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 7/17/24
Schwab Trading is now powered by Ameritrade. To give you a new, elevated trading experience, Taylor made for Trader Minds. Go deeper with Think or Swim, the powerful award-winning trading platforms now at Schwab. Unlock support from the Trade Desk, our team of passionate traders who live in brief trading like you do. And sharpen your skills with an expanding library of online education crafted just for traders. All designed to help you trade brilliantly, learn more at Schwab.com/trading. Homes.com knows that when it comes to home shopping, it's never just about the house or condo, it's about the home. And what makes a home is more than just the house or property. It's the location and neighborhood. If you have kids, it's also schools, nearby parks and transportation options. That's why homes.com goes above and beyond to bring home shoppers the in-depth information they need to find the right home. And when I say in-depth, I am talking deep. 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 the sales history of each agent. So when it comes to finding a home, not just the 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 Money. Welcome to Kramer. - I'll be with my friends. - I'm just trying to make loose money. - My job is not just entertained, but try to explain what things are going on. So call me 1-800-743-CBC, tweet me at Jim Kramer. You know why you need to stay diversified? Because on darn days like today, where the Dalibis, 244 points, closing above 41,000 for the first time ever. (dramatic music) But the S&P plunge, 1.39%, and an Aztec plug in, 2.7%, if you only own the big tech stocks, and we talk about so much, the ones that believe in this market till a week ago, let me tell you something. This day might make you want to give up on the entire asset class. I bet some, if not many, will do exactly that. Yes, it was that ugly. I got to try to prevent that. Before we get into it, I want to see something about the stock market and what it means to me. It's been 40-odd years since I came down here, a block away, and I've always been amazed at how compelling the market can be. I regard as a gigantic puzzle. I'm always trying to piece things together, figuring out if a stock might be a buy or sell. But I don't know something else. Most people just don't care about individual stocks, would rather just be in some mutual fund, rather than be burdened by the difficulty of managing their own portfolio. They want nothing to do with puzzles. Okay, for example, I spent an hour with CBC Investing Club members and Jeff Marks, where all we did was talk about which stocks win or lose if Trump's the next president. It's a critical issue. Some would say it's driving you this entire sector rotation. Of course, rotation started last Thursday. We've probably got a low consumer price index number. When we saw the CPI, most investors figured it was time to buy stocks that really benefit from lower rates. Gonna get some rate cuts, mostly homebuilders, and what goes into a home or home divo. However, I have to tell you, very few people were prepared for a gigantic, kind of inexplicable rotation out of winners into losers. All at once, as if the mega cap tech stocks really hit a wall and they really do poorly in a lower and straight environment and they've had their days in the sun and are finny. In reality, they do well regardless of rates, which is precisely why people sold them and frankly, shipped into the kind of stocks they can put up explosive earnings growth, but only when rates go lower. On Friday, we had a fairly broad-based rally led by small caps. Again, it wasn't clear why the big cap stocks were out of favor. The small caps just kept running. They haven't got the events of the weekend, which led to a new consensus that Trump's extremely likely to win the election. Suddenly, ah, the mega cap tech winners became huge share donors to the losers stocks that had done nothing for ages. Now, here's what really gets interesting. The shift from winners to losers mirrored the politics of Trump. He and his running mates see themselves as populous, something that's been out of favor for most of my lifetime. They see many big capitalization companies as enterprises that have sold out America in the name of higher stock prices. They abandoned small towns, USA, closed the factories, laid off the workers, and made their merchandise more cheaply overseas. Some of this rhetoric is, I'll tell you, it's right out of the late 19th century as though they're channeling William Jennings Bryant really against the bankers who crucifying mankind on a cross of gold. How does this translate into stock profits? Well, the big and social investors want to get right with Trump, right, because they think he's going to win. That means buying the stocks of small to medium sized businesses that weren't involved in the abandonment of rural America, something you can read about in JD Vases, memoir, Hillbilly Elegy, which is not a particularly conservative book, by the way. You know what, if you read it differently, you would think it's actually a left wing manifesto of sorts. It also means investors are getting ready for more protectionism. Last time we learned that Taiwan is being vilified by Trump for stealing a crown jeweled American industry. The semiconductor manufacturing business. It's the point where he indicated that he might live to figure if China tries to invade, holy cow. The narrative fits perfectly with today's action. People are talking about aborting out, but I think that most did not believe that it's a game over for the big dogs, even if you thought they're part of the problem, not the solution. That's sure the white, the sellers, I've got the sellers of the text in the last half hour. They were like, please, tomorrow's something really bad that's gonna happen, I gotta get out now, get out now. But now let me get back to where I was started, okay? As much as I love to tell you that all of today's action made sense, couldn't even continue boosting the bank stocks because people recognize the industry's gonna benefit from deregulation and the event of Trump win. I just can't believe it. In fact, I know it's not true. Days like today don't encourage people to invest in individual stocks. Even as we all know that there's been formal wealth created by owning an Apple or an Nvidia or Microsoft or as Amazon and an S&P 500 index fund, by the way, all those stocks were down badly. Why don't people own these fabulous individual stocks over time that have made so many millionaires out of relative paupers? The reason actually is simple. Most people are not diversified. I learned 40 years ago that not all stocks can go up at once. That's why staying concentrated in a handful of stocks is a recipe for disaster and for giving up, especially if they're all part of the same sector. This weekend, while doing some charity work, I heard from a bunch of people who wanted to know why they were club members. Why I stick with such losers like Best Buy or Abbot Labs. Instead of just going all in or an Nvidia and Amazon or Apple and Alphabet, I was actually upgraded for buying the stock of Ford for the child with trust. What a loser. But Ford Best Buy and Abbot are the secrets to stay in the game. One of the days like today, we're a position in Nvidia just torpedoes that the child with trust. I concentrated on games that we got in a Honeywell or Lindy so I don't go crazy. If I didn't have them, if I had nothing but say Nvidia Meta, I'd say get me out of this stupid casino. I'm done with stocks. I can't take the pains. - The house of pain. - However, because my trust owns this matter of industrial retails in healthcare, I actually can handle the pain. And it's pain that drives people out of stocks. Even as they know, they'll probably never get rich if they just park their money in an S&P index fund of the 500, a mathom of good, bad, and in different stocks where you are resigning yourself to a great deal of mediocrity. I believe in diversification enough that I never mind you owning an index fund, but I want it to be side by side with individual stocks that can potentially make your fortunes. That's why I started the CMC Investing Club. I know that you won't stick with those stocks if you're underversified. The pain is just too great on days like today, and then tomorrow you're finished with it. So while you could argue the small meaning of those businesses have been strong because of lower inflation or the Republican ticket, you can also say some large money matters to decide the big tech hadn't gone too far. It was time to sell that and switch to the printerly under forming Russell 2000. That rush of money into these small cap stocks sent them to the moon in five days time and that's what you witness. All right, you know what? I honestly don't care which explanation you prefer. What matters is that you're now getting a chance to ring the register on the winners from this rotation, just a fantastic game, and start making a list of what to buy that's being thrown out. That's what we've been doing. Why do that? Because people like to chase and they hate to buy down. They like momentum and they hate free fall. They're inclined to panic and they toss out great stocks because of fear. They only own stocks like Nvidia because they were hot. And suddenly, well, you know what? They're not hot anymore. But for you, that could soon be a buying opportunity. Hey, perhaps it's always tomorrow. As we just had our third day of this rotation and that's when they kind of run out of steam. Too late to buy those stocks for sure. Listen to the bottom line I've got here. For all my years down here, I know that if you self emulate on days like today because you ignored diversification, put everything in some of the magnificent seven, you are doing something wrong. And what can I say? I don't know 'cause you almost certainly aren't watching this show. Milaud in Michigan, Milaud. - How you doing, Kramer? - Kramer doing okay, how are you, partner? - I'm good, I'm good. I just want to say thank you. We appreciate everything you do for us. - Thank you, these are hard. These are trying days, aren't they? - Thank you, oh yeah, oh yeah. - Thank you. - We got a roughly day to date. - Yeah, we did, we did. But yeah, if we only just own United Health and Johnson and Johnson, we'd be geniuses. - Of course, of course. Kramer, I just have a question about McDonald's. McDonald's a year to date is 13% down. And as we know, we have their earnings coming soon in two weeks, what should we expect from this company, a consumer discretionary? And we know like. - Okay, I will tell you that when you buy McDonald's when it's down, it has tended to be a great call. Now, and what happens is, is that like United Health, like PepsiCo, like Coca-Cola, these great brands, people can't get enough of them. So what'll happen is it may not even be that good a quarter, and I still don't think it'll go down. That's how low it's come, it's down 12%. That's kind of weird, down 12 to 15% for McDonald's, that's a pretty good price to get. All right, now days like today, where we saw a real bifurcation in the market, proved one of my most important and all repeated pieces of market wisdom. You gotta stay diversified. I'm at my time. Close watchers know that we've been looking for brown shoots in this market, one of the earliest signs of them are the transport. So I'm giving you an update on what the sector is telling us about the health of greater economy. Then I have spotted this lesson on AI play, I gotta put it on your radar speed. You won't wanna miss that. And first your eyes reported a quarter of this morning that disappointed the street. It's been such a winner. Let's go think to the CEO. Stay with Kramer. (upbeat music) - Don't miss a second of Mad Money. Follow @chimcramer on X. Have a question? Tweet Kramer #MadMensions. Send Jim an email to madmoney@cnbc.com or give us a call at 1-800-743-cnbc. Miss something, head to madmoney.cnbc.com. - When you're hiring, the best way to search for a candidate isn't to search at all. Don't search, match. With Indeed, Indeed is your matching and hiring platform with over 350 million global monthly visitors according to Indeed data and a matching engine that helps you find quality candidates fast. Use Indeed for scheduling, screening and messaging to connect with candidates faster. Plus, 93% of employers agree Indeed delivers the highest quality matches compared to other job sites according to a recent Indeed survey. Leveraging over 140 million qualifications and preferences every day, Indeed's matching engine is constantly learning from your preferences. Join more than three and a half million businesses worldwide that use Indeed. Listeners of this show will get a $75 sponsor job credit to get your jobs more visibility at Indeed.com/MadMoney. Just go to Indeed.com/MadMoney right now and support this show by saying you heard about Indeed on this podcast, indeed.com/MadMoney. Terms and conditions apply. Need to hire? You need Indeed. 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 PBC. Over the last few months, I've been using a new term. I made money original. Brown shoots. You hear about people talk about green shoots all the time. That's when they see signs of a strong economy. Brown shoots are the opposite. They're the first signs of a weakness, a weaker economy after period of strength. It sees brown shoots that have given the federal reserve, the confidence, start thinking about cutting rates as early as September. I started talking about brown shoots from April 18. That was after we got some really ugly numbers from a pair of logistics plays. JB Hunt, big trucking company, Prologist, the REAT that owns warehouse and fulfillment centers. That one two punch was the first sign of a broader weakness in the economy. I picked it up and believe me, everyone's kinda caught on since. I bring this up because both these companies have now both reported their second quarter numbers. JB Hunt last night, Prologist this morning. I'm gonna update you on what we've learned from the latest numbers. These are two companies that are integral to the US economy. Let's start with JB Hunt, which put a very weak set of results. We can expect the revenue down 7% of 5% of the client and revenue per load for the intermodal business with low vibes down 25% at their integrated capacity solutions division. While the truckload and dedicated contract services use both saw 9% of the clients. Prudel, the house of pay. Meanwhile, JB Hunt's operating income fell by 24% year over year, also worse than expected. Management attributed it to, and I quote, higher insurance and claims equipment related and certain personnel related expenses. End quote. JB Hunt's net interest expense was also up 38% year over year thanks to higher rates and debt balances. So they ended up delivering a 16 cent earnings miss off a dollar 48 basis. Now this trucking company doesn't give formal guidance. So the management's commentary in the conference call is even more important than usual. And as bad as the numbers were for JB Hunt, the call was, oh my, the call was somehow worse with an adversarial analyst community. Really management, about when will things get better? They really went after the company's new CEO, Shelly Simpson, who just took over and paid in July, just July. I mean, I thought it was very painful call. But here's what you need to know. The most important takeaway. Simpson refused to call a bottom. She said that, and I quote, were at least closer to calling some kind of reflection and quote, but she refused to go all the way. That's not good. Between the distinct list of optimal numbers and Simpson's refused to call a bottom, investors fled from the stock, sending it down 7% today. Wow, that said, even after this big pullback, JB Hunt's only giving back about three days worth of games. After getting wrecked after the last report in April, the stock traded sideways until the middle of last week. When it finally took off alongside the small gaps and the whole transport index. So obviously the transport index was wrong. It was a group move, everything goes up, and then we pick off the individuals that didn't do that well. Now, the stock's given back a little over half of its gains from the past week after the company said, in effect, not so fast, to the investors who were starting to bet on a turn. So what do these numbers mean for the rest of the transports? 'Cause the transports are acting so, so bullishly. CNBC's terrific global supply chain reporter, Lori Ann Larocco, had a fantastic piece on CBC.com, where she noted that many logistics executives are ready to call an end to the longstanding freight recession. For example, Heymas Woodrow, he's the head of strategic analytics at Motive, which tracks trucking visits to major distribution facilities for retailers. He said to CNBC, quote, "When I look at the trends, "what is pretty clear here is compared to last year, "where retailers were de-stocking "so they were artificially by bringing in inventory, "we now see strong re-stocking trends," end quote. Look, I also got the impression that Shelley Simpson mainly refused to call bottom on JB Hunt's call, not because the date is ugly, but because you don't want to make that kind of risky cold shot on your first-ever conference call as CEO, too much for gamble. Now, she did have that opportunity to do so when her team said the business had improved to the west coast, again, related to imports for retailers, but she chose not to. However, you know why? Look, I don't blame her. You don't want to say something positive of a call, and then you may regret it later. That's a real black mark, so let's bear with her. Hey, how about this prologue, the giant smart warehouse company? First, this stock has been a much better performer than JB Hunt, even though it collapsed in April. It actually started rebounding again in May. It's been rising ever since. That disparity in performance makes a lot of sense, because this morning prologue just turned into a very solid quarter, in line revenue, slightly better than expected funds from operations. They have a key profitability metric for real estate investment trusts. All of those were very, very positive. And I've got to tell you, I don't know if you caught the CEO this afternoon, but I think he was much more confident about how things look. And maybe it's because of this. Their occupancy rate came in at a solid 96.1. Their cash, same store, net operating income, who by 7.2%, those are very good numbers. Now on prologue, just at this point in April, the issue wasn't actually the court itself, which was good. But the fact that prologue lodges slashed, it's full year forecast. But I mean the weak outlook on a more competitive operating environment. This time around though, prologue just didn't cut its guidance. They only tightened their funds from operations to outlook while keeping the midpoint the same. Other than that, they mostly reiterated the numbers. Not bad. And the owners released prologue's chairman, CEO, Hamid Mogadan, said, "We continue to outperform the industry "driven by our team and the quality of our assets. "While customer may remain subdued, it is improving, "and we expect the trend to continue "as the construction pipeline shrinks." And quote, "That is very positive." In short, it was a solid update from prologue, there was no real setbacks. And that alone makes this a better quarter for the company than the one they got. He gave us in April. Stock match is gained about 1% today, maintaining momentum that it's had over the past few weeks. So let's get back to the original question. How do these latest updates from JB Hunt and Prologis make us feel about what we call the macro environment? The answer, overall, after hearing from JB Hunt and Prologis, I feel better about the economy, but only slight and better, still need that rate cut. If you take JB Hunt's quarter by itself, without considering the broader context, you probably feel worse about the transports in the entire economy. But if your management lets slip some comments about improvements towards the end of the quarter, and considering the fact that Shelley Simpson just took over at the beginning of the month, plus the more positive outlooks from others in the industry, I am going to go out further on Lyndon Simpson. I'd say the trucking business is at least bottoming right now, even perhaps even bottoming already. As a prologis, they had a legitimately fine quarter, which is an improvement from three months ago. And when you layer in management's comments about improving customer demand, I certainly feel better about this warehouse situation than the last time they reported. But the bottom line, look, these are just the kind of clues. These are a couple of clues that we'll get on transportation and logistics with many more to come as the earnings season unfolds over the next few weeks. And believe me, I'm going to be watching a hawk. We want the pain to stop, even as we can't have too much improvement without jeopardizing the possibility of getting those Fed rate cuts that we need from the Fed, particularly, we've got to have one in September. Everybody's back there for the break. [MUSIC PLAYING] Coming up, lightbulb moment. Kramer shares an illuminating take on an AI play. Next. 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. [MUSIC PLAYING] For the past week, the most beloved stocks in this market, the artificial intelligence plays, they've been selling off like crazy. And today, the whole group got totally obliterated when former President Trump put the squeeze on Taiwan, saying they should pay more for their own defense. Given that they manufacture almost all the most essential ships that we need, that could be brutal for the industry. So everything from NVIDIA to AMD and Micron just got just clobbered, negative pin actions spreading into the everything AI-related areas. Super micro, we heard from them earlier this week. Dell, HP Enterprises for Servers, Arista Networks, what a great company from Network Equipment, Broadcom for Hardware Infrastructure. In other words, all the winners for the last year, and the Trust has got a bunch of them. We did talk about them in today's meeting, if you want to go and look what I'd say. There's another AI hardware play that got hit hard today, or at least an industrial company, the AI Kicker. Even though it hasn't run anywhere close to as much as the PurePlays have. I don't want to give up on what I consider the next industrial revolution, but I know it can take time for these sector rotations to run their course, and they can be quite frightening. Which is why I like some of these AI adjacent names, and the weakest, they've got less downside. Specifically, I'm talking about Hubble, HUBBBLL. That's 135 year old company that makes utility and electrical solutions. That includes so-called front of the meter solutions used by utilities and telco carriers to help transmit and distribute energy to customers, and solutions, like the actual meters that allow data and energy to distribute back and forth for utilities to their customers, and behind the meter solutions. Used by owners and operators of non-residential buildings, manufacturing facilities, and critical infrastructure. So they really got the soup, they're nuts going here. Over the past seven years, HUBBBLL moved towards a higher tech products, like smart meters, and away from more commoditized equipment, especially in the lighting space. I know this is our game, but bear with me, this is cool stuff. HUBBBLL has gone from a company that primarily served the construction industrial markets to a company that mostly sells into the utility market with a much smaller non-residential construction business. Then why does it matter that they're in utilities? Well, given that the demand for electricity is off the charts of this country, thanks to the AI Fuel Data Center built up, HUBBBLL's end market is now much faster growth than the old end markets, and best of all, they carry much higher margins. So they make much more on everything they sell. And that's because this company now has major exposure to some of the strongest secular themes of the market. Even if the stock market's put many of them to the meat grinder over the past week, and they're flushing out all the weaker hands, again, that's what's going on. We don't know when it's going to end. We're trying to find a good companies to buy into the weakest. First, there's Reshore. Companies bring back manufacturing in the United States, if your global supply chains got so small during the pandemic, these two domestic manufacturing issues have led to mega projects all over America, and these projects need to connect to the power grid. HUBBBLL's there to help them do it. After these mega projects come online, they'll result in energy-low growth, which benefits HUBBBLL's utility customers, too. The second major theme, grid modernization. Now, we see major failures in the nation's electric grid in recent years. That hasn't been updated in years. No one put money into it. I think no one thought it was going to grow. And given that electricity demand is now growing at a 5% annual clip, it hasn't grown for years. Things will only get more difficult if we don't modernize our grid. That's why I keep telling you, that's a great business. Thankfully, there's lots of federal support for these efforts. The $30 billion combined from Biden's infrastructure bill and the so-called inflation reduction act. Ultimately, if it brings down power, maybe I'll stop being so sarcastic about the name. But this is great news for HUBBBLL, because many other products help automate energy transmission and distribution operations. That's exactly what we need to modernize the grid. Third, there's sustainability and alternative energy. When new wind or solar farms get built and plugged into the grid, that means more sales of HUBBBLL's products. But HUBBBLL also makes products that help building owners use energy more efficiently, lowering their costs and helping them hit their sustainability goals. Many big companies have those goals. Some little ones too now. Last but not least, how does HUBBBLL benefit from the AI-fuel data center boom? Simple. We're going to need a lot more energy to support these facilities. And when utilities expand their production or transmission capacity, they need equipment like HUBBBLLs. One important, HUBBBLL first came on my radar is an AI play in March. When the company is part of a presentation during NVIDIA's GTC event, remember I went out there in San Jose? It's about the increasing complexity of the electric grid in the AI era. I had an idea about this, the main message. We now need AI to help manage the grid because power grids will have to do things like adapt in real time, just severe weather, facilitate two-way power flow with more home solar assets and electric vehicles. And managed cost as energy gets more expensive and resource shortages and inexpensive infrastructure upgrades have to occur. In fact, there's an NVIDIA backed startup called Utility Data, looking to introduce AI decision-making to the grid. And earlier this year, they announced a partnership with the HUBBBL subsidiary that specializes in smart meter technology. They're the first company to embed utility data's platform in their smart meter systems. And I know you always tell me, please tell me what Jensen Wong's up to. And this is one of them. This partnership is still in its infancy. You can't expect much in the way of revenue from any time soon. But Jensen Wong, the visionary CEO of NVIDIA's, just mentioned, seems very focused on this project and we're generally when using AI to modernize the grid. Remember, he also wants to have the grid generate less heat, obviously, reduce the carbon footprint. Now, last month HUBBBL hosted an investor day where he gave us some additional color in the data center opportunity. Yeah, it's not a huge business. We can't afford just 3.3% of HUBBBL sales last year. But management expenses to be one of the fastest growing businesses with double digital organic growth from 2027. HUBBBL's also acquired a company called PCX two years ago, which makes modular power solutions again for the data center. PCX has great relationships with hyperscalers who will be doing the most data center building. They're involved in the early construction phase with data centers. Remember, data centers are all down right now. So this is why we're presenting this piece now. So PCX represents a put in the door for HUBBBL which, imagine, we will help them cross-sell the rest of their electric hardware. Why do I bring up HUBBBL on a day like today when the stock's down 6%? I mean, shouldn't I be focused on, I don't know, a solventum or something? Well, because you're not chasing the stock. Look, hey, how about I come to you here, right? I say, listen, I buy this as P87, it's going to 400. Well, you know what? That's called being a chump. This is when you come in knowing that it could go here, maybe here, but it's not going to go here, okay? Anyway, while this has been, this is a new suit, so I didn't want to go all the way to the floor. Well, it's been an excellent performer up 92% over the past three years. The stock's already pulled back from 429, it's April 5th to 366. Doesn't mean it's going to bottom here, okay? It just hasn't had the insane short term moves like the purer it plays on AI. So it doesn't deserve to be telling them how far, but if you want to buy 100 shares, you buy 25 tomorrow and then you'd leave some room and buy some more. Plus, Hubble's last quarter was strong. It's just that management left their four year forecast on change when Wall Street wanted them to raise numbers. They reported again in two weeks on the 30th and while I don't have any reason to be negative, you should know, I am not recommending this as a short, as a one quarter play. It's a long term story. But here's the bottom one. More than a year and a half into the AI boom, we're now at the point where many of the most obvious AI winners are well-known richly valued stocks that can easily fall prey to vicious declines during this kind of sectoral equation. And that's why I'm researching the relatively under the radar AI plays like Hubble, a lesser unsupplier to the total energy industry that has a good business now. But we'll do even better as the AI continues to take off and the megacaps build new data centers everywhere, regardless of who is present. Let's go to Peter and California, please, Peter. - Hi Jim, I'm talking about Alphabet, G-O-O-G-L. I know it's got an AI play. I've had this stock for at least six years. I'm making a 250% profit. Is this still a hold or should I pick some profits from the stock? - Okay, okay. First it's an inexpensive stock. We did take some profits for the travel trust in this company. Why? Because it ran up so much. And I'm not gonna tell you that you shouldn't if we took some profits. That said, it's not that expensive and it's a really good business. And you know what, this too shall pass. I mean, this stock could be, it's 181. It could come to 160. And all that what happens is you should be a buyer, not a seller. So I'm okay with it. Tom in New York, Tom. - Jim, good evening. - Good evening, what's up? - Thank you for taking my call. - Of course. - And let me start out with a great monthly meeting today. - Oh thank you. - Thank you very much. - Good news to you, Jeff and everybody involved. - Yeah, Jeff did a great job. But you know, we're a sense of the idea. You know, it wasn't positive about most stocks. I think they're gonna come down. All right, but we got capital, we wanna do some buy. And that's what you do into these panic selloffs. How can I help? - Jim, I called you a while back, right after the IPO on a cybersecurity startup. And I was wondering what your thoughts were nowadays after their solid first quarter numbers. - Rubric, RBR. - Yep, and I said I liked it. And I continued to like one of the companies that have come public in this period that I think makes a lot of sense. It's data security and cloud management. Now there are a lot of companies that do that. I just said, I wanted Rubric on air because I think it's a very exciting company. And it's been a big winner and it was still up today. So anyway, thank you for the kind comments about the meeting. This was the hardest meeting that we've done in, I don't know, I can't tell how many years because we're trying to buy stocks that are going down. And we know they're going down. It's very tough to tell people to do that, but we don't know where they're gonna buy them. Most AI winners are known. I want to look for the under the radar names and I've come up with Hubble. I think it'll really start to shine as the AI-fueled data center build up continues to take off. But we know, again, these groups are in down mode. You buy a little at a time. First, a rise reported this morning, cutting its net interest income out while considering the shares lower. Bummer, I'm saying if today's the client will be a buying opportunity if the stock's strong showing so far this year. Then, Kramer eventually has been doggedly seen by complaints of high prices and small portion sizes. So what do you do with this stock like this? It's become a bit of a piñata. I'll give you my cake. And of course, all your calls wrap and find tonight's edition of The Lightning Man. So stay with Kramer. (upbeat music) (upbeat music) Now we've heard from the big banks starting to get results from the smaller regional banks. Today we had first to rise in the Tennessee-based regional bank that missed numbers, cut its full-year net interest income forecast. That was 'cause of increased competition for deposits. And what is the hottest region in the country? And that's why the stock dropped nearly 6% today. First to rise usually tends to be a steady operator, which is why the stock is still up 16% for the year. Think about that. Even after today's pullback. So how concerned should we be about this new competition? Let's check in with Brian Jordan. He's the chairman, CEO of First to Rise and get a better read of the corner. Mr. Jordan, let me back the bad money. - Thank you, thank you for having me. - Okay, so Brian, when I moved to New York in 1980, I opened an account at a bank and they gave me a toast because they wanted my money so badly. Are they giving toasters down there? Is that what's happening? - No, not toasters yet, but it's pretty darn close. We're seeing a tremendous amount of competition. It tends to be very aggressive for money market and CD deposit rates. We see a lot of specials in the marketplace. And what we experienced this quarter was a little bit of a shift in what we'd seen in previous quarters. We had about a billion and a half dollars that was at what we would consider back book or base rates that essentially repriced in defense of offers. And so we were very cautious about not protecting our customer base. We wanted to ensure that we protected our customer relationships, our client relationships. And so we matched offers and that raised the price of deposits overall. If you looked at the first part of the quarter, I'm sorry that we were, saw our interest rates on deposits actually dropped April and May and it started to accelerate with this competition in the June timeframe. - But how do you combat that? I mean, look, you're a solid bank, you're a good operator. You guys got coming in there, I guess, 'cause they, what, you're in the hottest area of the country. I guess banks that don't have a lot of growth are coming in trying to pick up business. - There are tremendous growth markets. And in the aggregate data, you see that the deposit base continued to shrink on a national basis. It's a function of the Fed continuing to shrink. It's balance sheet. And our customer base is very strong. It's in great markets. There's a lot of competition coming into those marketplaces. And it drove a little bit of increase in cost. We are gonna defend our customer base. And we think about it in the long term, not from a quarter to quarter basis. - Oh, but let's talk about the loan business. I mean, if you're in a great area, obviously there's still a lot of, there's learning to be doing. I read through this part, people seem to be worried about your commercial real estate. I mean, the 60% loan to value, they're not tall buildings we are worried about. I mean, basically, it seems like all the worries that people have are not being justified. - Yeah, I think, look, commercial real estate is one of those things that is going through a bit of a down cycle. But it's not something that keeps me awake at night. As you said, our commercial real estate portfolio is very diverse. Half of our office portfolio is medical office, which tends to be 100% fully absorbed. When we look at our office, office office portfolio, as you said, we tend to loan to nine story buildings or less. I think we have eight loans on buildings that are greater than 10 stories. It's geographically diverse across the footprint. Great borrowers, great borrower relationship, and very strong loan to value. So, commercial real estate is under a bit of pressure. It gets a lot of coverage, but it's not something that keeps me awake at night, not today. - Okay, so tell me about what happens. What's the day new mall here? Do some of the banks realize, you know what, we're not gonna pick up business, or do we just stay in a dogfight for a long time and you can't give us the return that we want? - I think it's gonna be an interesting environment, at least for the remainder of this year. And I think you've got the convergence of two major things. One is reasonably obvious with the presidential election coming up at what that means in terms of regulation, taxation, competition in the economy, there's likely to be a different outcome, depending on who wins the White House in Congress. And then the second is, is the Fed gonna cut rates later this year, when and by how much? And I think when those two questions get resolved, the economy, all to start to accelerate, loan to man, I ought to pick up a little bit. And I think it is gonna be a bit of a dogfight, as you suggest, for the remainder of this year. But I do think we see optimistic reasons to feel good about 25 and beyond. - All right, now we have a lot of people who watch the show who have mobility to move into Tennessee, Florida, and Texas, okay? If you wanted to be savvy, is it time to maybe ring the register in Nashville and go over to Memphis? - Well, it's an interesting question. I think we've had great momentum in Nashville, for example, in Tennessee for the last couple of decades, and it continues to grow very aggressively. We have a lot of things that are going on that are very attractive and Nashville. Excuse me, in Memphis, we're seeing X AI come here and build a facility here. We're seeing a lot of positive reasons for Memphis to accelerate. And I think that's true of a lot of the base cities we have around our footprint, whether it's a Birmingham, a Huntsville, we think we have a great footprint with a lot of opportunity for n-migration and strong economic growth. - Now, do you want to expand beyond that footprint or is there still, I mean, 'cause I don't want you to be in a dogfight for the next two, three years. Are there places that you can, that you know, that these out of counters don't understand that you can go make a big hit in? - Well, I think we have the opportunity to continue to invest in this 12th state footprint that we have. We were undersized in a number of these markets and we can continue to be very aggressive and competitive in those and continue to invest in places. Like I mentioned, Memphis being one, but you've got Houston, Dallas and Texas. You've got the entire state of Florida, essentially. You've got Atlanta, Georgia. You've got the Carolina's I-85 quarter from Charlotte up towards Raleigh, Durham, Chapel Hill with the triad in the middle. We see a tremendous amount of opportunity to invest in this footprint and I don't think we need to expand it. - Good, I don't want you to. You're in the best area in the country. You don't need to go down market. Well, I want to thank you, Brian. You're always a straight shooter. Brian, Jordan, Chairman, President, CEO. First of all, I love having you on the show. Thank you. - Thank you. - Okay, may everybody be back here for the break. (upbeat music) - Coming up, pop open those umbrellas and tee up your toughest questions. Kramer takes on all comers in the Lightning Round. Next. (upbeat music) - It is time to start the Lightning Round Christmas. We're at the Red Cross, and this octave is about to be right. So, I don't know the whole stack of that. It's not myself, but we'll be playing this out. (buzzer) And then the Lightning Round is over. Are you ready, skiing dad? It's over the Lightning Round Christmas. I'm with Chris in Alabama. Chris! - Good evening, Kramer, kaboo, yeah, I'm a fool. - Oh, yeah, right back at you, Crimson Thai. What's going on? - Okay, I'm on a 17% toboggan ride down from 202 to 166 with Arrow Environment Inc. symbol A-B-A-D. - I've got to tell you, one of the reasons why is that there are people in the Pentagon who think that maybe they're charging too much money. Now, they are few and far between. I think that this is the best bang for your buck, so to speak. But, I can tell you that that's the weakness and that's why the stock at 50p is considered to be too expensive. I like it though. How about we go to Chris in Florida, Chris? - Hey, Jim, I got to start with a quick go bird. - Hey, go Eagles, absolutely. - Yes. - I like everything I'm hearing from training camp. I mean, like the subtle training camp, that real one hasn't started yet. What's up? - I love it. So, I'm all about the logistics and transportation industry, Jim. - Go Dell, there's two quick things that I wanted to ask you about. - Just yesterday. - Lineage talked about an IPO with a $19 billion valuation. - I think it's going to be massive. - But more importantly, a stock that you and I talked about a few weeks ago, you weren't entirely sold on it. I think it's still got room to run. Look at the last few days. S-W-R-D, four days. - I'll tell you, look, the rest of the group has been carried up. The stock is down 60%. Losers will be winners. This is a slow ones now, will later be fast. I mean, it's like, the times are changing. You might get forward, go to 28. Let's go to Bill and that's just Bill. - So, oh yeah, Jenny James. - Chillman says, all right, what's happening? - I feel like opportunity is locking Jim. - Where that? - I trimmed off some of my tech stocks. - All right. - 20 days though, I got lucky. - But what I did was, I sold the video last year at 4.56, 59, 50, and put that all into Broadcom, vertical things, DuPont and Meta. - Well played. - Well played. - Thank you. - You were the only one, when I trimmed it at 4.50, the only one to say that there was nothing wrong with taking profit. - No, nothing. We took some of the beginning of the year, we thought it was the right thing to do. Okay, what's happening? - It's static, I'm interested in general dynamics, she told me last year, it was great, you gave me the green light and I'm doing great on it, I'm happy, I want to buy more. - Okay, okay. I can bless that, because it's not an expensive stock and it's a great company that I've been dying to have on the show, but I've had very little luck, but maybe my luck's about to change, but I think it'll be fine in that. I need to go to Anna in New York, Anna. - Welcome, hi, Jim. So great that you took my call, I'm from Westchester County, New York, in your backyard, and I'm calling about. I worked for CE at Con Edison Solutions, it was an escrow company for Con Ed for 15 years, we were bought out in 2019 by Exelon, Ben Constellations, so to payroll deduction, my CEG stock, I purchased 68 shares for about $2,100 back then, it's worth about $12,700 right now, five old or so. - Okay, this stock is under heavy pressure, there's a big rotation going on in it, the rotation hasn't lasted long enough, I think it's gonna go for a couple more days 'cause the stock is up 60%. Keep your powder dry, and that, ladies and gentlemen, it's the conclusion of the Lightning Round. - The Lightning Round is sponsored by Charles Schwab. Coming up, give the people what they want, Kramer on lessons from Chofotlay and more. Next. (upbeat music) Sometimes it's about the why. As in why the heck does this stop going down? - Sessessessessessessessessessessessessessessessessessessessessessessessessessessessessessessessessessessessessessessessessessessessessessessessessessessessessessessessessessessessessessessessessessessessessessessessessessessessessessessessessessessessessessessessessessessessessessessessessessessessessessessessessessessessessessessessessessessessessessessessessessessessessessessessessessessessessessessessessessessessessessessessessessessessessessessessessessessessessessessessessessessessessessessessessessessessessessessessessessessessessessessessessessessessess That's how I feel about Kramer Fave Chipotle right now, there's a fever around Chipotle, a fever that says it's been raising price and shrinking Porsches sizes that's a recipe for customer vote. I put the question CEO Brian Nookle not that long ago. He's what he had to say We've always said we want to give people great portions. I want to give them what they want And you're not shrunk the portions. No, no, we never have like from the beginning of time with Chipotle I think there were billboards that said burritos as big as your head like that's never changed And our teams, they are focused on giving people what they want Dear God, that was good enough for me. Nookle's one of the best executives we've ever had to make money Hey, you know what if he says they haven't shrunk the size? I believe him case closed But what I realized is sometimes there are issues that dog accompany They can't just be put the rest who cares about the reality of the situation All that matters is if Chipotle can convince his customers Yesterday, we had hundred extra consumer research firm on the show and they're all about perception CEO Rob Pace points out that positive Chipotle feedback has actually been declining Purchasing tends to drop two to three points since April and that's in part thanks to the growing perception that the sizes have gotten smaller Despite what the CEO told us just a few weeks ago There was this widely read piece of research from Wells Fargo by Zachary Fatum He has a buy on the stock and he too is puzzled by the perception versus reality So what do you do? Oh, I'll just read it to you quote to put the weight debate to rest We consume 75 light for like Chipotle burrito balls in New York City and quote turns out the consistency He said quote very widely with some locations serving bowls that weigh 33% more than other locations and quote mmm What that says to me is well, we'd love for every bowl to be consistent There's no grand plan to produce the portion size for heaven's sake although the standards don't seem to be consistent from location location Which makes things a lot harder. I'm concerned because as long as people think Chipotle is shrunk the sizes It's going to be a tough stock to own I think you got to wait until this issue blows over and everyone comes to their senses It would help with management impose more uniformly uniformity across the table. Maybe you can't here's what matters I trust Chipotle. I trust Brian nickel. I believe they deserve the benefit of doubt I don't need to weigh 75 bowls But I'm not the one who needs to be convinced had it for lunch today I celebrate to complete the CBC investing club monthly meeting and until they get a handle on this Perceptions on this stock could be pretty painful now We know 100x is not a stock picking organization But I really like the work that shows the dominoes DPC is at the top of the pizza heap with a 97 score versus other top pizza brands 61 highest best. How do I use this simple? I like the stock of dominoes. I like it more than the other pizza stocks That's been the case ever since May of 2022 when Russell Wiener took over co and the time dominoes Sock was trading in 340. He's now since 473 when it purports tomorrow I think there's a good chance we had a compelling set of numbers I went over this the other day with you and the 100x research piece made me inclined to tell you to buy it Could be wrong But I like to use this kind of data to ensure that I'm not way off base We'll see tomorrow And I don't like to play earnings for less so don't do any crazy at night, please in the end getting stocks right means trying to figure out a Mosaic until 100x came along. I relied on my own research married to my own view of the product My family loves dominoes. That's been true ever since the stock was in 10 bucks almost 15 years ago back when former CEO Patrick Doyle started turning his around and urged me to yes eat dominoes is right But you see my views purely anecdotal with 100x. I have what's known as empirical data Which is always better doesn't mean it can't be wrong does mean that you'll be better with this research than you are without it Oh, and for the record I wish I work with Zachary Fader At least this once at Wells Fargo on that your polypies because I would have been happily to happy to eat all 75 bowls Because that's how much I love the taste of Chipotle. I like say there's always more market somewhere I promise that if I just be right here, I'm in money. I'm through Kramer. See you tomorrow. Let's go start now All opinions expressed by Jim Kramer on this podcast are solely Kramer's opinions and do not reflect the opinions of CNBC NBC Universal or their parent company or affiliates and may have been previously disseminated by Kramer on television Radio internet or another medium you should not treat any opinion expressed by Jim Kramer as a specific inducement to make a particular Investment or follow a particular strategy, but only as an expression of his opinion Kramer's opinions are based upon information he considers reliable But neither CNBC nor its affiliates and or subsidiaries warrant its completeness or accuracy And it should not be relied upon as such to view the full mad money disclaimer Please visit cnbc.com forward slash mad money disclaimer Imagine earning a degree that prepares you with real skills for the real world Capella universities programs teach skills relevant to your career So you can apply what you learn right away learn how Capella can make a difference in your life at Capella.edu [BLANK_AUDIO]