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 7/8/24
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And the by-product 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. 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. Mad money starts now. Hey, I'm Kramer. Welcome to Mad Money. Welcome to Kramer. I'll be with my friends. I'm just trying to make you a little money. My job is on this entertainment to educate teachers. Call me 1-800-743-C. Tweet me at Jim Kramer. I got some tough news for everyone who's sick of a market that's led by just a handful of tech stocks. You're wrong. Look at the stock of Eli Lilly, which was up nicely today on the news of an acquisition. They're buying a biotech company for $3.2 billion to expand into the inflammatory bowel disease space, gigantic space. On a day, when the Dow dipped 31 points, that's to be advanced point 1%. Now, as that game points to 8%, I think it's worth pointing out that there's no rule that says only the tech titans can lead us higher. Sure, Apple and Amazon and Alphabet and Microsoft Nvidia. Yeah, same old same old R on the move. And yes, we can say it's ridiculous that they keep climbing and some people can cling to the idea through everybody. But I say, wait a second, cowboy. Where does it say that this club is restricted? Where does it say that nobody can join in except companies that are loaded with tech, especially gender of AI? Perhaps we should stop wasting our time worrying about how the gains are concentrated in the hands of a few cloistered tech titans and instead think about how a company can become sane and simply by doing everything right, where are those companies? Why aren't there more of those companies again? There's no rule that a former stock can't lead this market. Just like there ain't no rule that says a dog can't play basketball, which brings me back to Eli Lilly, the air bud of Big Pharma. Think about what Lilly's accomplished here and how it's knocking on the trillion dollar door with a market cap of $872 billion. By the way, it was one point it was close to $900 billion before the stock pulled back from its highs. First, Lilly comes up with a weight loss in diabetes, control injection that competes strength with Novanor's ozemic. But unlike Novanor's, Lilly has a huge balance sheet and can afford to put up gigantic, complicated, multi-billion dollar plants to pump out their drug. That matters because production capacity will be the real gating factor against the competition. It's why we didn't take profits, did not take profits in Lilly for the charitable trust when we heard of all the competitors that JPMorgan Health Care Conference since the beginning of the year. Incredible competitors, I'm talking about Regeneron and Amgen. And boy, we didn't jump stick when sip when Viking Therapeutics burst on the scene with a positive clinical trial for their own GOP-1 drug. How the heck can Viking make enough to matter? I'd only worry about this one if big format now, let's say Pfizer, which failed its own weight loss drug trial swoops in and buys Viking. Lilly's drug is just too good. And while we know it works on sleep apnea, weight loss and diabetes, do you know what? I think the biggest indications involving heart problems, including blood pressure, are yet to come. That's not all Lilly's doing. Right now, it's gotten a pool for a drug that slows the progression of Alzheimer's disease, long instead of totally impossible to take on. Because Luna is safe and for many people, it works to hold back the disease. And this is according to my own sources in the brain and migraine community. We don't know the size of this market. We just know sadly it's going like weed and this drug is one of two hopes, the other being from Biogen. And that Lilly takes the cash that's spewing from its coffers and buys morphic, a small early-stage biotech for $3.2 billion for throwing a promise to find new drugs and build its pipeline. Sure, that's a 79% premium. I know that seems like a lot, but Lilly needs to focus on the burgeoning immunology segment with a pill to help manage inflammatory bowel disease, ulcerative colitis and Crohn's disease. These are large and growing diseases, some of the fastest out there sadly. While Lilly has done, but Lilly's done with its money is get behind a drug that might be more potent than its own competing drug candidates that are listed on its website. It's work diligently to ensure that it has no real patent clip, unlike say Pfizer, which isn't a deep one, or Bristol Myers, which is severely suffering. Oh, and let's not forget, every time you hear that so-and-so might have a pill version of some GLP-1 weight loss drug competitor and not just an injectable, remember that Lilly's working on a pill too. Why is Lilly's strength so important to me and should be to you? Simple, because it's an obvious winner outside of big tech. Rather than bemoaning the limited breath of the market, maybe we should be asking why other companies aren't joining the club. Who's to say that only pure technology can win here? If you'll actually show smarts as a CEO, if you have a vision, you can ask you well, then you can belong in the mega-cap universe too. There is no law this says you can't. This week, for example, we get earnings from JP Morgan, arguably the best bank in the world. It's market cap, not in security at $5.89 billion. The stock trades, though, had a ridiculously low 12 times earnings multiple. Why shouldn't it sell 22 times forward earnings instead? That's what people are paying for the average stock in the SP500s. JP Morgan, the best bank in the world, actually worth dramatically less than the average stock. PepsiCoal supports this week. 1995 Coca-Cola was the second biggest company in the fortune of $500. Now, PepsiCo has doubled the revenues at Coca-Cola. Hey, maybe if it made more swift moves or bigger takeovers, then it could be worth $1 trillion within a $223 billion. A short observer recently asked me by email, "How could Exxon with $330 billion in revenues over the last 12 months not be much, much bigger than NVIDIA?" Which rang up just $79 billion from rivers in the same period. Well, Exxon's worth $500 billion more than video clocks in at $3 trillion. Well, the answer to that is that this market values growth much more than it just values plain old revenues. And I got to tell you, NVIDIA's got the growth in space and much higher margins. Oh, and Ford, which I actually think is breaking out, had $177 billion from rivers. Well, Tesla, considered by many to be a tech stock, not an auto stock, had $95 billion in sales, both in the last 12 months. But Tesla's worth $800 billion and Ford's value is $51 billion. If Ford could come up with a electric car that outsells Tesla makes more money per vehicle than, and then replicates that in Germany and China, well, guess what? I think Ford could be a mega-cap too. There's no restriction on that. All these material differences that stepping stones at $1 trillion have been scaled by companies that simply can't stop innovating. Amazon comes up with Amazon web services and Amazon advertising. Meta dreams up reels take on TikTok. Apple's got a monster installed base, which allows it to get the artificial intelligence technology from other companies for free, simply because they went access to all of Apple's customers, Microsoft, as co-pilot and chat GBT alphabet has the staggeringly popular YouTube. NVIDIA now is a whole platform to go with its ships, including software. These companies maintain their status through invention. The question is not why they're so sainted while others get left behind. That's obvious. The question is why other companies aren't doing the same thing saying that Eli Lilly's doing to get in the winter circle, or hey, like NVIDIA, a company that came out of nowhere, but not really. A CEO, Jensen Mom, was working on the concept of these ultra-fast GPUs a decade ago. I think there are so many companies with failures and imagination that they are their own worst enemies. The winners here are colossal thinkers. Much of the S&P would do well to show some similarities to the tech types. Bottom line, it's time to stop cascading a market that works trillion-dollar status through a scam few and start recognizing that companies only reach those heights because they've earned it, and others would be very good to emulate them. Ronda in Kansas, Rhonda. Oh, yeah, Jim. Oh, yeah, Rhonda. What's going on? Jim, spirit, arrow systems, a Boeing supplier. Your perspective, please. Okay. Now, Boeing's buying them with stock. I think that there's a persistent buyer of Boeing in this stock market every single day, and my take is actually, I know this could be a little counter to it, keep it, buy it. Spirit is going higher, I think. Boeing has to buy it, and Boeing saw the worst possible thing happen today, and it's still flying. Eddie in Texas, Eddie. Good evening, Jim. Good evening, Eddie. Major's region performance. Heading into key parenting. If I were a buy. All right, this is one of the toughest questions possible, and the reason why it's so tough is we must see something from C Gen, the old Seattle Gen X, this quarter. If not, the stock's going to go to a six and a half percent, you'll go lower. So this is a make or break quarter, and we're all going to wait for it. I need to go to Tom in my home state of New Jersey, Tom. Mr. Kramer. Yes. Great to talk to you. Listen to you every night. Thank you. I just want to say thank you for all the work you do for all the little guys, and I just wanted to ask you about Disney. I've had it a couple of years, and it just doesn't seem to be going anywhere. No, it doesn't. And no, no, no, Tom, please don't do that. My travel trust has been buying some right here. It sells it only 20 times earnings. It's got box office success. It's got the theme parks. I want to thank you for the kind words, but I'm urging you not to sell Disney, and if anything, I would be inclined to buy some. All right. Companies only reach the trillion dollar status when they've actually earned it. The question is not why they're so sainted while others get left behind. It's why other companies aren't doing things to get them in the winter circle. Failure of imagination, people. Well, I may have money tonight. Many say the market goes all. So our stock questions are offering clues as to what we'll see in November's presidential election. I'm going off the charts find out. Then is the tap running after Constellation Brands, am I in the company after earnings, and giving my key takeaways from the quarter. Plus, I'm giving my take on whether Nike can find his footing in an uncertain market, as promised this morning on Squawk on the Street. So stay at Kramer. Don't miss a second of Mad Money. Follow @chimcramer on X. Have a question? Tweet Kramer #MadMensions. Send them an email to madmoney@cnbc.com or give us a call at 1-800-743-cnbc. Miss something, head to madmoney.cnbc.com. 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Now if this marks experience a more remarkable run during the first half of the year, and we're getting into the period where the presidential election dominates the airways, can the average just keep running? Now going back to 1928, the S&P 500 has rallied 75 percent of the time in election years. That's three out of four, but the average gain is only 7.5 percent. Now this makes things tricky, because the S&P is currently at more than 16 percent year to date, and we're doing one of the most candidly insane elections I've ever seen. High ranking members of the incumbent's party keep urging him to drop out of the race after the horrifying debate performance. Meanwhile, the challengers now are convicted foul enough, although the sentencing selected would be a slap on the wrist. Looking at the polling, it's hard to imagine by getting reelected. Before we know Biden might not even be the Democratic candidate. Maybe we get a contested Democratic convention, like Chicago in 1968. In which case, I hope we get another pick assist, the immortal, the domesticated pig nominated by the youth industrial party, only international party. I'm sorry to get that right. Only presidential candidate to have been confiscated and possibly barbecued by local law enforcement. Now bring this up, because there are major differences between the two parties in economic policy. Those differences won't affect vast flaws in the stock market, right? So is there any way we can define the election results from the action of the market? We all know the market's basically a prediction machine, and it tends to be pretty darn accurate, which is why we need to know what it's saying. And that's why we're going off the charts with the help of Larry Williams, legendary technician, market historian, been the best in the business since I was a teenager. He's written over a dozen books and created a ton of proprietary indicators. We use all the time. Larry's also made some stunning calls for us in the last few years. He nailed the COVID bottom. He nailed the market going bottom late last October. He nailed the pullback and the high-flying tech stocks this brain and the fact that the pullback would come to an end in May. Boom. So what does Williams have to say about the state of the election year, your stock market? Okay, first take a look at the action. This is Dow Jones Industrial Average. It's going back to late last year. The red line shows the Dow's average performance in years when the president was not reelected, okay? Gerald Ford, losing a Jimmy Carter, Carter losing a regular. George H.W. Bush losing a Clinton and Trump losing Biden four years ago. You could say that this incumbent loses average match. The Dow's performance pretty well so far. But Williams says you probably shouldn't read too much going into this picture. See, going back to the '50s, we've had only four election years where the incumbents lost. Tiny sample size. Just not enough to draw much of a conclusion from how, but about the election years where the incumbent won. Okay, so let's get this. Now, here we go. Okay, check out the performance of Dow Jones Industrial Average, paired with how the Dow did on average during years when the president got reelected. Again, the pattern seems to fit the action pretty well until May back, where the connection falls apart. Okay. Although this one has a larger sample size, it's not so much larger in question. Well, Williams actually questions you again, not to take this chart too seriously. However, one thing to note is that the fact that the Dow historically tends to perform pretty well going into August during years when the incumbent wins. Let's think about that. That's why Larry prefers to look at how the markets held up during the averages of all election years, where we have lots of data, regardless of who wins. So here we go. So this time, check out the performance of the Dow, paired with the average performance in every election year since 1968. When the aggregate of all the election data, when you aggregate it, you can see that the Dow tends to soar starting in the first week of August before pulling back over the course of October until the last week where the market starts rallying again into election day. Then after election day, stocks tend to keep running. So when you nearly get this nearly the last 60 years, Williams sees two patterns. First, stocks typically do well in August, which is highly unusual. That's a dreadful month. Outside of election years, August can be really terrible. Second, stocks tend to get hit over the course of October before bottoming roughly a week or two ahead of the election. At which point, they typically go back into rally mode. So we've got buy opportunity and buy opportunity. And then, of course, buy opportunity, but that's already occurred. Again, regardless of who's winning or losing, don't forget the stock market craves searching and accepting some rare situations like 2000. When we had the weight of the Supreme Court, election day gives us certainty. As Williams sees it, these are the two most reliable election year patterns. Let me give you the bottom line. Can the market tell us who's going to win in November? Elections happen so infrequently in this country that the historical patterns don't give us much of a guide to predicting the outcome, especially in a senior year like this one where we're still not entirely sure we really get it, it's going to be. But the charts as interpreted by Larry Williams suggested that the doubt almost always rallies in August. What a takeaway of any given election year, remember, shortly bad month, regardless of who's ahead. And that's exactly the kind of pattern that you can make some money with. Yeah, money's back. Coming up with summer in full swing, who feels like a drink? 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Sometimes the misconceptions in this business are just too great to overcome, and you got to ask yourself if the market can stay wrong longer than you can stay solvent. Take Constellation Brands STZ. On Wednesday, the company reported almost stellar numbers, and yet the stocks still plunge. Drag down by deep-seated misconceptions that can't seem to be put to bed. Constellation is a strange amalgam of Mexican imported beers and fairly high wine and spirits. It's by far the best performer, not a beer, but of all consumer packaged goods companies. That's right, all of them. It's the beer, Medello, Corona, and Pacifica that's driving things here with an 8% increase in sales remarkable. Modello is the number one brand in the United States, which continues to gain share. Medello, especial, grow 11% and get this one. Pacifica, you're the only next, up 21%, while beer sales were roughly in line. Constellation is operating market expanded by the Sanjay and 260 basis points. Wine and spirits declined 7%, but that's tiny compared to the beer business. At this pace, by the way, wine and spirits will be less than 10% of sales. Compared to beer, it's not really even enough to move the needle. In theory, Constellation's growth is so much better than any major carbonated beverage or packaged food business. You could argue that the stock should sell at 300 bucks easy instead of the current $250-speed price target, but it doesn't. Why? Simple. Constellation sells alcohol and Wall Street has given up on alcohol, even if the consumer has it. So despite the company's tremendous 70% earnings with it, the stock couldn't get any trash when it was reported. It was one of the worst performers that day. It has recovered to someone on Friday, but it got rocked again today, though, down 5,000-30% or 2%. I like to think our small trim of Constellation's position for the child will trust last week, but up during a recent week, this didn't play a role in the decline, but I'm real upset. I know sometimes that can happen. Instead, what mattered, though, is that I think Wall Street turned on alcohol in a way that makes the really the great work of CEO Bill Newlands irrelevant. Now, and it's true that Constellation's stock is running or circles around the rest of the industry. It's up 5% year-to-day, while buns down 8% plus the beers above 15% moles and courses less 18%. The weakest part of Constellation's wine and spirits isn't crushing the stock, unlike Diagio, walked 12%, and an incredibly poor performer that is brown form, which has fallen 26%. Thanks to weakness in the once invincible Jack Daniels franchise. In some ways, the relative strength of Constellation is even more impressive than it seems. The annals of the call seemed seemingly wanted to be positive, but were concerned about a potential Trump win. Now that he's floated to 10% tariff from oil imports including beer, they were concerned about how the beer brands were "starved" according to Bonnie Herzog, "a very good annals from Goldman Sachs, a proposition that was handled or treated by Newlands on the call." And there was a question about "beer" sentiment. How it's going out of style on the Wall Street fashion show? Just look at the declines in Molson course with butter, Boston beer. Never mind the Constellation stock is up. It's in part because it keeps introducing winning new products like this Corona Sun Brew, which is a non-alcohol potential block for us. Now Newlands kept coming back to the fact that the brands are beloved with incredible customer loyalty, and that is so tough to refute. So why isn't the stock higher though? How can a company is generating huge free cash flow and is actually expanding? With a greenfield brewery in Veracruz, spiking capital expenditures to 3 billion and yet still has enough money to buy back $200 million worth of shares, not to be the king of consumer package goods. This should be the king only every three years is why it isn't. And I think that when you think about them, I think you really understand what's going on. And the first of course is the GLP-1 weight loss drugs led by Lillie and Novo Norris. They are said to be reducing alcohol sales. Now widespread belief, even though nobody in the business, nobody in this brewing business, no one in the booze business will admit to this. Wall Street thinks it's just a matter of time because people who take the GLP-1's absolutely do not crave alcohol as much as they did before. There have been no studies about this, but the medical profession is well aware that these drugs turn heavy drinkers into light drinkers. And Wall Street assumes it's these drugs will clobber both beer and it's wine and spirits portfolio. Second, while beer is more linked to experiences, then the desire to get hammered. There is a strong belief in Wall Street that the younger generation, particularly between 2126, has sworn off anything that's bad for their health and wellness. My generation grew up believing that light drinking is a benevolent vice and that wine is actually good for you in moderation. But the medical world has long since discredited anything positive about alcohol, which is literally a poison. Finally, most devastating is the increased prevalence of cannabis, with its easy, inexpensive, high without a hangover. You know what you're getting here? You're getting buzz without a hangover. And that is the holy grail of recreation, they tell me. Yet the alcohol industry is in total denial about the competition from legalized weed. Even as Constellation owns a big stake in Can't Be Growth, the most visible cannabis company. As regulations on cannabis loosen naturally, beer sales go down except for constellations. Again, in part because of the loyalty of the fast growing Hispanic community mentioned multiple times in the Comp School. None of this is helped by the endless selling of the SANS family. A hidden detriment to a stock that just won't stop maybe until the buyback expands, which Constellation can't do without jeopardizing. It's criterating. There used to be two classes of stock here, the presiding one of the SANS family and the common stock owned by Mayor Mortals. The company spent $1.5 billion in 2022 to eliminate the class B shares, money that made the company independent and maybe even a possible takeover target, but then the Biden administration strident antitrust policy basically eliminated any hope of Constellation being acquired. Against that, the activists at Elliot Partners agitated for a board seat and a plan to improve performance in 2023. Now get this, it was one that was welcomed by Newland. Smart man, smart move. It was as smart as Constellation's 2018 decision to invest, well, no, it's, I don't want to be too mean. As smart as that was, the decision to invest $4 billion in cannabis maker can't be growth, that was stupid. And that's led to hefty write offices the market never materialized. It's a testament to Constellation's strength that it could absorb such losses with the plumb. Just like when it spent $1 billion buying Dallas point in 2015, only sell from your $41 million, just four years later. I mean, man, this is the classic by high solo company. Newlands was not responsible for either disaster, but he's had to deal with the consequences, which are finally almost behind them, which brings me back to the bleagard state of the stock. If you want to be a great investor, you can't afford to be worn down by shadow boxing against the bears. But when the bears have GOP-1 health and wellness and cannabis behind them, well, it's almost become too much to resist. Now capital expenditures will peak this year as the vehicle is brewery, spending tops out very positive. This will lead to a more aggressive buy back again, very positive, perhaps even enough to absorb the selling for the sales factor. However, the simple truth of how a stock can go down hard on tremendous earnings, albeit in line sales, and no forecast increase just became too much for me as a money manager. No, we're not abandoning the stock for the travel trust. It's too valuable. And there's always the chance that people realize the greatness of this business, as we told members of the CBC investing club. But the bottom line, constellations compelling to listen that you could have the premier factual growth story beat to feed it by the premier challenge to waking. Without waking, ever really being discussed in the conference call, the elephant in the brewery hidden in plain sight. Susan in California, Susan. Hey, Jim, hey, two things want to let you know love your teaching. And I've got my daughter and my grandson into stocks. Thank you very much. Yes, that's what I want. That's how you can get wealthy in this country. I mean that. And that's helped me. I am just into Chipotle, which you have been in love with for years. Of course, of course. What do you see its direction going for the next year, stock-wise? So let me tell you, Susan, it's a great question. I had said that when they did this magnificent, gigantic split, there would be a lot of selling coming from people who say, "You know what? I have too much Chipotle." They did a very effective split. It's got the stock down to 59. We are still handling, still working off that split. I will make no decisions about the stock until I sense that the churn is over and the churn is not over. Now we're going to go to Arthur in New York, Arthur. Boy, Jim Cramer from Pekipsey, New York. Oh, how are you doing? That's where my in-laws are from. Oh, you're kidding me. I love it up there. I love it up there. Now, it's in value. It's beautiful. Now, my question is to do with Amazon. It's long-term prospects considering that years ago, many of the conglomerates had a divest of a lot of different businesses and unable to be profitable carrying all these businesses. Well, Arthur, I've got to tell you, I'm not going to disagree that under a more, even more aggressive FTC and Justice Department of Amazon would have to break up. If it did break up, these businesses are worth so much money that I still would hold the stock for my travel trust. And it's been a major position of mine for about a decade. I'm sticking with it. Thank you for the call. Okay, we are abandoning STZ, Constellation Badger with the Travel Trust. He just did a little, what's that call, a schnitzel. I'm banging on a chance that people will still realize the greatest business before it's been tough, huh? And I'm much more mad about it. I'm taking another earnings deep dive into Nike as I promised you this morning on Squawk in the street. The stock has been swooning after cutting its full-year guidance, but could it lace up a turnaround? How do you like my buns? I'm giving my take. Then the pressure is on for pal ahead of this sit-down with the senate and the house this week, but could he hold a witty hand? I've got a message for the doubters. And of course, all your calls rapid fire in tonight's edition of The Lightning Round. So stay with Kramer. Oh boy, is there any hope for Nike? Can this formerly unassailable sneaker company finally turn things around? Or is it time just to throw in the darned towel? Back on June 27th, the company put a truly dismal quarter in the stock lost 20% of its value the next day. Some would call it a haircut. I call it a beheading. The stock's now at the lowest level since March of 2020. Hey, that was COVID. And it still hasn't been enough to attract value hunters. I mean, just today. Just today, the stock, it felt another 3% fighting new lows. Hands to the question, can Nike still be saved? Is there any real hope here that if there is, I think the stocks could buy down at 73. But it does seem like a hopeless situation. And then we have to admit, if that's true, that Nike's a value trap. Even it has already fallen 59% from its highs in late 2021. This is Nike, one of the great senior growth stocks of all time. So which is it? First, we need to figure out what's going on here. When Nike reported a week and a half ago, the actual quarterly results were fine. Not great, not even good, but fine. Their sales came in week and then expected it down 2% year over year, with key reasons like North America, Europe, Middle East, and Africa struggling to grow. Even though everybody loves to worry about Nike's Chinese business, greater China is actually their only reason with higher than it just paid sales. Even though a company's sales were not so hot, Nike's profitability was terrific. But the company reported a 17% earnings beat off an 84% basis. Do you know that this stock look was going to trade up when this first happened? They had 53% adjusted earnings per share growth, for heaven's sake. Although nearly all that came from cost cuts, including the 2% headcount reduction they announced in February. In the end, it was a mixed quarter from Nike, something you could explain a small sell-off. But definitely not the 20% tumble we saw the next day. House of Bays. The real problem? Okay, so match me gave us a grim full-year forecast, talking about mid-single-digit sales shrinkage when the analysts were looking for 1% update. Even worse for the current quarter, Nike predicted a 16-10% decline in sales, far worse than a 3% hit that Wall Street was expecting. At the same time, management doesn't think they'll have enough cost cuts to bail them out on the earnings front, especially not with everything that they're investing in the upcoming Olympics. Point to you by, yes, NBC commercial. Long story short, the big news here was that Nike's return to sales growth is going to take a lot longer than the bulls had hoped. CEO John Donneau even said the 2025 fiscal year, the one that just got started, would be, and I'm going to quote them, a transition year, which is a phrase that no shareholder ever wants to hear, especially from a company that's already coming off 12 months of flat sales. Transitioning to what? Explaining the door outlook, CFO Matthew Friend cited a laundry list of headwinds, boy was he downbeat, continued weakness for classic footwear franchises, including commerce, which has been doing terribly down 18% last quarter. Lower growth from Nike's digital increased macroeconomic uncertainty, especially greater China, and generally uneven, that's his word, consumer trends, especially in the Europe, Middle East, and Africa. The biggest disappointment? So many of Nike's former strengths seem to have turned into weaknesses. Their company's lifestyle business, wow, this is going to, and a double-digit clip for the past several years, decline last quarter with widespread weakness. Even the ones on a sale, well, Jordan Bram was down. It's also tough to say on Nike Digital. We use one of the company's top growth drivers, doing so poorly down 10%, so they don't see it improving any time soon. And then there's China, which was a key source of growth for years. China's postcode recovery was a key leg for every bull case for the stock. Now, though, that leg has been injured, even as the numbers as I mentioned, did surprise to the very low bar upside. The morning after its earnings report, something's astonishing happened for this incredible growth stock. Nike got hit with six separate downgrades. All of which took the stock from buy to hold, because the company indicated the turnaround will take longer than plan. Many in Wall Street now are wondering if CEO John Donahue is the right man for the job. I mean, Donahue is a tech veteran who previously ran a service now in eBay, did a great job for taking over at Nike in January 2020? Is that a strong enough sports background to be Nike's CEO? I like the guy personally, but he was brought into a tech right, like the direct consumer initiatives that now seem to be fuller, which brings us back to the key question. Is there any hope for Nike going forward? Let's start with this. If you're betting on Nike here, you're betting that the latest quarter was what we call kitchen sink quarter, meaning a quarter of management rips the Band-Aid off and gives investors all the bad news at once. They throw every in the action but the kitchen sink. Given the long list of issues cited by management, that wouldn't surprise me. Maybe Nike's got tired of leaking under performance, drip by drip by drip by drip by drip by drip, and finally decided to just assume the worst when it's coming up with the guidance. If this was a kitchen sink quarter, then the sell could be, yes indeed, a buy-on trip. Because it means the estimates are low and Nike may be able to surprise the upside. Remember, management's rejecting sales down 10% this quarter and down mid-seal digits for the full fiscal year, and those are incredibly low bars. I'll also say this, Nike's stock now sells for less than 23 times forward in any assessments. Even when the economy shut down in March of 2020, it was only traded at 25 times estimates. Cheapest the stock has been since 2017. Of course, the valuation argument only matters if Nike's capable of at least meeting its own estimates. While Nike's missed sales estimates in three of its past four quarters, it's beaten their assessments from 15 to the last 16 quarters, often by wide margin. There's a good reason to feel confidence in the earnings here, even on this struggling sales front. Frankly, I've been down on Nike, as you know, for a very long time now. I have been worried about powerful competition, typically from the hold of that and you know, or on one is one I've been recommending for ages. But now that everyone else hates Nike so much, the expectations have gotten so low, I think you should never underestimate the power of low expectations. Still, I feel a lot better about turning positive on Nike right here, right now. If we had more of a turnaround plan from management, how about some incredible blueprint going forward? Right now, the company seems focused on making things less bad by reducing supply to the marketplace, launching fewer new products. That's just not exciting. It's not a hook. So I want to hear a credible plan from management about how it can get its business growing again. If they can't, I won't give us that, then we need new management. However, that 20% poster on your selloff feels more like a good buying opportunity than a reason to turn negative on the stock to the six analysts who only downgraded it after that hideous guide. So I can say is, I mean, what took you so long? Frankly, even without a well-educated turnaround plan, without a well-articulated, without anything dazzling me, I think the stock can work simply if things turn out to be less terrible than management projected. I mean, maybe the Olympics is a positive catalyst catalyst. Three quarters ago, that's like, let's see what that was all they were talking about. Maybe China turns, maybe back to school season solid and the consumer in the US and Europe stronger than people realize. Maybe none of that happened, so Nike changed its CEO, the market size, that's a positive development. A lot of good things could happen here. So, the bottom line, I know things look bleak for Nike right now, but the expectations have finally gotten low enough that I think the risk more discreet to the upside here. Yes, that's right down here. If you're still one more hammering, today, I'd rather be a buyer than a seller. Their money's back in the brain. Coming up, pop open those umbrellas and tee up your toughest questions. Kramer takes on all comers in the lightning round. Next. And then the lightning round is over. Are you ready, Steve? Dang, down to the lightning round. Let's start with how about Mandy in California? Mandy? Yes, Jim, that's me. I am a first-time caller and also an investing club member. So, first of all, thank you for the vast amount of information with them and experience that you have been sharing with us. You're very kind. Thank you. So, Jim, I saw that a good opportunity for me to be in directly involved in private equity investings to buy a stock like KKR. I couldn't agree with you more. KKR is the foremost. The other one I would recommend is Blackstone. Those are the two I feel most come from recommending. Beyond that, I don't really feel comfortable because I trust these people and know what they're up to. I need to go to Ned in Ohio, Ned. Hello, Professor Kramer. How are you, Ned? How are you today? I am doing very well back for vacation strong and excited. How can I help you? Well, sir, I wanted to talk to you. I looked at the five top steel producers in the United States, starting with New Corps, including Cleveland Place and U.S. Steel and two others. And I noticed that they've underperformed and several of them have lost 30 to 40 percent of their value in the last three or four months. So, with the infrastructure spending catalyst, it's supposedly out there. 45,000 bridges in poor repair and ports, airports, railroads, automobiles, steel should be in demand. It should be, but the fact is, Ned, the problem is, is that the price for different crazy steel is falling. And that's why a new Corps can't seem to find any fitting or a letter X can't find any fitting or you mentioned Cleveland cliffs. And that's the one I want to focus on for a second. That's the one that has the most spring. That could be just a poiled spring down here. However, understand that the price of the commodity, when it falls, people do not buy any steel stocks. Now, I need to go to Mark in Washington, Mark. Yeah, hey, I'm calling you some beautiful ocean shorts, Washington, curious about Hertz, HGZ. Well, I think that you live in a beautiful area and I don't want you to own that stock and then not look, look out the window and think about that stock instead of the beautiful area. Let's go to Carl in California, Carl. Hey, I'm worried about a company. I see a lot of what they sell available on Amazon for less. What do you think about Ferguson? Boy, I see Ferguson stuff everywhere. I think Ferguson's a very, very good company, but you're, if you want HVAC, I mean, people are saying, look, then you got to own a train. You got to, the train is probably unbelievable right here, where you have to own carrier and people don't want to own Ferguson. Those are the two that I recommend and they're really, really well-run. Dave Gittler, the carrier's extraordinary, by the way. Let's go to Jason in New York, Jason. Hey, Jim. First time calling a longtime viewer. Jim, you're the energizer buddy of finance. Thank you. How can we make money together? Okay, I'm interested in oil stock. I want to buy petrol bros. Is that a good investment? Well, I'll tell you, there's a great place called the River Grill. It's near me and they have PBR on behalf and I'm willing to pay any amount for that PBR, but I will pay no amount for PBR, petrol, really, oh, best or any other PBR. No, the answer was not fine, Alan. Let's go to a nice shout out, by the way, to River Grid here. Remember that? He has never gotten a free one either. How about Dave and Massachusetts Dave? Hi, Jim. How are you tonight? Oh, I'm great. Thank you for asking. How are you doing? I'm doing well. Thank you. And thanks for all that you do and for taking my call. Thank you. I was calling. You're welcome. I was calling to get your thoughts on ARLP in general. Well, it's had a very big run. Okay, and I've got to tell you, it is coal-based. I know the yield looks great. I think you're peeking on a coal cycle here. I am not going to get in front of a peak of a coal cycle. Let's go to Bill of Massachusetts, Bill. A big Boston bull year for you, Jimmy Gams. Well, I'm trying to figure out whether by the Celtics, you know, I kind of talked about it in the office. We think about that we're going to cash in our considerable stake in the Eagles, which is represented by my season tickets and by the Celtics. What's going on? Bill? I went on too long about the Celtics. What can I say? But I thought that Scott Watner had a doing good show today. Well, let's have not come on. Let's go one more. Let's go to Jerry in Missouri. Please, Jerry. Hey, Jim. Welcome. Taking my call. Oh, of course. Let's go on. Jim, recently he suggested that one of the world's chief of stock starts with Chinese. You still like it and do you see any catalysts that will cause Alibaba to rally? Alibaba is the chief of stock in the world, I believe, one growth and also on its breakdown value. Dave Tepper, one of the greatest investors I know believes this too. I think he doesn't have to hold it right here. I'm not being aggressive, but you have to hold it. And that lane jumps the conclusion of the lightning round. The lightning round is sponsored by Charles Schwab. Coming up, is Jay Powell close to achieving the unthinkable? Why the fed chief is well equipped for a stroll down Capitol Hill. Stick with Kramer. Jay Powell may have a winning hand after all. The federal reserve chief is on the firing line tomorrow. When he goes in front of a sound panel, and then on Wednesday when he heads to the house, and I think he's in good shape, even if our elected leaders disagree. Remember, this is a man who raised the fed funds rate 11 times, many of those double or triple rate hikes, taking the key rate from near zero to his current range up between five and a quarter and 5.5. It's the highest level in nearly 20 years. Now, usually that'd be terrible for the economy, right? But we have seen a number of batteries, or traumatic layoffs, or massive spike in bad loans. No! How about none of it? Instead, we've got a generous number of jobs that still need to be filled. Last Friday, non-informed payrolls increased by 206,000 positions. Average hourly earnings moved up 0.3% for the previous month, and up 3.9% from a year ago. Workers are still getting raises, but it's slower paces. Where's all those bankruptcy? At the same time, the unemployment rate climbed to 4.1%, which may give the fed actual coverage to start cutting raises as soon as September. Especially because last month's uptick in employment came mostly from government and health care, which accounted for 70,000 and 49,000 jobs respectively. Social assistance contributed to 34,000. These are not economically sensitive areas, people. There's nothing that they can do about the government jobs. No amount of rate hikes will put much of a dent in health care spent either. So, if we have a tame consumer price index number on Thursday, it seems like a good bet that Powell can talk about having room to cut rates. Although that might be too fraught for him to speculate about his impact during his testimony, too early. If Powell can pull this one off, though, he may do the unthinkable, giving us the fabled, some would say mythical, soft landing. If you go back to when the tiny cycle started in 2022, there were so many dollars for every part of Powell's agenda. This sort of inflation, especially wage inflation, not to mention the supply chain problems courtesy of COVID. I usually try not to spend too much time wasting talking about the fed. Yes, wasting time about the fed, although often it's unavoidable. I prefer to talk about stocks, and I want to point out that millions and millions of people have been hiding in high yielding cash of winning a stock market that could have made them fortunes if only they hadn't been scared away from the asset class by all the predictions of an inevitable hard landing. Nearly all the experts argued that a soft landing was impossible. They thought Powell would need to absolutely wreck the economy in order to contain inflation. They frightened everyone. Looks like they were wrong. So I want to call out all those people endlessly doubted Powell. They doubted him when COVID struck, and he took rates down quickly to what could have been a severe recession. Sure, he misjudged the risk of inflation, but when he realized his mistake, he went in hard to take rates up again. The only actual mistake he actually made was dealing with rampant housing inflation with a median U.S. home price up almost 30% since the end of 2019. That's too high. The rate hikes raised the mortgage rates, but they didn't stop the buyers because so many had so much cash. At the same time, higher rates made the housing shortage worse, because existing homeowners don't want to sell their properties to buy new ones as that would mean trading ultra low rate mortgages for high rate mortgages. Meanwhile, the home voters don't want to put up new homes, but when they see mortgage rates going higher, because they worry about being stuck with excess inventory. But housing is a real no-win situation for the Fed. Still, if that's the sole defeat for the Fed and the emotional period, knowing that if a different president gets selected, Powell must likely not be kept, I say, we salute this man. Yes, he may finally have a winning hand, but then again, he created that hand. I like to say this has always been working so much, but just for you right here, man. Money, I'm Jim 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 Bunny disclaimer, please visit CNBC.com/MadBunnyDisclaimer. Vitamin Water is from New York. We needed a drink that can keep up with the music seen in the city. We got to see our favorite DJ perform in Brooklyn. At 3 a.m. or St. karaoke in the village. Also at 3 a.m. Drink Vitamin Water is from New York.