Fed rate decision, restaurant earnings

CNBC’s Jim Cramer on Friday guided investors through next week’s top Wall Street action, highlighting a long-awaited interest rate decision from the Federal Reserve and earnings from restaurant chains Darden and Cracker Barrel.

Investors generally expect the central bank to issue a rate cut, but are unsure whether it will be by 25 or 50 basis points. Cramer said he is betting on the former, saying he believes the Fed should be measured when it cuts and not risk a burst of inflation. He added that a cut of 50 basis points would signal that something is wrong with the economy and could cause panic on Wall Street.

“There is simply no reason for the Fed to take that chance when it can simply hit us with a series of 25 basis point cuts that neither reignite inflation nor cause panic,” he said he.

On Monday, Cramer will attend an investor event at the biotech company Regeneron. He said the company could introduce new drugs, and he would focus on his upcoming obesity drug. The treatment is intended to help patients lose weight without losing muscle mass, a problem that can occur when similar drugs are used.

Tuesday brings August retail sales figures from the Commerce Department, which Cramer labeled the last piece of meaningful data before the Fed’s decision. He said the report was a good measure of consumer spending and predicted weak numbers.

The Fed meeting takes place on Wednesday, along with earnings from General Mills. Cramer said the packaged food company is trying to improve its portfolio, none of which sold its North American yogurt business, but that its remaining pet food and snack franchises remain strong. He added that he thinks stocks are a bargain, but warned that Wall Street tends to sell stocks in that sector when the Fed cuts interest rates.

Thursday, Olive Garden-parent Darden, Cracker Barrel and FedEx are set to report. Cramer said he wasn’t sure of the outcome of Darden’s report, but said Cracker Barrel is a “work in progress,” saying management can turn the business around, but maybe not quite yet. He was optimistic about FedEx’s ability to achieve a “giant turnaround.”