Listen to Jim Cramer’s personal guide through the confusing jungle of Wall Street investing, navigating through opportunities and pitfalls with one goal in mind - to help you make money.
Mad Money w/ Jim Cramer
Mad Money w/ Jim Cramer 7/18/24
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Each listing features comprehensive information about the neighborhood complete with a video guide. They also have details about local schools with test scores, state rankings, and student-to-teacher ratio. They even have an agent directory with a sales history of each agent. So when it comes to finding a home, not just a house, this is everything you need to know, all in one place. Homes.com, we've done your homework. My mission is simple, to make you money. I'm here to level the playing field for all investors. There's always a more market somewhere, and I promise to help you find it. Man, money starts now. Hey, I'm Kramer. Welcome to Man of Money. Welcome to Cray Marker. I'll be with my friends. I'm just trying to make your money. My job, not just to entertain, but they just can't teach you. So call me at 1-800-743-CBC, or tweet me at Jim Kramer. Sometimes it feels like it's harder to own winners than losers, I don't know. See, if you own losers, they don't have any profit takers, so they don't go down. If you have winners, well, you know what? I mean, what can I say? Until today, I thought that the winners were going to stay higher. And that's my conclusion about a day where the Dow tumbled 533 points, as we lost 0.78%, and then asked that to climb 0.70%, with the companies that had the best fundamentals getting hammered once again. And I have to tell you, candidly, I did not expect that to happen today. See, the difficulty with the only winners right now, the reason I always urge you to take some profits on your gains while you have them, is that you get weeks like this one, where the old winners get obliterated. And if you own too many of them, you might want to give up on the whole asset class. So tonight, I want to explain to you why you need to understand the bear gains, the stocks that you own, for the most beloved stocks. Otherwise, you'll never know what you're up against. Yeah, this year, the winners had been, until this week, the magnificent 7 plus Eli Lilly, which, after years of making money for you, are now crushing your portfolio. So we gotta dig in to see if anything has really changed, or is this just one of those periodic sell-offs? Set, set, set, set, set. That could actually be an opportunity if you have some sideline cash, and no one's thinking like that. First issue, when you get this kind of rotation, you never know whether these stocks are selling off because there's something wrong, or because they're up huge, and people want to take profits. That's why I say if you own losers, you don't have to worry, there's no profits. But winners, people find ways to take profits. It is so hard right now. At least you know why the losers are going down. It's 'cause they aren't any good. The winners, you have to say, what the heck's going on? I thought it was a good company. But when a big winner sells off, you have to ask yourself, if the stocks got too rich, did it go too high? Was there always, maybe it was just momentum? Or is maybe something shifted, something changed, and you're gonna be left holding the bag for a long time, so why not sell now? From what I can tell you, nothing has changed with the stocks that we're gonna talk about tonight. But it is true that the stocks are, heck, a lot more expensive than they were one year ago, even as their earnings have been growing at a nice clip. So they've gotten too expensive versus where they are. That's a big issue. Second issue, as a winning stock goes down and the pain doesn't stop at say seven to 10%, which is the typical garden variety of decline, you get a second group of traders who follow the charts. They decide to sell because their stocks look broken on the charts. Once again, people take up the broken stock banner. You know, there's no stopping at the climb and that happens. Yes, the charts are that important, at least in the short term, the medium term. And yeah, just like the stocks seem expensive, the charts are broken. Number three, there are always people who see these formerly hot stocks go down to say, they were always just in a bubble anyway, so why not short them? Maybe short them through an ETF, so no individual can really crush them. But they figured the easy money's already made, and you know what, let's sell, sell, sell, and short, short sure, because when the short sellers arrive, they could do a ton of damage, and they do their best to not let the stocks lift anytime they seem to rally in today, which I saw three different times today. Few different times these momentum stocks tried to rally, and three different times I saw shorting. Right now, these choke points are coalescing all at once around the mega caps, and that's before we even get to the bear cases, we're gonna go over them right now. So why don't we do that? Let's go through the individual reasons why I think people are selling you my difference in seven and Eli Lilly. We're gonna start with Amazon. Here's the name, it's still up more than 20% for the year, outperforming most stocks, but what's the matter here? It sells it 40 times earnings, and that's unusually high, even for Amazon. It's not a huge beneficiary from lower interest rates. So people are fleeing from Amazon, they're buying sick local places, like at DR Horton, the big home builder, they can see an earnings explosion as rates come down, and that's how Horton can rally 10% today when just an okay quarter, and great companies like Amazon are getting hit hard. Alphabet, real tough one. It's cheap, the ad market's fantastic, YouTube's killing it, but perhaps people think, wait a second, I'm using their AI platform as well as Microsoft, so are the regular search numbers going down? It's a legitimate question, I know I use search much less, I go to chat GPT, many other people doing the same thing. So what happens? People want to sell first and answer, get questions answered later about whether the search is being heard by AI. Apple, people are in their selling at 165 in April because they thought that the new iPhone wouldn't resonate. When the worldwide developers' conference came, we found out about all these new features, including building an AI, getting it for free. Next iPhone iteration couldn't be terrific, stock comes right back, but in the 230s where Apple peaked earlier this week, hasn't run too much? I think that's what's alien. Alongside the possibility of some anti-China rhetoric from Donald J. Trump, he speaks at the convention tonight, that big China business, meta, seem solid, but it's a little unnerving to own shares and a company that the presidential front-runner seems to have it in for? Trump, just like meta? Look, even though Trump's rapidly anti-China, he's willing to support TikTok, a Chinese company, as a counterbalance to Martin Zuckerberg, the CEO of meta. This talk was subdued for most of the day before we learned that meta might want to buy a stake in Ray Ban maker, Esselor Lusotica, the maker of meta's AI sunglasses product, which apparently can't even get close to meeting demand. But then, well, that's probably not enough to offset the president or presidential candidate. Is it, how about Microsoft? This morning, David Faber was talking about how all the data centers spending may turn out to be a big waste of money. But the companies that are building huge data centers could Microsoft be spending too much without a big return? I think co-polic through AI platform will be huge, but will be big enough to justify their investment. Given that the stock sells for 37 times earnings, there's not much room for failure. So why not? Six, you pick any 20-year period for any stock, Nvidia's had the biggest gains over the past two decades, with a 33.38% annual return. And that's over a hundred-year period. That's just used from a transfer of the paper by a fellow by them, a Hendrick Besson bender, binder from Arizona State University, Besson binder. I brought it up this morning, 'cause I thought that was just an amazing calculator, amazing number. My colleague Faber smiled, laughed, and then reminded me that this is a what have you done for me lately, business, so it doesn't matter. And this kind of selloff, that's the prevailing attitude. That's why everyone wants to out, Tesla. Okay, it just had an almost a hundred point move, and about a month, based on absolutely nothing, other than chat about self-driving cars. The numbers aren't that great, that's ridiculous. Stock sells at a monster charisma per share number, but also an equally large price to earnings multiple more than a hundred times. A hundred times earnings. So who would want to take profits with that? And Eli Lilly, the bear cases that Roche is developing their own GLP-1 weight loss drug in pill form, not an injection like Lilly's, and it has very good efficacy. Well, wait a second, we talked about that in January. I mean, and we don't even know how long it'll take before it's approved by the FDA, if it's ever even approved, but in this market, it causes a tailspin. I still like Lilly because these drugs are hard to mass produce, and they've got a huge lead on the competition. It's up there in mind investing club members about, yesterday, because big position for the trust, didn't matter, the stock is for sale. So let me tell you where I come out of the magnificent seven plus Eli Lilly bear cases. Every one of these bear cases is for real. Just like most of the bearish arguments you've been hearing about these stocks for years now. At a certain point though, real worries do get baked in. The market with itself is trying hard to bake these in. You can own losers and have no profit taking, right? Winners have profit taking, that's what's happening. Do I know when they'll bottom? Do I know when they're done? Usually when you ask that, you're staring at the bottom, but I felt yesterday was gonna be the last day to solve and that was wrong. But if you ask me, the reason why these former winners are all going down now is because the shareholders are scared. They're frightened, they don't wanna give up their gaze. So they're getting out. Why don't I feel similarly inclined? Because bottom line, I think if you're willing to own them for the long haul and take some pain, you'll continue to win. You just need to get over the hump. A hump that periodically scares people out of this whole asset class. These are solid companies with real earnings and great balance sheets. But these moments of panic are usually where you need to be patient and even opportunistic. No, no, no, no, no, no, no, no, no, no. Taking the sell off is a chance to buy some great stocks while they're on the way down. It's got to Robert in New York, Robert. Jim, you couldn't have said that any better. I mean, what you just said, that's exactly what you do. That's why I listen to you. That's what I do. I buy on the way down. But you know, Robert, it is painful. And if you have losing stocks, you're not worried 'cause you don't have no profit diggers, but we've got used profits to be taking on this. And that's what you and I are looking at right now. - That's exactly it, Jim. Jim, I'm gonna talk about this stock. The other day I was at the country club. I wasn't having steak this time, okay? But I'm there with my buddies and I'm at the country club 'cause of all the winnings that you have made me very-- - Oh, thank you. - Great recommendation. - Thank you. - Okay? So I'm sitting there with lightning storm comes in, boom, power goes out. Two minutes later, the power comes. I figure, oh, I'm not gonna get my food. Power comes back on and I look at the waiter and I go, he says, oh, we have a generator. And I said, oh, I knew the generator that he has because everywhere I go, I see the same name. And this company designs the manufacturer's power generation equipment serving residential commercial industrial. And by the way, the other day, they just received up to 200 million from the Department of Treasury to supply renewable power to Puerto Rico the other day. And they were also in the EV charging stations right now. - They're doing everything. What's the stock? What's the stock? - The stock is generic. Generac. - Generac. - Generac. - Generac has been one of the things. Hey, I gotta tell you, Robert, that stock's like it all time high. And we don't let them know, no, 52 week high, I'm sorry. I agree with you. I think it's a great stock though. And we had them one, I love the story. When rates go down, that stock doesn't even better, Robert. Now, you know, let me have a, where we go? We're going to, we're going to Augusta, right? We're going to Augusta, Douglas. We don't know when the magnificent seven will bottom, but I know that if you own them for the long term and be patient, you will continue to win. But that's a hard thing for people to have. Well, may I have any time? Constellation Branch reported a strong quarter that sent the stock lower. But after climbing back, what should you make of the mixed action of the company behind Corona and Medellos? I'm going to check with the CEO. Then Travel Trust Dave Abbott Labs has been doled by litigation concerns and after the cover reported this morning, I'm sharing if earnings changed anything in our thesis. And close viewers know we've been fans of Charles Schwab. So now that this stock is falling after earnings, our investors getting an opportunity to buy, I'm checking in with the CEO. So stay with Cramer. (upbeat music) - Don't miss a second of Mad Money. 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Breaking news, the peanut butter group and Chocolatey Corp have merged to create PBC Inc. And the byproduct of the merger is the new delicious JIF peanut butter and chocolate flavored spread. I got the press release and get this. Critics tried to say it creates a monopoly on cravability, but obviously it's not illegal to be irresistible. Calling it now, this will revolutionize the snack industry and the contents of my pantry. Visit pbcincorporated.com to try the flavor merger of the century, JIF PB&C. (upbeat music) - We need to talk about constellation brands, S-C-Z. The beer wine and spirits cup be best known for putting America's top-selling beer. And that's bedella, but with corona and the incredibly popular Pacifica. I said before that you need to get more selective in the whole alcohol industry between these GOP dash one. Weight loss drugs that reduce cravings for just about everything. And a general embrace of healthier lifestyles by the younger generation. Well, people think things aren't that looking at the good for alcohol. Still, constellations a long time craymer fave I think it's the best of the bunch. When the company reported two weeks ago, it posted a slight revenue missed pair with an 11 cent earnings beat off a $3.46 basis. Good forecast too. Yet the stock couple of 3.3% response was mostly some negative on the group. While constellation quickly made up its losses, it's been selling up for the past week when concerns that a Trump administration might impose a 10% tax on all imports. Not to mention that it's customer base could be curtailed by a possible crackdown on immigration. So what do we make of this stock here? I mean, let's have a closer look. We'll build new ones. These are the president and CEO of constellation brands. But yeah, what's happening? Mr. Newell is welcome back to me at money. - Thanks, Jim, good to be here. - Bill, this category has headwinds, as you said yourself. And yet the numbers are sensational. Medello group depletion is nearly 11%. Stennis Lee is the number one viewer. Do you think that the category and your stock are being punished unfairly by things that are never gonna really come to pass? - I think that's very true, Jim. When you look at the growth story that we've had, it's not a flash into the pan. We've had tremendous growth over a long window of time. And what I really think it speaks to is the importance of brands. Our brands are doing extremely well in this category. We're gaining share. And that would be true if you thought about us in the overall consumer products landscape. It's very hard not to recognize the true success that our brands have been having. - Now, when I look at the brands, I say to myself, well, Pacifica growing well, Medello growing well. But Corona did not grow that well. I was thinking maybe people are concerned about the fact that Corona seems to have cooled a bit. - Well, I think we'll be fine over the course of the year. It was a shade soft in the first quarter. Some of that was given by its overweight in the east in the weather wasn't particularly good during the early part of the year. But we expect Corona to be up in the low single digits during the course of this full calendar year. And we expect that we'll get there. - So what, let's talk about the Trump administration. 'Cause I keep hearing, Jim, you gotta get less bullish about consolation. There's gonna be 10% tax, tariff on anything that's brought in. And I mean, let's not forget there, if you have a total seal on the border, some of the people who drink consolation brands, Hispanics might not grow as much. Now, that second one, I think is a little pejard of it, I don't like it. But I have to understand that both of these are square in the wheelhouse of why the stock's not soaring here, I think. So tell us how you're handling in your boardroom, the notion of what a President Trump could mean. - I think a couple of things are important to keep in mind. First of all, we already have four years of history of a Trump administration. And two of those four years, our business grew high single digits at the top line. And two of those years, we grew low double digits at the top line. So we have had tremendous success during previous Trump administration. So we're not particularly concerned about that avenue. Relative to the question of tariffs, I think it's important to recognize that a significant part of our inputs come from U.S. farmers. And I highly doubt that any tariff expectations are really designed to hurt U.S. farmers. And remember, Jim, we're an American company. A lot of our inputs are grown here in the United States. So we think we'll be just fine and we really don't necessarily expect that there will be a tariff situation related to our brands. - Okay, excellent. Now I wanna talk about one that the New York Times did a piece recently, cannabis tops, alcohols, america's daily drug of choice. Now, you have a stake in the best cannabis company with a stake in cannabis. We've had them more many times, but when you look at your portfolio, are you concerned about cannabis rising and beer slowing? - This is certainly a worthy discussion to have, Jim, but the facts as we have them today, say that the cannabis is not a massive threat to the alcohol beverage business. When you look at states like Colorado, which were one of the early adopters, you just didn't see a lot of change in the alcohol beverage consumption in a state like that that was, again, one of the very early adopters of cannabis. So we think they can quite honestly work just fine in parallel, and as you point out, we do have exchangeable shares in canopy. If that happens to take off, we'll be quite pleased about that answer. - Excellent. Now I wanna talk about the difference between beer and spirits in that some of your spirits, businesses are down and beer are up. And what I wonder is that GOP-1 makes craving less for some of these spirits and spirits, but also people are being a little bit more, the younger people, a little bit more worried about what pure alcohol is. They don't worry about beer, Bill. They worry about whiskey. They worry about vodka. They worry about bourbon. Are you seeing maybe the beginning of the healthy lifestyle/ GOP-1 cutting into those brands that frankly didn't have great growth, but not hurting beer? - I really don't think it's gonna be a big impact. We've listened to millions of consumer conversations, and GOP drugs just really don't come up in the conversations at all. It doesn't mean that there isn't some peripheral discussion around the topic, but it's fairly minimal. I think the important thing to recognize though, is that there is a desire on many consumers for betterment. And you and I have talked about this before. And we've done a bunch of things to go right after that. Corona non-alcoholics, a great example. We introduced it last year. It had a spectacular year. And our beer experts would tell you, you're hard-pressed to tell Corona non-alcoholic from Corona Extra. So for those people who are looking to have a light Tuesday night, or be the designated driver, we're starting to have products that are available for those people on those occasions. - Yeah, I have to tell you, I've not been able to detect the taste difference. And I never thought I'd never say that. I've always felt the non-alcohols were shamps, but I can't detect it now because you got 'em really good. Now, let's do a real question. You're the only package good company I know that has double digit, and is actually building capacity to meet demand, which you're new brewery. Why are you being treated as if you're streaking, like every other CPG company I deal with? - I think people are not recognizing the importance of brands. You know, some people have said, gee, the category of beer in particular isn't particularly strong at the moment. Well, I look at it and I say, our brands are very strong and performing extremely well. But we're not the only brands that are doing okay in the category. What that says to me is, it's critical to have brands that are strong. Our buy rates are up and they're up even more with a Hispanic consumer. So that just says, we've got tremendous brand loyalty, and I think that over time, we really need and should be rewarded for that loyalty. - Yeah, I totally agree. When we've been telling people who are members of our investing club, listen, patience is not a sin here. You've got the number one company in a great category. You've got them building breweries to meet demand. Everyone else is shuttering things. So, I'm with you. I mean, I just don't understand, but I had to bring out every negative. So, I'm tired of hearing on the negatives we've dressed to every single one of 'em, okay, partner? - You and me both. And we haven't even talked about our margins, which are also best at best at best. - The best thing, Clint, it's the only thing that happened. - But we had it them all. Because, you know, I sit here every day as a member, as the chief of the club. And people tell me, "Why do you stick with it?" I said, "Because it's the best!" There you go. Bill Newwood's is the president and CEO of Consul Jibres. Thank you, Bill. - Thanks, Jim. - All right, guys, we address every negative. I mean, it's painful. We address every single negative. I like the answers. And that's why we stay along this talk for the club. We have monies back here for the first. (upbeat music) - Coming up, back to the lab again. A MedTech name reporting today with results. You won't wanna miss. Next. (upbeat music) - Join FinterAct, a peer-to-peer community of financial services professionals, and keep your finger on the pulse of the industry. FinterAct offers a digital hub to start conversations, connect with fresh perspectives, and problem-solve with peers. This member's-only community also provides access to virtual and in-person events, where you can chat tech stack, develop efficiencies, and learn new ways to propel your business forward. Apply at FinterAct.net. - At EverNorth Health Services, we believe costs shouldn't get in the way of life-changing care, and we're doing everything in our power to make it possible. Behavioral health solutions that also keep your projections at their best, it's possible. Pharmacy benefits that benefit your bottom line, it's possible. Complex specialty care that cares about your ROI. It's possible, because we're already doing it. All while saving businesses billions, that's wonder made possible. Learn more at EverNorth.com/wonder. (upbeat music) - All right, what the heck is going on with the stock of habit laboratories? The Kramer Fave Medical Technology trying to be home for the child trust. Now, here's a comin' to the reporter, a really good quarter this morning. Yet his stock still got hit. Wake up, four percent! I've recommended this one before, because I think Abbott's core business is in good shape, and they finally started getting over the post-COVID hangover. But for months now, the stocks been weighed down by litigation worries, related to their specialized formula for premature infants. Back in March, another baby formula maker, Wreck-It-Bink, he's lost a lawsuit on this issue. And now, Abbott's starting to defend itself in court as well. Personally, I think the whole issue is a red hern, but we need to address it, because it now controls the stock narrative. I believe the markets take it more seriously than the actual earnings. It's why the stock got obliterated, and what was otherwise a pretty good quarter. It seemed that until Abbott brought the whole liability issue up today, nobody seemed to know about it. I can't believe that. We've been talking about this issue for months with club members, but it sure seems to surprise a lot of people today. So why don't we just get into this whole thing? Let's get into the baby formula issue right now. Abbott started facing his first court case here in just last week in Missouri. The plaintiff is the mother of a baby girl who was born premature, and then developed a potentially fatal condition called NEC, which caused brain damage. Their lawyer claims that Abbott's premature infant formula is what caused the condition, while alleging that Abbott also hid evidence of the risk. Abbott's lead defense lawyer says that the baby in question already had a host of medical problems at birth, and developed this condition before ever consuming the company's formula. Now, I'm a bit confused about this initial case, not because of the facts, but because of the venue, St. Louis. See, St. Louis courts are considered to be particularly plain and friendly, maybe the most in the whole country. In 2019, a St. Louis jury ruled in favor of 20 women who alleged Johnson and Johnson's baby powder caused their cancer and worded them $4.7 billion. When this whole premature baby formula sag started, an Illinois jury ordered Wreck-A-Benkieger to pay $60 million to the family of premature baby who died from NEC after using the formula. And by the way, that was a number that was larger than what the plaintiff asked for, and that really made people concerned. Wall Street's worry that if Abbott loses in St. Louis, they'll get hit with much larger damages too, possibly setting a bad precedent. Just across these two companies, there are more than 1,000 lawsuits over allegedly dangerous formula for babies who were born premature. It's a real concern. However, I gotta say, even though upset parents make for extremely sympathetic plaintiffs, I think Abbott has a strong case here. And even if they lose every case, highly unlikely, it would amount to much less than $28 billion in market cap this company has lost since the March defeat to its competitor Wreck-A-Benkieger. And by the way, as I said this morning to our own Sarah Eisen, I think there's a pretty good chance that Abbott does lose, but that this is still a good company. This morning, I spoke to Abbott CEO Robert Ford, and I think he made some very strong arguments. This is specialized formula for hospital use only, and the condition the plaintiff's claim it causes, NEC, also afflicts premature babies who get regular breast milk, not just the ones that use formula. Plus, the regulators proved it. They signed off on the labels. To me, this feels like a correlation is not causation situation. If you've been following this story closely, you knew that already. But something new also came to life. Abbott makes only about $9 million per year in revenue from this product. When I heard that, the obvious question because, well, why don't they just get out of this darn business? If there's such little reward, such large litigation risk, and the answer, Abbott pleased it has a moral obligation to offer this product. Even though it would be in Abbott's financial best interest to just throw its hands up and discontinue the product and pay off the plainness, they don't want to leave neonatal intensive care units without a vital resource to help feed premature babies. Now, later in the interview, this morning Ford did concede that if Abbott ends up suffering multiple losses in court and facing any kind of significant liability, they might have to think about pulling the product. But he made it clear that he really doesn't want to do that because it would cause a public health crisis. Sometimes these health care lawsuits are morally murky, but to me, this one seems real clear-cut. So that's where we are on this litigation from which, again, consumed everybody's mind. Not thinking about the company itself. But how about the company itself? How about the earnings? Honestly, the numbers were excellent. Abbott's now two for two this year. In April, they reported a clean quarter and then raised estimates. This morning, I said a clean quarter raised estimates. Abbott delivered a 9.3% organic growth, excluding the COVID business, when Wall Street was only looking for 9%. Total sales came in ahead of expectations. Margins were strong. It translated into a four-cent earnings beat off a dollar-10 basis. Even better, Abbott raised the low end of its four-year organic growth forecast by a percentage point. And they boosted their earnings. That looked by six cents. Meanwhile, management's guidance for the current quarter was basically in line. The results were driven by strong results from Abbott's core medical devices and diagnostic segments, which were more than enough to offset weakness in the smaller nutrition and establish pharmaceuticals divisions. Medical devices, which are a huge division, particularly strong, 12.1% organic growth, led by the company's line of continuous glucose monitors, CGM's, for people with diabetes. This line had 1.6 billion in sales, representing 20.4% organic growth year-of-year. That's right, 20.4. By the way, Abbott recently received approval from two new over-the-counter continuous glucose monitoring systems, including for people who are not actually diabetic, but might have other health reasons for watching their blood sugar levels. More broadly, I liked that Abbott's new products continue to do well, including many that are discussed with Ford at the JPMorgan Conference, or this year. In the first day of 2024, Abbott announced 10 new growth opportunities, including both new products and new indications for existing products coming out of its R&D pipelines. I love to see that they're building the future of their business internally, rather than through acquisitions. Unfortunately, none of that matter. Not one bit of what I just mentioned mattered at all, as the stock fell more than 4%, reaching its lowest level since late 2023. Of course, that's the reaction to the litigation news I mentioned. My sense is that some investors were surprised to see Ford discussing these lawsuits so early in the conference call it as prepared remarks, and so heavily prepared remarks. I actually prefer transparencies to the opposite, but it sure didn't seem to help Abbott's stock today. It's more casual investors who haven't been following this baby formula story all along, seem to have gotten a rude awakening. They were shocked about what they heard. But overall, I'm in rough in the same place on Abbott tonight, as I was before the quarter, or when I recommended spring for that matter. When you look at the strength of the underlying business versus the weakest in the stock, I think you're getting a buying opportunity. The bottom line, I believe Abbott's on the right side of the premature infant formula litigation. Even as I worry a little, that the first case is not gonna go with them. Why is that? 'Cause our legal system sometimes feels like law super wet. Still, I'm confident that someday, hopefully soon, the strength of Abbott's business will actually shine through, and the stock can start making up for lost time. Would I buy it here? At this point, you know what? Let's see if they win the case or lose it. And if they lose it, you may get an even better chance to buy the stock lower, because the amount of money involved is not an existential threat for this great American company. Let's go to Jim and Florida, please, Jim. - Jim and Jill, a big, sunny buoyant from Les Chateau in Naples, Florida. - I like that area. I know exactly what you're talking about. It's pretty terrific. What's going on? - I wanna thank you and Larry Kudlow and all your staff for all your help throughout the years. You don't know how much it's meant to me. - Oh, thank you. Larry's a good old friend. I know he's over at Fox. But you know what? That doesn't make me not like him. He's my friend and my former partner. My question is on Walgreens Boots Alliance. It seems like this stocks in deep trouble. I'm not only is it trading at a 52-week low, but it's trading at levels we haven't seen in 20 years plus. When I look at the liabilities and the assets and liabilities, it seems as if they have 16 billion in assets and 25 billion in the liabilities. Do you think Tim Wentworth can turn this thing around? - If anybody can turn around, he would be the one, but they've gotta make some sales. They have to sell something and raise some capital to make it so that people are not worried about their balance sheet. They have to do it. But Brack and Darryl did the other day with VF Corp. Sell something, raise some capital, take the existential risk off the table. And remember, I think that that can happen, but it's gotta happen soon. Given the strength and the habits of underlying business, I think the weakness you're seeing because the litigation is a buying opportunity, but let's just see how they do in this court case, okay? Cool. Much more may have been ahead, including my swissler, Charles Schwab. With the TD Ameritrade combination bursting complete, what's next for the brokerage now that the stock's been down, down, down? I'm gonna get the latest from the CEO. Then, free trade has come at the cost of many markets, and I'm breaking down the issue on both sides of the aisle. It makes sense of this hot button topping in the upcoming election. And of course, all your calls by I've been firing tonight 'cause it's just the lightning round. So stay with Cramer. (upbeat music) (upbeat music) - Once more into the breach, dear friends, once more. That was my Shakespeare response to the sell-off in Charles Schwab, the big retail brokerage firm. This is a stock I've been recommending ever since it milled down in the spring of last year during the mini banking crisis, even though Schwab's not a bank. Ever since then, the stock steadily recovered. But there've been repeated moments where it gets crushed for bad reasons and you have to go into Henry the fifth mode and buy this thing aggressively. This week, it happened again. Schwab reported Tuesday morning and in response, the stock has lost 70% of its values. One, seven, over the past three sessions. Even though the sales areas came in better than expected, this time the stories were complicated. With some of the wants questions about customer cash balance trends and how Schwab treats cash for customers that it acts as an advisor for. That's why I want to go straight to the stories with Walt Benger. He's the co-chairman and CEO of Charles Schwab Corp. Get a better read on what's going on here, Mr. Benger. Welcome back to Mad Money. - Jim, thanks for having me on today. Really appreciate it. - Of course. Now, first of all, I wanted to dispel the really bad thing. There are a lot of people who told me, "Oh my God, it's a mini banking crisis again." With Schwab, they're worried about the positive balances, they're fleeing. Just put something in context about last year versus this year, please. - Yeah, the situations couldn't be any different. This, the circumstance with our stock decline in the last few days has nothing to do whatsoever with the regional banking-related issues up a year plus ago. We have put that in the rear view mirror and I just, I shake my head. I have to admit, I've shaken my head and done some double takes multiple times the last few days as I've read some of the articles and seen some of the headlines, Jim. - Well, I don't blame you. There's one that came out this afternoon at 2.53 p.m. and I've read barons since I was a little boy. Schwab, short-changed clients cash for years, now they're paying for it? I have to give you a chance to be able to say, to refute that because that's pretty incentive here. - Yes, it is. I think where they're coming from is when, when Schwab serves as an investment advisor or fiduciary to our clients. And so we're setting the asset allocation for those clients. We determine how much money goes into cash. When we do that, we ensure that the clients cash across all of our advisory solutions to Schwab goes into a high-yielding money market fund. So I think there's confusion about the difference between when we serve our clients as a fiduciary. In other words, as an investment advisor. And when we're just self-directed in which it's in the hands of the client and they go ahead and do whatever they want to do with the cash among all the various choices we have. Money market fund, CDs, U.S. Treasuries, bank. It's completely up to the client when they're self-directed. - No, a lot of this just comes under the rubric of cash sorting. I care about when this rubric doesn't need to be discussed anymore. I know I felt that the previous quarter was the last week I have to worry about cash sorting, which didn't end up shows people taking their cash out, to try to get a better return. Are we done with this topic? Is it small enough, the minute it's enough that it won't come out next time? Because that's the case. Well, then this stock's been overly punished. - Well, I certainly think it's the case. We're not really seeing clients realigning money out of our bank, their liquid transactional cash anymore in any volume. I think in the second quarter, people may have been disappointed that we were a couple of billion dollars less than they anticipated. But you're talking about a $9.4 trillion base, a record base in assets. And June was a wonderful month to buy into the market. A lot of our clients did. So their cash went down a little bit more than anticipated, because they bought stocks. $3 billion divided by $9.4 trillion is a really, really small fraction, Jeff. - Well, then maybe the problem is the earnings power. These analysts don't seem to know what, how to do, how to model your business. I can't ask you to model it on our show. But for instance, in the Cowan Downway, which was a significant downway, they kind of said, "Well, we don't know what the hell they're gonna earn." And I think that is probably also doing you a disservice. - Well, it is. And I think it's linked to some erroneous commentary that got out there around us shrinking our bank. And some even said shrinking the company. Now, when you're adding a million new clients a quarter and bringing in $25 to $30 billion a month, that sounds like growth to me, not shrinking. But what I think occurred is we talked about a scenario where we might look at certain times in the interest rate cycle because we get more deposits to our bank than we possibly have in loans. We might look at shipping some of those deposits off to a third party bank if it generated more earnings per share for us. In other words, when a dollar comes into us at the bank, we have to put capital behind that. There's a lot of banks who would love us to pass a few of those deposits onto them in return for a very small fee. And then we don't have to put any capital up. It's actually earnings accretive. And that's what we talked about in our annual stay on Tuesday. I think that got misinterpreted to the shrinking of the bank or debanking. And it's just not the case at all. - Well, I want you to do that. I want you to make that money. Now, I will do what I ask you. If all these come under the category of say, I want to use the term misinformation. If they come under misinformation, then it's a great opportunity to buy the stock. So why are you or not you taking advantage of the decline and buying stock yourself? - Well, I did. Yesterday as the stock fell, I jumped in and bought another 25,000 shares. And I've got my eye very closely on the stock to see what it's doing now to make it determined whether to buy more. But I did buy a bunch yesterday. Again, I can only shake my head at our rate of growth and some of the things I've read. It doesn't sound to me like they're talking about the company that I'm so familiar with. - Well, people sell stock for many different reasons. They only buy stock for one, which is to make money. You're no different. I know you bought during the mini bank crisis. It was, let's just say, it ended up making you a lot of money. You can't flip, I know that. Which makes it even more of an important reason to note that you bought because you can't flip and you're in it for the long term. I believe, I think these stories are overdone, but I also know this market has a mind of its own right now. And it doesn't want to go out. So let's see what happens. But thank you for coming in and explaining what's really going on and let people make their decision. Fair enough. - Fair enough, Jim. We're just going to keep focusing on serving our clients. That's how you grow. That's what we've done for 50 years. That's not going to change. The stock will go up, the stock will go down. Eventually, in the long run, the stock will reflect the way we deliver for our stockholders. That's all we can ask. - No, that is what you can ask for. And then that's the way the stock market works. I want to thank Wall Badger. He's the co-chairman, CEO of the Charles Swag Corporation who come on to explain what are really some very complicated issues, but certainly not nefarious ones, Wall. They are not nefarious. Thank you so much. - No, that's for sure. - Okay. - Thanks, Jim. - May have money's back after the break. (upbeat rock music) (dramatic rock music) - It is time to start the light round, quick round, quick round, quick round. Whoever's here in this talk, I'll tell you about my vice hustles. I don't care if it's the cost of the invite, my Stanford is the way you can play this out. (buzzer buzzes) And then the lightning round is over. Are you ready, Steve? Daddy, talk to the light round, quick round, quick round with Paige, you got a point of Paige. - Hey, Jim. This is Paige calling about sharp ninja. Is it a bicellar hole? - Okay, sharp ninja is actually a very, very good company that I think is still coming down a little bit more because it's got a high price to earn each boatable in light of what I saw with hell on a toy, which makes similar products. I want sharp ninja back when I want to see how they're doing 'cause I am a little concerned. It's a big form when we recommend it. It's got a miles in Louisiana, miles. - Hey, Jim. You recently recommended Alonco Health as the way to invest in the humanization of pets. I wanted to get you to start on iMac Labs, which has slightly better growth and share Bible and code. - iMac Labs has to come on the show. That would make me feel better. I dug the old regime was a long time ago. I had not spoken to them in a long time. They have to come on the show and I welcomed them. Let's go to Robert and Washington, Robert. - The baboon, yeah, Mr. Kramer. I'm the first-time caller and one-time listener from Washington State, home of the Seahawks. - Exactly. - Thank you for taking my call. - Okay. My question is on ticker RC. Ready, capital, a small cap, read, but pay for nice, juicy dividend. - It does pay a good dividend. The problem is we don't know exactly what they own. It's a little too opaque for me, but it will do better with lower interest rates. Let's go to Josh in Colorado, Josh. - Hey, Jim. Thanks for taking my call on about American superconductor. What do you think? - Well, I gotta tell you, when I see stocks like Nvidia and Qualcomm go down huge, I cannot reach from American superconductor, not with these high quality stocks that are just plain old on sale. Let's go to Greg in Virginia, Greg. - Hi, Jim. Long-time viewer, first-time caller. - Okay. - Oh, Owens and Miner. O-M-I-5, dollar one. - If I want medical device and I want those kind of properties, I will buy Abbott Labs, which is down huge and is much higher quality company. And that ladies and gentlemen's conclusion of the LIGHTY ROUND! - Coming up, no finger pointing needed on flea trade. But where do workers go from here? Stick with Kramer. - Jim Kramer, the die part of this doll. - Hey, Jimmy, love the show. My five-year-old grandson, let's watch your show. - I have to thank you for making us money when it's there to be made. - Our world is a better place with you in it. (upbeat music) (audience cheering) - For decades, we followed the gospel of free trade in this country. A gospel that made big money for corporations and gave big cost savings to the consumer, but also sold out millions of blue collar workers who played by the rules and got crushed anyway. But it was a bipartisan sellout, not a democratic sellout. As I listened to Senator J.D. Vance speak about the D industrialization of America, I'm a little surprised, not by what he's saying, but because he blames globalization on the Democrats, specifically Joe Biden. For the record, both the Democrats and the Republicans were all aboard the free trade train. Both parties figured that the vast majority of Americans would benefit from lower prices if we let manufacturers outsource the production to constitute a cheap labor. Sure are the textile workers, the steel workers, the elderly workers, and so many other workers, they got hurt. Many would see their plants close, but the Democrats said more people would benefit than be hurt, and the Republicans said it's just capitalism at work. Lower merchandise prices for all and higher stock prices for big multinational corporations. Now let's establish something about the Wall Street Barons, the Senator Vance talks about. They've been vilified for as long as they've been around, turned into the whipping boys because Wall Street's made up of people who work for companies. And their jobs are to maximize shareholder profits. Investment bankers do not work for the people who lost their jobs. They're working for companies that laid them off in pursuit of higher stock prices. And look, the people who run publicly traded companies are supposed to work for their shareholders. Unless the government forbids them from moving their corporations overseas, they're gonna do it if it's legal and makes the business more profitable. That's the way it works. That's capitalism. You might think that workers have been sacrificed, which is absolutely true. But they weren't sacrificed by Wall Street. They were sacrificed by generations of politicians from both parties who understood this bargain and decided it was worth taking. Some voted for NAFTA, free trade binazas, sent many of our manufacturers running to Mexico where they could make stuff on the cheap with non-union labor in the name of making less expensive goods to sell Walmart. In 1980, America had 860,000 people employed in the textile industry. Now there are only 168,000. Those mills that were shuttered are at the heart of what Vance is talking about. He is right when he says the towns that lost these jobs suffered greatly when the plants moved overseas. But it's a nuanced issue, as he knows, because the Republican Party actively supported free trade until 2016. President George H.W. Bush is the one who originally negotiated NAFTA before it was signed into law by President Clinton in 1993. It had broad-based bipartisan support, although generally it was considered more of a Republican issue at the time than a Democratic one. I point this out not to cast the advance at all, but to get to the core issue. These free trade agreements were bipartisan acts of human sacrifice, and they did in fact bring more net prosperity for both shoppers and shareholders, net. However, the so-called collateral damage turned out to be far more terrible than we were promised. And looking back, the curious lack of concern for communities that lost out is really the fault of the politicians, from both parties, who blessed these deals without thinking about the ramifications. Neither party did anything to help the victims of de-industrialization, but it was the Republicans, not the Democrats, who pushed free trade to hardest, at least until eight years ago, and both parties should share equally in the blame. I like to say there's always a bull market somewhere, and I promise try to find it just for you. Right here, oh man, money, I'm Jim Kramer. See you next time. 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