of the open market committee can agree on the number of rate cuts that are needed say nothing about investors or people betting in the predictions market the second question

Jim Cramer (Host of Mad Money) 01:32.870

for twenty twenty five we wanted to know whether the labor market would remain tight and here the answer seems to be it seemed to be a definitive no we went from adding over one thousand jobs per month in the first few months of the year averaging around seventeen thousand jobs

Jim Cramer (Host of Mad Money) 01:45.950

added over the course of the past six months meaning june through november that's actually kind of pathetic in june august and october chuck with was actually negative and that i'm gonna call that bad meanwhile the unemployment rates rise from four percent in january to four

Jim Cramer (Host of Mad Money) 02:01.350

point six percent in november that's not good either now the silver lining here is the fact that the labor market weakness has allowed the fed remain our friend but to answer the question from the beginning of the year no the labor market has not remained tight third question we

Jim Cramer (Host of Mad Money) 02:16.070

asked what what's going on in washington specifically what's going to happen now that was a catch all question what i was really asking was how the trump administration would impact stocks irrespective maybe i should have been more detailed because trump two point zero cuts in

Jim Cramer (Host of Mad Money) 02:30.590

many different directions long story short the nasdaq indices up over twenty one percent for the year that's incredible S and P up almost seventeen percent i'll take it and the dow up close is fourteen percent the trump administration has overall been just fine for stocks of

Jim Cramer (Host of Mad Money) 02:45.430

course it didn't look that way initially the year began with this huge pullback with the SP falling twenty one percent in anticipation of the president 's increasingly hard line tariff agenda and in response to those initial liberation day tariff rates that were announced in

Jim Cramer (Host of Mad Money) 03:01.670

early april but once the president reduced or postponed most of those tariffs the market bounced back and bounced back quickly and spent most of the year since then rising gradually whether you love trump or whether you hate him look if he does something that truly panics the

Jim Cramer (Host of Mad Money) 03:16.470

market he tends to roll it back now the only major piece of legislation out of washington this year the one big beautiful bill act didn't impact stocks much yet in fact some of the specific policies in the OBA are concerned immediate expensing of capital investments might

Jim Cramer (Host of Mad Money) 03:33.200

actually be underappreciated as a huge catalyst as we enter twenty twenty six it could boost earnings dramatically but no ones talking about there i just did and the government shutdown this fall the largest longest history in forty three days well i didn't hurt that much it did

Jim Cramer (Host of Mad Money) 03:46.320

it not stocks once it ended we bounced right back i want remember that 'cause i'm gonna tell you there gonna be more of them of course there's a ton of controversial stuff happening in washington to give a moment but at the end of the day it's just not that relevant to the

Jim Cramer (Host of Mad Money) 03:58.150

market maybe you think the trump administration is pushing the boundaries of executive power look but i guarantee you that wall street doesn't care either way fourth the last big macro question we asked was whether corporate earnings would keep growing like we expected in the

Jim Cramer (Host of Mad Money) 04:11.870

end about end about twenty twenty four as a reminder at the beginning of the year when i first posted these questions the contentious expectation was that we'd see about twelve percent earnings growth for the SP five hundred and twenty twenty five followed by another twelve

Jim Cramer (Host of Mad Money) 04:23.990

percent of earnings growth in twenty twenty six those expectations were at the heart of the bull thesis for this market coming into the new year so how does does that look well to start the final tally for S and P five hundred twenty twenty four earnings and the up slight like

Jim Cramer (Host of Mad Money) 04:44.670

it will come in slightly lower than anticipated more like ten percent instead of twelve percent but not for bad reason in fact the SP five hundred earnings projections for twenty twenty five slightly higher than it was in the beginning of the year on absolute basis earnings

Jim Cramer (Host of Mad Money) 04:57.030

expectations for both twenty twenty five and twenty twenty six came down after the president's tariff rollouts but bottom in may and june then we had strong second and third earning seasons so the estimates have gradually climbed back to levels that are now above what we were

Jim Cramer (Host of Mad Money) 05:11.030

looking for at the beginning of the year the other big thing to note here is the fact that the earnings expectations for next year higher rather than the twelve percent earnings growth that wall street was projecting for twenty twenty six now we're looking for nearly fourteen

Jim Cramer (Host of Mad Money) 05:23.110

percent earnings growth next year asking me very high benchmark of course those are just estimates not something you can take for granted for the market to keep rolling in twenty twenty six we're going to need to hit that fourteen percent collective earnings growth forecast but

Jim Cramer (Host of Mad Money) 05:36.430

look at these numbers you can see why the markets had another strong year of gains at the end of the day earnings growth is the single most important determinant of stocks the direction and the fact of the matter is that earnings growth outlook has gradually gotten better over

Jim Cramer (Host of Mad Money) 05:53.430

the past twelve months so the bottom line there you go those are your answers for my four big mac pro questions that i asked at the beginning of the year but we're far from done stick around because after the break we'll revisit our sector specific questions and see how those

Jim Cramer (Host of Mad Money) 06:08.390

have worked out in twenty twenty five net money 's back after the break