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 7/11/24
Hey Fidelity, can I get a second opinion on stocks in the Fidelity app? With Fidelity, it's easy to get an outside opinion from independent experts in a single score. And then? When you're ready, trade U.S. stocks and ETFs with no commissions. That's right. I am always right. Investing involves risk, including risk of loss. Sell or assessment fee, not included. A limited number of ETFs are subject to a transaction-based service fee of $100. See full list at Fidelity.com/Commissions, Fidelity Broken Services LLC, and YSE/IPC. 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 a 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 a special, shortened edition of Man Money. Welcome to Kramer, I'm going to make friends. I'm just trying to make little money. My job, not just educate, but to teach, so call me at 1-800-743, CNBC. Of course, tweet me at Jim Kramer. CNBC will be bringing you live coverage of President Biden's press conference at 630. But first, what do you do when the house of pleasure becomes the house? The house of pain. What do you do when the house of pain changes to a much better address? Moving right next door to the bull statue on Wall Street. That's exactly what happened today in this stock market. When investors abandoned tech, and when I say abandoned, I mean people fled from the group like rats from a sinking ship. It was Titanic! They took their money and went all in on the small and medium-sized companies, we would call it the Russell 2000, because we got a much softer than expected consumer price index, a number that shows inflation is effectively beaten. And interest rates are coming down. And that changes the whole backdrop. It's why the Dow ended up 32 points. S&P lost 0.88%. And the Nasdaq, home of the trillion-dollar techs, plummeted a staggering 1.95%, causing lots of people to say it's over more than a second. The real action, though, is in the bond market, where interest rates really plunge. In recognition that the Fed may finally have whipped inflation, which means Fed Chief Jay Powell can start giving us rate cuts. And they're not too distant future. Listen, people don't buy the same stocks when rates are plunging, when they do when rates are doing nothing or inching higher. Still, how does that cause big cap stocks to get obliterated? How could Amazon stock tumble 2.4%? How could Apple stock lose 2%? How could Microsoft fall 2.5%? And holy heck, Batman! What explains in videos 5.5% died? [MUSIC PLAYING] First, you have to understand that sometimes this stock market can switch directions on a dime. [INTERPOSING VOICES] Typically, that only happens because the much larger bond market does something extreme. With the new context of lower bond yields, all sorts of stocks that haven't been doing well this year, stocks of companies that need lower rates can suddenly get bid up, be bought, because, well, that's what happens when rates go down. What happened today always happens when rates plunge, make no mistake about it. Today was what we call a first-class rotation, where the market abandons more actually mose down the former winners, and simultaneously anoints the former losers to kings. Even if the companies in question haven't changed one bit versus last night, so let me use this moment to teach you about rotations. First, when you see an extreme rally in bond prices pushing yields to lower, that will always, always, always ignite some stocks. The ones that are suffering from the withering interstitial machine gun fire, that happens when rates are all at higher levels. Stocks like the homebuilders, which have been just punished endlessly by sky-high mortgage rates. For example, I've repeatedly told you that I like toll brothers in Lenore. When I do that, I recognize that they truly thrive, and they can't. They can't go up until rates go down, but then they really thrive. You always need some stocks that are worth buying of rates, which have been on the fence, suddenly making decisive move lower. Why? Because when bond yields go down, mortgage rates go down too, and that translates directly into more demand for housing. So this isn't just a road map, people. Anything housing today, from Home Depot and Lowe's to our age in William Sonoma, those stocks went crazy. It was like they make AI chips or something. Only a few weeks ago, most people have looked at the homebuilding stocks in peak, because their numbers weren't as strong as expected. Their whole cohort was just destroyed late to waste. Now, with a very cool CPI reading, like we got at 8.30 this morning, this very important indicator for the Fed is flashing green. If we keep getting data like that, I wouldn't be surprised if we got not just one, but two, or even three rate cuts, not just that September cut that people were speculating about. But when you get that many rate cuts, your portfolio needs some stocks that soar when rates come down, stocks like the Homebidders, or at least something connected to them, like the stocks I just mentioned. Let me give you another example. I've been assuming that interest rates would eventually come down, because we keep seeing these brown shoots that I talk about every night. Signs of softness that tell you that the economy is weaker than expected. Last night, I recommended buying warehouses for heaven's sake. But one of the nation's largest lumber companies, because its stock had been in free fall along with the price of lumber. But if anything positive happens with interest rates, I told you the warehouse could soar. Well, what happened today? It went up 5%. By the same token, we've been telling members of the CNBC investing club that even though Stanley, Black and Decker, might be terribly out of fashion, its stock is a buy. Again, this tool, this too, it's going to make out like a bandit with lower rates. I mean, this stock rallied 4.6%, they couldn't give it away last week. Okay, so now this is what you have to think about it for me, telling you. Does this make any sense at all? I mean, like any at all? Not today, no. No. But if rates keep going down, these stocks will continue to go higher. The lows, the Home Depot's, the Stanley, Black and Decker's, the Whimps' numbers, they will go higher. The bullish bits made today were all about trying to catch a multi-day rally before it happens. Not just getting the gains from a single session. Second thing you need to know about rotations, these moves by nature tend to last for about three days. Okay, write that number down. Three, that's how the lonely average rotation works. Because as much as it's fine to own some of the stocks that won today, there's still not a major chord in the market. In the end, I've preferred investing in the major chord, Dr. Minecord, always. I have no illusions about the situation. When rates drop, they must keep dropping for today's winners to keep working. And I don't think there's enough data on the horizon to keep fueling the bomb market's rally. That means even as stocks are pushed up and the rally broadens out to include many long left behind small cap names, as well as this matter of industrials, the big tech buyers will be back soon enough after a few more punishing days. Why is that simple? Because in reality, nothing's really happening at the vast majority of companies whose stocks went higher today. We didn't hear anything positive from most of today's winners. We won't hear anything positive from most of the winners tomorrow either, or Monday or Tuesday. But these stocks have been left behind for a reason. They have things wrong with them. Sometimes many things wrong with them. They have warts. They have shortfalls. They need rates to go down rapidly. They need investors to look past their mostly weaker earnings. And that is a very tall order. People, very few money managers, have the ability to take the level of pain that they're like good experience if they stick with these minor chord stocks for more than just a couple of days. If you're in them, remember that unless you get another huge bomb market rally today, you likely won't see more big gains. They're only worth buying if you're prepared to stick with them for the long haul, as we are with Stanley Black and Decker filing. Can you buy the Magnificent Seven? I heard this all day. By the way, no, here's what I heard. I heard that the Magnificent Seven was finished. That's what they get. It's finished, done. I mean, like, forget those. Like, Steve McQueen, he doesn't even make it. And you'll bread or die in this one. And you know what? I have to tell you, I think that now that they're all for sale and you're looking to buy them, the answer is no. Yes, the answer is no, absolutely not. When you have this kind of vicious decline that's infected all the winners, you can't expect them to get out of the intensive care unit that they found themselves in today, go into the recovery room and then get picked up and taken immediately to rehab. It takes time to recover from this kind of beatdown. And in the meantime, their stocks are likely to drift lower, not go higher. Keep in mind the megacaps are all super stocks, but they're not super men. They're not faster than a speeding boat. They're not more powerful than a locomotive. They can't leap 12 buildings in a single bound. They need some time for heaven's sake. So if you want to buy, I say wait a few more days. Let's see how they react if the banks report good numbers tomorrow. Remember, these super stocks have become far more expensive than the rest of the market. Days like today are corrective to that. So the worst thing you can do is gun jump. Bottom line, I say enjoy the rotation. It's historically broadened things out. And tomorrow you'll get another chance to make money with today's winners. But if interest rates stop going down and stop going down hard, then please do not overstay your welcome. Because then the rotation will unwind within a few days. The markets major courts will reassert it. And you'll be saying, Jim, NVIDIA, it's back. Let's go to Jackson in New York, please, Jackson. Period. Hi, Jackson. Hey, Jim, I shot a question on the sketches. Do you think it's a good time to borrow right now? Because you've been going to DCM out recently. OK, I have mixed and most about sketches. It's a boom bus stock. And I've been it in the boom and it's unbelievable. And I've been it in the bust. And it's so horrible that I can't do it. So I'm going to say no to that one because it's just hurt me too many times. I need to go to Rob in California, please, Rob. Hi, Jim. Rob, what's up? Lovely, sunny, cool Marin County, California. So beautiful. Long, long, long time listener, first time caller. Oh, thank you for getting in touch with us. Thank you. Thank you, Jim. I'm looking to open it account for my 16 year old. OK, good idea. We're thinking crowd strike, but it's a little frothy. Love your thoughts. OK, I would hear what you're going to do. You're going to buy some crowd strike now. And then you're going to wait three or four days and buy a little bit more. And then you're going to wait a few more days and buy more. You have to buy that stock, not all at once. It has to be bought and bought on the way down. George Kurtz will deliver for you, but you can't ask him to be a superman. Stocks are not supermen. They are in the end stocks. But if you buy it on the way down in stages and then just hold it and keep doing the research, I think your sum will do just fine. So people, I say enjoy the rotation, but it will not last forever, especially if interest rates stop going down. And then we just rotate back to the same old, same old that I heard all day were finished. But I don't think so. Oh man, tonight, I'm taking a bite of Conaugarith, the company's CEO of Freshall River earnings. Get a sense of GOP-1 concerns in the package's food space are warranted. And today, we got a pessimistic report from Delta, which sent the airline cohort lower. So is the whole group just uninvested. So I'm going to give you my take. And later, we'll be bringing you President Biden's press conference on a special early edition of Last Call. So stay with Raymar. ♪♪♪ Don't miss a second of Mad Money. Follow @JimCramer on X. Have a question? Tweet Cramer #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. 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The peanut butter group and chocolatey Corp have merged to create PBC Inc. And the byproduct of the merger is the new delicious GIF 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, GIF, PB&C. This morning, we got the first few reports of early season, including a pair of quarters from the tricky packaged food space. Normally, you want to buy the food stocks when the economy is slowing down and we know that's happening. But their stocks also got out of style when Wall Street starts anticipating rate cuts from the Fed, because that makes the boom bust sickles more enticing and certainly makes the housing stocks loved. Against that backdrop, Conaugra brands reported mixed quarter this morning. Conaugra posted a larger than expected decline in sales, but its margins and earnings were higher than anticipated. What tipped it is that the company gave a conservative four-year forecast, which only sent the stock down 1.5 percent, although it did recover from lowness. So is management simply being prudent? Or do we need to worry about real weakness ahead? Let's check in with Sean Connolly, a straight shoot in president's CEO of Conaugra brands. Get a better sense of the quarter, Mr. Connolly. I am always thrilled to have you back on man money. Hey, Jim, thanks for having me. All right, so Sean, there's just you always give us a huge amount of information. I'm going to start at the 30,000 foot level. You've got some key messages right up front in your deck and I'm going to just read them. Sequential volume improvement domestic retail business. Strengthen share position, especially in key frozen and snacks domains. Strong innovation pipeline, they continue to resonate with consumers. Why with those messages, Sean, does this stock not go much higher? Well, I think what you saw in our report today, Jim, is that while the consumer environment is still not a bet of roses, it is continuing to get better. We've been investing in our business to drive a positive inflection in our volumes. And we saw that again this quarter for the third quarter in a row, very material inflection. In fact, we saw a positive volume consumption overall in our key snacking business, our frozen single serve meal business, our international business and our refrigerated business. So very positive trends, we have more to do. We just started another fiscal year. We've got a couple of businesses left to invest in, but we do expect continued volume improvement from here. The good news in my eyes is that we've been able to make these investments to improve volume while maintaining even expanding our margins. And that's key because maximizing our key free cash flow is important for our company. Our free cash flow conversion in the quarter was 138 percent. And that's essential. It's helping us hit our deleveraging targets, clean up our balance sheet, get to our long-term goals. And that's really good news from the quarter. But we did guide today for the full year ahead. We believe it's prudent to be conservative in our guide not to try to be heroic. It's been a challenging consumer environment for over a year. We're forecasting that in the future, but we're absolutely seeing the volume trend improvements that we're looking for and investors are looking for. It's just that after three years of runaway inflation, it's a process to get to a normalized operating environment. It's not an event. And we've been investing to facilitate that process. And we like what we're seeing. Okay, so I'm going to go again to your deck. There's an incredible chart. The volume trajectory improved as the year progressed. Total domestic retail shipments, they were down 5.2 percent, first half fiscal year 24. You're now looking minus 1.8, but there's an arrow that I drew, which just says you are so clearly, so clearly on a breakout mode. This is the bottom quarter that we're in. Why did you not just say, you know what, guys, we have really fixed up this thing. And when we get some more volume, we will have huge leverage just you wait. You did not give us that. Well, we've gotten a lot of feedback from investors that there's no real reward right now to try to be too heroic in our outlook because it has been somewhat of an unpredictable environment, say the least, over the last four to five years. But make no mistake about it. When people look at our portfolio, they want to know how we're doing in frozen and in snacking. Those are our two key strategic domains. Our snack business grew volume consumption in the quarter, and our frozen business overall is knocking on the door of volume growth with roughly flat overall consumption in the quarter, but positive volumes in our largest frozen business, which is frozen single serve meals. I think that bodes well. We're not suggesting that it's going to be a bed of roses from here. We think it's prudent to be somewhat conservative in our outlook given how volatile the environment's been the last few years. But I like looking at these markers and seeing real material progress because I give me confidence that we can hit or beat the numbers that we've put out there today. I completely agree with you. I'm looking at your brands and I'm thinking like during COVID, you're one of the copies where we took in a lot of your brands and coming out of COVID. Yes, there's been price increases, as you mentioned, that there's some people who sampled your product and now out of COVID, they may be having more boom, a lot more popcorn and with GOP-1, where all the doctors keep saying you need protein, the meat snack is the snack of the future. So are these things panning out for you? We have an unbelievable snack business, Jim. It's a couple billion dollars and we don't sell potato chips and pretzels. We sell protein snacks and fiber centric snacks, brands like Slim Jim, Dukes, Orville Redenbacher, Angie's Boom Chica Pop, Act 2, David Seeds, Big Seeds. These are protein centric and fiber centric snacks. They remain on trend. We grew snack volume in the quarter, which is great to see again and we expect even more in the year ahead because consumer trends toward healthy snacks, permissible snacks, protein centric snacks, that's not slowing down any time soon, Jim. Now, you're still introducing products. For instance, I'm grabbing right now, Dolly Parton, Duncan Hines. There's an extension of the Dolly Parton line. Now, does this kind of thing really add? I mean, people are going to say, Jim, you grab the Dolly Parton, Duncan Hines, give me a break. That can't move the needle, but can it move the needle? You better believe it moves the needle, Jim. Dolly Parton is an American icon and she is a friend of Conagra. We started our partnership with Dolly with Duncan Hines and Bake Mix. We loved what we saw. We extended that relationship with Dolly to broader food. We're introducing Dolly, the Dolly lineup into our frozen business this year with some great dessert products and down home southern cooking. We know people love Dolly and we're going to continue to expand the lineup. All right. So someone said to me today in this brand group, they said, you know what, why does someone come in and just say, you know, we're rolling back our prices 25% and we're just going to crush everybody. Kind of a marble Friday. You and I have been around for a long time. We know that there was a consumer product company, not so great tobacco that cut prices and really did kind of annihilate everybody that came out ahead. Is it ever worth it? Just have a meeting. We just say, guys, should we just roll everything back 25% and say, listen, we're the hero for this country. Yeah, I don't think that's a great move because if you number one, I don't think it's necessary. Consumers are stretched, but they are adapting to the new pricing. They are making trade offs. They're putting a lot of analytics into what really what products offer the best taste and the best value. And we feel confident that our products will continue to win that assessment. But really, it's more about refinement. It's not that kind of a deep cut blunt instrument. We know exactly what the key price thresholds are for our brands. We know what the key gaps are versus competition. We've been able over the last three quarters to refine those price points to nuance them, get them exactly right. And look what's happened. We've seen our volume trends move materially northward for three quarters in a row. And in a large part of the business, it's already begun growing again in the absolute. And that's a positive sign. And you've got brands like they do just pop up and you know, banquet was incredibly popular. Did you put a lot of money behind banquet that that came back? Because that is, look, I'm in New York and you know, we're snobs. I'm holding up the banquet spaghetti and meatballs that made from scratch-bearing aerosols. This thing's killing it, isn't it? You know, it's funny about banquet is banquet for a long, long time, didn't get any innovation attention. In the last five years, we've completely overhauled the banquet line. It is not the banquet line up that you remember from 10, 15 years ago. It's a completely new product line up with brand new innovation. And our innovations have been really doing exceedingly well in the marketplace. We've got some great ones coming this year. And we're seeing terrific volume performance on that business. It's a combination of great value, but increasingly great taste. And quality has been a focus area for us. We've dramatically improved the quality of our portfolio over the last five to 10 years. And the consumer has noticed. Absolutely, Sean. And that's why I believe in the inflection. I like volume more than I like price. You know that volume is real. You are real. That is Mr. as Mr. Conley. And I've got to tell you, Sean, everything points to the inflection. I know you didn't want to say it. I'll say it, OK? If a 5% yield, I feel like I don't have a lot to lose. Thank you so much for coming back. May have money. Thanks, Jim. You bet. And of course, I've got 14 original snack size Slim Jim's. No, make that 15. May have money's back into the break. Coming up, don't believe your lying eyes. Kramer books a flight to remember. Next. Imagine earning a degree that prepares you with real skills for the real world. Capella University's 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. OK, how many times have you boarded a plane? Only do you hear that it's an extremely full flight. And there's no more room on the overhead. How many times have you folded over seats or didn't even trust the ticketing process because you figured like you bumped. If you're like me, the answer is every time air travels become a total nightmare. Every weekend seems to bring this news that it's the busiest week ever. Yes, ever. Which makes it a very strange time for me, for yours truly, unless I'm hiding with my hat and my sunglasses. I'm always going to get asked about owning the stock of whatever airline I'm flying on because it's so darn packed. Now, understand, I'm actually thrilled to be recognized and talked to. It's a big deal. I regard as a blessing. So, it's been a long time precisely because we have amazing viewers like you and I don't want to lose you. Which is why I always demure when asked whether the owner of the extremely full flight should be bought. I beg off the passengers, I duck the flight attempts. I hide my face when I see any pilot. I don't want to tell them that none of the airlines are worth buying here, not when we're in the air. But some people just won't take no for an answer. They want one airline, any airline. The one I feel confident in. They know that Boeing seems unable to make planes. So, some know that the more reputable air buses having supply chain problems too. So supply is tight. Demand is insane. So, for the desperate, the ones who can't believe these airlines aren't just coining money. You know what I say? I say, "Okay, Booyah, if you must, I don't count on it." But, if you absolutely have to, then buy Delta, the most profitable airline there is. Sure enough, today we found out why my caution was justified. Today, Delta reported a disappointing quarter and it stopped humble almost 4%. What happened? Why, first, let me be clinical. As Ed Bastian, the terrific CEO of Delta said on a conference call, "While demand for air travel remains strong, with record TSA travel volumes up 7% from last year's levels, domestic industry seat growth has accelerated through the summer months, impacting yield performance in the main cabinet." In other words, don't believe your lion eyes. There are way too many seats than there are people to put them in. Despite all the signs of overbook flights you see constantly and I see constantly, it turns out that that evidence was all anecdotal. In reality, there's been an 8% increase in capacity. In reaction to those incredible travel numbers, the airlines ramp it up. They caught up with demand and then they overshot it. And in chanting "bright spot," the glow-up effect from a certain bejeweled tortured poet? You look at the summer, you look at what's the big news where people want to go, especially our younger demographic, they want to go to Europe to see Taylor Swift. Well, that's what that's what's selling. A phenomenon which even the Mad Money team got in on, including our executive producer Regina Gilligan with her sister and her daughter, Vesper, and Nisa Isabella. And of course, Dublin. Now, observation is very important power with your picky stocks, but it must be marriage to curiosity before you pull the trigger. And if you had the curiosity, what would you have found? You'd know that Delta is a great company, as it might be. It's actually not a great stock. Up only 20% or so over the past 10 years. It's a good time to judge a stock. 10 years. During that period, the SP500's up 184% Dow Jones and Dustials up 135% same period. Now, it's not as easy to spot the weakness as I'd like on Delta's conference call. You would have heard the premium revenue is up 10% over the pre-op prior year. You would have heard that the loyalty program outperformed with revenue helped by growing Sky Miles member base. You would learn that cargo revenue is up 16% domestic pasture revenue up 5%. Those are incredible numbers. And given that Delta is very well-run, I believe that bastion, when he says things can improve and the disappointment might be short-term. The company, reminds us, has too much debt, so it has to use a big chunk of its cash to cover the interest payments. But what Bastion does in control, and will never control, are the lousy companies in his industry at competitors that are always doing things wrong. In recent years, we've convinced ourselves that the airline industry has disciplined on pricing, but it's tricky. That's usually the case. And now there's a skunk at the garden party. Delta, the company's terrific. Delta, the airline stock, is only as good as the weakest competitors, because they're leading a race to the bottom, and that's killing it. So if you have one big takeaway from tonight's show, let it be this. If you're going to buy a stock, any stock, first see how it's done over time. Second, see how its cohort is done. You can take one look at the jam-packed plane and want to buy Delta airline stock, or you can take one look at the pathetic chart, and know for sure that the stocks, sadly, simply not worth owning. I like to say, there's always more market somewhere. I promise you I'd find it just for you right here on Mid Money. I'm Jim Kramer. See you next time. A special early addition of last call starts 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/madmoneydisclaimer. Imagine earning a degree that prepares you with real skills for the real world. Capella University's 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]