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 6/6/24
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They also have details about local schools with test scores, state rankings and student to teacher ratio. They even have an agent directory with a sales history of each agent. So when it comes to finding a home, not just a house, this is everything you need to know all in one place. Homes.com we've done your homework. My mission is simple to make you money. I'm here to level the playing field for all investors. There's always a home 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 hope you want my friends. I'm just trying to make you a little money. My job is not necessarily in pain but to educate and to teach. So call me at 1-800-743-CBC Tweet me, Jim Kramer. After a day where the market was pretty much on hold in anticipation of tomorrow's all important, non-farm payroll report, down gaining 79 points, S&P edging, down 0.2%. That's a client point on 9%. We need to talk about the difference between the haves and the have-nots in this country. We've seen a series of earnings reports from a whole universe of retailers and they're truly just concerning because while everyone's feeling the pinch of inflation, the have-nots are feeling a heck of a lot more than the have's. This must be talked about because the incredible implications has for your portfolio and what happens next in the stock market. Like I've told you before, we can't just call up the consumer as so many people do. It's so lacking in rigor. You can't say that the consumer's weaker than the consumer's strong, even if that's what a retail CEO might tell you. See, most retailers, they don't know about the consumer. They know about their own consumer, their own customer, which is why the people who run these different chains can have such wildly different views on the situation. I want to start with five below. That's the fine chain that's filled with totally cheap, totally discretionary goods. Discretionary meaning Wall Street talk for, you don't need it. This fine-filled-off economy has been growing like a very profitable week, but now it is indeed hit a wall. Five below is still putting up stores like Mad, which I think, by the way, is mistaken to figure out exactly what's going on with their existing locations. Last night, five below reported a quarter that went over like a lead balloon. I mean, it was truly a terrible number, very weak, same-floor sales. Now look, the force analysts to slash their estimates, and that's why the stock tumbled 10.6% today. Well, what's wrong? All right, I want you to listen to this from CEO Joel Anderson, because it is quite sobering, and he's quite smart. "This quarter solidified that consumers are feeling the impact of multiple years of inflation across many key categories, such as food, fuel, and rent, and are therefore more deliberate with their discretion." And then he goes on to say, "The slowdown we experienced was across all geographies, further suggesting there was a broader macro impact," and quote, and I was devastated with that, but he's not alone. Yesterday, we heard something similar from Rick Drelli. Now, he is the CEO of Dollar Tree, 16,000 stores. He explained quote, "This was the first discretionary comp decline we've seen at Dollar Tree since the first quarter of 2020 at the outset of the pandemic. Dollar Tree's quarter one comp came in below expectations, because Easter was especially challenging for us this year." Easter? Easter, is it? Yes, Easter is a major driver of this discretionary demand during this period. Apparently, it's ten times more important to Dollar Tree than it is to other retailers. How bad was it this time? In Joe's words, and I quote, "Recent consumer research showed that Easter gatherings were down 20% this year, and that 6 million fewer American households purchased Easter products in 2024." That's not good. It's not good at all. Now, there's just one problem with this analysis. There's a whole other cohort of consumers in this country that probably didn't even realize that Easter was tough for a huge part of our country. That cohort includes the 74.5 million households with a Costco membership. It's only 60 bucks for the basic card, because these people can save a huge amount on groceries and discretionary goods. Costco carries this one-hundred products in bulk, which allows them to drive a hard bargain with their suppliers. This company just beats them up. Clobbersom, if they don't play ball, hey, they can always leave, or yes, Costco can set up a premium brand called the Kirkland Signature, which goes directly against their product. I almost exclusively buy Kirkland by myself, because in my opinion, it's almost always better, albeit less expensive, and I like the big size as it comes in. But now, let's think about who Costco is, right? What is their consumer? Well, their consumer first needs a car to go to most of these stores, and everybody can, of course, got out of reach for millions of people during the pandemic, and they haven't come down much. Second, you've got to have the 60 bucks up front to be a member, which for many people is a meaningful up front expense. Third, you need a house or an apartment big enough to fit all of Costco's bulk merchandise. This stuff is so huge. You don't have anywhere, look, if you don't have a big enough place, you can't go to Costco. In short, it's not just the wealthier consumers have more money. They also have more opportunities to benefit from companies that are willing to fight against inflation like Costco. And look, I'm not just talking about the legendary $50 hot dog. I'm talking about aisle after aisle series. Now, it's possible that they have nots can go to Walmart, which is certainly a good bargain. Now, if they've rolled back 7,000 items, you're a viewer, that's fantastic, but it doesn't take prices back to where they were in 2019. About the only places that offer those kinds of deals are the off price chains, TJX, Ali's. These companies get their merchandise from cash strapped retailers that need to unload inventory so they can thrive when the rest of the industry struggles. I love my Ollies. I bought a ton of books there for under a buck each because they've been water damage. So what? They're in less readable. We're seeing this divide play out in all sorts of venues. We just don't talk about it. We don't want to see it, maybe. Big Mac Fry's diet, Coke combo too expensive, let them make it at home. Possible from Olive Garden too expensive, go to Chile's Texas Roadhouse for something cheaper. Hey, that's, by the way, that big smash burger for under 11 bucks. Now, that is for real. And by the way, it includes fries in soda, unlimited soda, actually, but not unlimited chips in salsa too. It can be cheaper than McDonald's. Now just like the Easter retail divide, there's a considerable number of people in this country who are somewhat struggling. Then there are others who've been able to cash in on the stock market, which we know has been bountiful. Get a huge amount of interest on their savings, which cushions the hip from inflation because the rates are so high, they can afford the real estate gigantic percentage by homes with cash for, I'm saying, they can keep rent up because they ain't have enough to pay up. Cars not a problem, yet, shelter and cars are the major, major parts of the inflation issue that faces the Fed. I think the billionaires that come on our air was one yesterday, wringing their hands about the problems with commercial real estate are truly insensitive to what's going on with regular people who will never be able to get a job in one of their properties. Every day we hear from strategies to go for several rate cuts because they want stocks higher. I want higher stock prices too, but if we get multiple rate cuts and inflation comes to our back, it's the have nots will get hurt, the ones who had to skip out on Easter this year. That's why the stakes are so high for tomorrow, that's why the stakes are so high for the Fed. It can't afford to cut rates until there are more people out of work, but at the same time, it doesn't want to cause mass layoffs, difficult position. Works of the Fed cares about the people who can't take advantage of Costco, the ones who are struggling to keep their cars so they can go to work. These people have already moved back to their parents' homes. The Gulf is wide. But let me tell you, the wealthy investor who doesn't know enough about the Gulf, well that person we disappointed tomorrow if the employer imports too strong because it means no rate cuts. But it also means that people can still find jobs, they just need to be protected from inflation. So let me give you the bottom line of a very complex story that directly hurts your portfolio if it goes wrong. Wall Street may be rooting for a weaker job market so the Fed can start cutting rates, but keep in mind what you're betting against when you throw up your hands in anger tomorrow at a sub 4% unemployment rate. Jay Powell isn't worried about those of us with big portfolios. He's worried about the tens of millions of people with almost nothing in the bank. Sorry, you come second and all I ask is you'd be ready to take that backseat if the employment number is hot because slang inflation, not promoting jobs, remains Powell's most important mission and at this point, his most important legacy. Let's go to James and New York, James. I'm feeling a little chill right now, definitely. What's going on with you? I just want to give a shout out to my beautiful fiance Debra. Debra's fine. I love Debra. I love Debra. I'm not that close. I want to honor, remember, the greatest generation who shared Normandy Beach, who stole Normandy Beach 80 years ago today, they protected our freedom. I love that story. Absolutely. Absolutely. I'm glad you bring that up. Thank you so much. Thank you. I've been following you for 20 years. Excuse me, my voice is gone. No problem. And your wisdom and teaching has been amazing. The best advice I ever got from you was don't sell your winners, sell your losers. Yes, is it so hard? Is it so hard to hold on to Apple and Nvidia? No, no, no. I want to hold on to Bauch Health. I mean, come on. It saved me so much money over the years, you know. Thank you. Thank you for saying. I just feel good stuff. Was it Denise? Who was the one I was supposed to get in the shout out? The first. I'm sorry? The way the initial shout out, I'm joining the shout out. What's going on? Debra. Debra. I'm shouting out Debra. Debra. Debra, my fiance, she's beautiful. She's gorgeous. Okay. Hey, it's on the inside partner. You're chill master. We got here. I got a company that's a market cap, a hundred ninety three billion. I got net cash balance sheet, three hundred sixty seven billion for P nine and a half. Price to sales one and a half price to book one point three, ados community, forty seven by zero sales. All right. Okay. You know. Let me know this. No, I don't know what it is. There's a lot of companies. Come on. You get a convertible for a convertible price one on six, chill master, chill master. Ali Baba, unlike the video, Ali Baba is the only Chinese stock I like. But remember, you're in the cross hairs of the government there that something we have to engage the government. I'm not saying against that, but Ali Baba is incredibly cheap. My friend, Dave Tepper, I'm actually proud to call my friend who wants to panthers. He and I both think this is the cheapest stock in the universe. But if the government doesn't want it to appreciate, well, then it just won't let it. And thank you, Deborah. Thank you to all the nice things you said, the gym master, thanks you. And I like, and your voice, you may be working on that during your day job. All right. Listen to me. This street might be rooting for a weaker job market so the Fed can start cutting rates. But keep in mind what you're betting against if unemployment stays below four percent. Everybody tonight, if you'll tell this first ever investor today, what does the company have planned to help it produce into the future? I'm sitting down with the man in the driver's seat on the tail of today's event. Then Campbell's earnings costs the tape yesterday. I got to see how pressure off the import to get a better read on what the numbers are really saying. And later, I'm checking on Chub after investor legend Warren Buffett announced he bought 6% of this company. If you want to know how to get a better read on this company, then you're going to get a better read on it. And if you want to get a better read on this company, then you're going to get a better read on it. And if you want to get a better read on it, then you're going to get a better read on it. And if you want to get a better read on it, then you're going to get a better read on it. And if you want to get a better read on it, then you're going to get a better read on it. 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And if you want to get a better read on it, then you're going to get a better read on it. And if you want to get a better read on it, then you're going to get a better read on it. And if you want to get a better read on it, then you're going to get a better read on it. And if you want to get a better read on it, then you're going to get a better read on it. And if you want to get a better read on it, then you're going to get a better read on it. There's not like a great turnaround story, is there? A little over a year ago, Lyft, then the struggling ride share company that's how I identified it. Boyd and David Risher is its new CEO. And he's made enormous strides both in improving the platform and bolstering profitability. That said, a lot of this was low-hanging fruit and many investors still wonder if there was a reason to own Lyft for the long run rather than just stick them with Uber. Today, though, Lyft told its first-ever investor day here in New York City, they told a pretty darn bullish story with some impressive long-term financial targets. The projection that bookings can rise at 15 percent compound annual growth rate through the next three and a half years. Hey, by the way, throw in margin improvement that could lead to some juicy profits down the road. Lyft shares initially jumped in response to these targets and we're up more than 11 percent at the highs of the day. Then they gave up most of these gains, ending up the day less than 1 percent, hey, that sounds like an opportunity. Let's check them with David Risher. If you had a better read on the comeback story, Mr. Risher, welcome back to M.Buddie. So good to be here, Jim. Okay, 15 months, 15 months, and what a change, a series of changes. Everything from faster ETA's lower prime time conversion, these are all going in your direction. They are. Well, we're actually driving them in the right direction. That's what's really happening. It's not just happening. No, it's not. We wake up every morning and say, "How can we do better for our riders and drivers?" And that's the magic. If you do well by them, the company does well. Okay, my first question was actually, how do you divide the time? Because if you get happy drivers a lot, there's a very virtuous circle, and that almost starts with the drivers before you get to the customers. You know what? It really goes like this. It goes like this. So for example, we have more drivers now on the platform than we've had in the company's history. Driver hours is an all-time high. So that's interesting, right? Because also low unemployment rate, that says they're liking what they're seeing. They've got a lot of other options. And you're absolutely right. When that happens, pick up times, get faster, pricing gets good, riders take it, and then rides, we get rides. And so that drives more drivers onto the platform. So as long as we can keep doing this, and I think we can do it for a long, long time, we've got a great business. Well, you also have things that you come up with things, like this commuter lock in. I thought that was brilliant. Thank you. Tell me. This is like, by some as the woman driver, this is a commuter lock, and this makes a ton of sense. Yeah. So the way we think about it is the first thing you've got to do is you've got to get the foundational stuff, right? Right. You can really start to innovate on top of that. You mentioned Women Plus Connect. We love it. So the women riders and drivers, we have a 70% earnings guarantee for drivers. They love it. That's fantastic as well. And then the newest thing, which are just in the early days of rolling out, is a price lock that allows you for the same trip, every single, you know, the daily commute sort of thing, but you don't like the price moving around. This allows you to pay a simple fee, probably about three bucks. We're still testing it out, $2.99, and the price will be locked in for a month for the segment. And it'll be easier for you to commute. Fantastic. Thank you. So I'm going to talk about it two months ago with my wife, and I said, "Look, this got the steel. They're going to be right there." And she goes, "No, they can't do that. Let's just use Uber." I said, "No, look at this research." She goes, "Don't worry. It doesn't happen." Intruth, not like does it happen, but how many times have you really missed the one time? Very rarely. I actually took it the other day. I'm so pleased. So I know all the stats. You know, we get millions of rides. I think we're down to like one and a half. So what do you're talking about? Just to be clear, for everyone who knows who doesn't fall, it's like you do, which I appreciate. If we are more than 10 minutes late for a scheduled ride to the airport, we will literally pay you 100 bucks. So to be clear, we don't want to pay you 100 bucks. We want to pick you up on time so that you can get to the airport on time. Last I checked, I think we were down to 1.5% remediation rate, basically. But this is all about what we call operational excellence, just doing it so well that as soon as you finish that ride, you're like, "Of course I'm going to." Your wife is finally going to take lift by default. Right. Well, that's what's going to happen. Yeah. That's what's going to happen. They've seen you. Growth partnerships. They make a ton of sense. Yeah. Lift media platform. Yeah. With the tablet, make ton of sense. Profitable. Tell me how it's going. Sure. So a couple of different things you just mentioned. I think that the lift media business is really interesting and one that a lot of people don't know about because we're still early in the process. Look, every single day, brands want to talk to their customers in new ways. We've got performance brands, big brands, Chase is a brand, a huge company, NBC Universal. We've been working with them. Delta. There are millions of skime out, you know, passionate skime out users. They can actually earn points on the lift platform. So little by little, what we're trying to do is to create integrated partnerships that allow these third parties to talk in new ways to their customers to create a bigger experience. Okay. Now, is it time to start thinking international? So. Beyond Canada. Yeah. Well, so let's talk about Canada for a second. Okay. Because even six months ago, we were barely focused on Canada. Over the last six months, we have really started to focus on it, bring that customer obsession, bring that operational excellence. Our share in the Toronto area, for example, just to start has doubled, literally doubled over the last six months. So what does that tell you? It tells you that this in customer obsessed approach, maybe it can work outside of the US. Certainly it can work in Canada. Maybe someday. It's not our near-term focus, and we didn't actually bake into our plan, but it gives us a lot of confidence. Now, do you have any surveys that tell you who was using, say, 90% Uber, who's down to 60% versus Lyft, 40 Lyft, 60 Uber? How is that in terms of trying to -- what's the trend line there? I mean, so because -- what we can tell you is, because we've grown quarter after quarter, this is now the fifth straight quarter in a row, you know, we're clearly doing something right. And that's my whole thing. I mean, I understand you bring up the other guys. I forget who their name is, honestly. I think you just said it. I don't remember. Yeah, yeah, yeah, yeah. But what I think about is-- I appreciate what you're talking about. Yeah, me too. But I don't so much think about competing against them. I compete against the 160 billion rides that people are taking in their own cars every year. And here's an even bigger thing, I compete against staying in a -- but we want to compete against your couch someday. Right. I don't want you staying home I want you out and about, as we were talking about before. That's where all the magic happened. That's the real competition. Right. Now, how about magic world economists? Just out there, not something you need to think about yet, just being able to use these as these machines. Yeah. As I know that Jensen Mom wants to quote them, the machines. Right. Yeah. They are machines, mechanical drivers, right? Yeah. Look, they are going to come on to the platform someday. Here's what's going to happen. Right now, if you're in San Francisco, you see them around. That's still pretty niche compared to -- you know, we do 2 million rides a day. That's a pretty big number compared to what they're doing. But at the same time, over time, we think we're going to be able to welcome them onto our platform and it's going to expand the pie for everybody. I'll tell you what, sometimes drivers look at me and they say, you know what, I don't worry about those things. By the time they get to be big, I'm going to be long gone, I'm going to be doing something else. And it's going to end up being a hybrid model of some drivers and some autonomous cars. But I think we're talking to years. And then finally, for this analyst day, what the team has already feeling is 15 months. I mean, when you came in, there were a lot of people who doubted you. There were. Including, frankly, I think some people at the company, we've gone through a rough, rough time. Look, this has been so great. And I would say this to -- I'm a new CEO, right? So what do I really know? But I can tell you that bringing the team together, having them work through this thing together, having us figuring out our long-term targets, how we're going to work together to kind of get up all on stage and pass the mic back and forth, silly things to big things, so clarifying. And it just unleashes so much energy from your team. I'm giving advice, I'd say, you know, do -- schedule one for six months for now, just to get your team focused on it. I think that's absolutely right. And you've done a remarkable job. And we'll talk next time about what it's like to teach a whole continent to read versus run. Okay? How about that? There it goes. And stay up with us all for just a really exciting analyst day. Very easy to understand, deck, lots of pages, but not a lot of words, my buddy's back after the break. There you go. Thank you, man. Coming up, an earning speed and a dip in the red, is this icon under a snack attack? Stick with Kramer. The market doesn't joke around, so why would you? Get serious. Choose tasty trade. Tasty trade gives you the tools you need to make smarter moves. Dig into data with advanced charting, track profit accurately with order chain trackers, see risk clearly with curve analysis, and trade with low-cap commissions, stocks, options, futures, and more. All-on-one platform. No wonder serious traders choose tasty trade. Join the club, genius. Tea trading is a registered broker dealer and member of FINRA and SIPC. What do we do with the recession-proof packaged food stocks? Now, there are more and more signs of a slowdown. Sometimes it feels like Wall Street doesn't know what to do. It's sort of the case with Campbell's soup. That's the house of iconic brands. You know them, goldfish, pepperage, farms, centers of Hanover, Prego, and many others. Yesterday morning, this company reported a modest top and bottom line beat, but they also cut their full-year organic sales to grow the forecast and lowered their full-year adjusted earnings per share outlook, claiming a "discerning consumer," particularly at lower levels. At the same time, management had some positive commentary about the integration of newly-acquired Sovo's brands, which gave them that great Rayo's positive sauce among other brands. In response, stocks down only about 1.3% of the past two days. Hey, I think that's less than what you'll get to the typical guidance cut, because it really wasn't a typical guidance cut. So where do we go from here? Let's dig deep with Mark Klaus, the president and CEO of Campbell's soup learned more about his order and what comes next. Mr. Klaus, welcome back to bit money. Great to be back with you, Jim. Okay, so first, we got to get one thing really straight, Mark. Wall Street is so interested in just having cut forecasts, raised forecasts, beat forecasts. It was actually a far more nuanced story you told. I thought what you basically said, "Look, things are good, got to be sure that snacking keeps up. If not, maybe we don't do as well." And it got reflected as you think your forecast is going lower. That was not the case, was it? Not really. I'm going to tell you, Jim, there's a lot to like in the third quarter for Campbell's. There were three, I think, very important proof points that investors have been looking for that we were able to deliver in the quarter. The first is we want to continue to see sequential improvement in the business and having it fueled by volume as pricing comes down as a tool, we want to see those volumes coming back. And in this particular quarter, we saw sequential improvement from Q2, actually stable volumes overall, and an improvement in our meals and beverages business, which was really a question that I think a lot of investors had. I think the second thing we needed to do in the quarter was show real progress on the margin side and show the earnings growth that we had projected for the back half of the year. And we saw that in Q3, double digit growth on profit, double digit growth on EPS, both very much in line and to some degree even ahead of expectations. And then finally and arguably perhaps the most important in the quarter was how is the integration of Sovo's going? And I've done quite a few acquisitions over the years, and I have to say that really across the board, this integration is growing fantastic. The business grew 27% in the quarter. We were neutral on EPS. How many times have you seen a big scale integration that had no dilution in the first quarter of the business? And when you put it together with cables on a pro forma basis, the total company would have grown collectively 2% and our meals and beverage division would have been up 5%. Right. That's the story. That's the story of over some very big numbers. And that is the top. Well, I wish you all got bogged down in one line, okay, that you said the stack business is now facing some short term pressure, especially among the lower middle income consumers. Look, I think you tell, maybe it's your military background, I don't know. You tell it so as it is that I've got sidetracked. I was focused on this billion dollar source category, which makes a ton of sense because source is easy. And suddenly I said, well, wait a second, maybe it's lance. I don't know. I'm a little worried here. You got us more worried than you should have. Yeah, I, you know, here's the reality. So snacking, first of all, let's set a little bit of context, right? Throughout this whole journey that has been filled with really almost unprecedented levels of inflation, the snacks businesses level of resilience has been astounded. Right. On a three year basis, we have grown that business at an 8% payer. Right. I mean, well above historical levels for food, but even above historical levels for snacking. But in particular, in this quarter, we were lapping a 12% growth from a year ago. Now in fairness, the business was off 2% on top line for the quarter. That was a bit more than we had expected as we saw the recovery curve a little bit more, moving it a little bit faster way. But when I think about the role of snacking and I think about what we have now built in this transform portfolio, right, 50% of the business is snacks. I see no structural problem. I expect this to be outsized growth. And now we've added the best growth story in all the food with silvos. And that changes the trajectory of our meals and beverage business, or even though I remain extremely bullish on soup, but even if you're not, it's now less than a quarter of the businesses. We've added this very, very high growth silvos and raised business. Okay. But all right. So that I asked some people why they like New Zealand, like yogurt, you're yogurt, everybody loves it in the, in the quarters, obviously doing really well. Somehow that becomes non-core and has to go. I can see other businesses you have that are, that are less core than that one. And why do you decide that something so good has to go? Yeah. So it's a great, it's a great business. So don't get me wrong at all, right? Nusa is a brand and the unique and the differentiation of the product is extraordinary. Yogurt and the temperature class of yogurt, the route to market, all of that is non-core to Campbell's. And look, if you look at the history of our company, I think one thing that we've learned a tough lesson on is making sure that we understand where our real strengths are. And as much as I love that brand, relative to what our core is and what we're really good at, you know, Nusa is a great brand, not like we're going to give it away. We're going to make sure that this is a really good option if we choose to go that route. But in the end, yogurt is part of the Campbell's business, it's just not core to where our strengths are going to be. Right. That makes sense, I know, because delivery matters and putting it on the truck matters, that's what it's about. It does. Okay, so now, in my hands, I have a Jason Kelsey, number 62 chunky, and I have Rayo's, okay? Which is more popular in Philadelphia? The Kelsey or the Rayo's? Oh man. I don't think you could be Jason Kelsey in Philadelphia right now, and look, he's been a terrific, terrific partner of ours, SS Travis as well this year. And look, Chunky Soup continues to be, you know, this brand that defies logic when you think about the world we're in today and just how popular that brand has been, how well it's done with younger consumers. And again, as we look forward, I continue to see Soup playing an extremely important role. One of the areas you've talked a lot about is GLP1, drugs, and how will that change how consumers eat, you know, and certain companies have announced products that are more specific to it. Here's what I can tell you we've learned, right? I don't see it in our numbers as a big factor today, but what we have learned is how do consumers eat as they're taking these drugs. And one of the main elements of it is this combination of easy to digest, but traditionally dense, ready tasting. There could not be a better category than Soup, as it relates to how consumers do involve some of their eating habits when they're on this drug. Well, there we go. We finally have some food guy who's willing to say what it may impact. Thank you very much for all of your direction, congratulations on Rayo's. Don't be so hard on yourself. That's more classy. President's CEO of Campbell's, by the way, about a 3.5% yield, not chubby. This is what you buy in a slowdown. Get money's back after the break. Coming up, the latest jewel in Warren Buffett's crown. Can this stock insure a bull market for your portfolio? Stay tuned. Right now we have a raging bull market insurance. So you don't hear much about it, because talking about insurance sometimes it puts people to sleep. But between strong pricing power and high interest rates, which a lot of insurance companies get a better return when they invest your premiums, the whole group is on fire. Take Chub Limited, the diversified insurance provider, that's best known for its big time property and casually insurance franchise, but there are many others. Here's this stock that's up almost 38% over the past year, yet even after this move, it still sells for just 12 times this year's earnings estimate? That's mystifying. Plus last month, Chub got a major vote of confidence when we learned that this stock was the mystery position that Warren Buffett's Berkshire Hathaway has been teasing about for the best couple corners. Now the current price seems ridiculous. So should you join Buffett with the position in Chub, let's take a closer look at Evan Greenberg. He's the Chairman CEO of Chub, and for my money, one of the strongest executives in the insurance industry, and of course he's also my insurer, Mr. Greenberg, welcome back to being a money. Jim, it's good to be with you. Well, I've got to tell you, you hit it out of the park again and again, but there's nothing like Warren Buffett giving you an endorsement. And of course he has Geico, which isn't as big as your company, but is still huge. So what's it like? What was it like to know that the mystery buyers buy you? You know, first of all, I know Warren and I have, I have an amazing regard for his capabilities. He may be the world's greatest investor of his time, and what a builder, what he has accomplished speaks for itself, and that he would, and he knows insurance, over 40% of his business's insurance, and that he would choose to invest in Chub and become a significant long-term shareholder is so gratifying and such a vote of confidence, we're honored. Now, I would also have to believe like Occidental, he can continue to buy, doesn't have to tell you, he's allowed to buy all he wants. Well, that's exactly right, and it would be better if he isn't telling me, because that's a disposable event. Absolutely. Now, I want to talk about your business. This is a Halcyon time to be in your business. That doesn't necessarily mean everybody makes a lot of money, and what I want in that, and I want potential investors, investors to know, you know how to underwrite. You know how to do it profitably. It's very clear from all your materials, not everybody does. What's the difference between someone who knows how to write, who knows how to price, and the people who are just out of the lake? We're in the risk business, and in the risk business, it's about how you structure risk. First, how you conceptualize and understand it. Then, can you structure it and price it properly? And if you can do that, then you can assume it. The art and science of that is where they call underwriting. That is the soul of who we are. Every company that is successful, the well-head of success, is first of all to know, who are you, and what is the purpose for which you exist. Ours is to underwrite and to assume risk. And by the way, you assume it when you can be paid properly on a risk-adjusted basis for taking the risk, and if you can't, you shrink. You walk away, very few. Everyone will say, "Oh yes, I walk away when it isn't priced or structured right," but very few are willing to pay that price and shrink. We've proven that over 20 years. In any business where we fundamentally can't achieve the right return, we will walk away. I think you can do that. One of the reasons why is because there's a perception in this country that I think now is true. When I was calling out my father said, "Listen, one day maybe you'll be wealthy enough to be insured by Chubb." This is a 70-year continuum where people still say that. How did it happen that Chubb is the one that we always say, "Pays. They pay," versus the others where they say, "I hope you get paid." You know, Chubb, let's just start with what is the company. We're a global insurer where 60% of our business is in the U.S., 40% is outside the United States. Our two biggest regions are North America and Asia. To me, the two regions of the world with the greatest potential for growth over the next 15 or 20 years, all industries, economically speaking, in a broad sense. In the United States, we're the largest commercial insurer, a business of all sizes. We're the largest insurer of agriculture. We're the largest insurer, and this is what you mean and know us for, of affluent people. We dominate in that business. It is the wellhead of our brand, and it's known for the quality of the product, the richness of the coverage and the service we provide. The halo that business has provided has really been a halo across our businesses, and it speaks to our ethos and our culture. It's not about simply the letter of the policy, it's about the spirit of the coverage we sell and to provide the spirit of that, a claim time, and an engineering time to our customers. That's why I am perfectly willing to pay because I know it's premium. It's the same reason that I want a premium broker for my capital, but what I understand, right now CPI, I keep saying insurance is something that's intractable that goes up. Look, if you're well off, you should pay, your stuff is increased in value, you better pay. But why do you think insurance in general has gone up so much? Loss costs, yes, we've come off of a period of 20 years, just think of it generally, of low inflation, low inflation, everything, and negative rates, negative real rates. We've been in a period of general inflation, and then there's inflation that's particular to insurance. So general inflation would be wages, would be supplies, parts and labor, all the rest. But what's particular to insurance, climate change, on one hand, climate change has created tremendous volatility, and it continues to evolve, and the concentrations of values in areas where the climate, the impact of the climate is greatest, continues to increase. Number two, litigation costs. Litigation in the United States is now two and a half percent of GDP. The litigation industry is just that, a money-making industry, i.e. the trial bar, and they're very well organized. And now you have litigation funding to has fuel on top of that, and they constantly perfect new theories of liability, and who pays for it? Corporate America, and in turn the consumer and the taxpayer. But litigation expense ensures we don't have the printing press. We intermediate money, we don't produce money, and so therefore reflecting loss costs when you think general inflation, when you think climate change, when you think litigation, that is driving the pricing of insurance. And for those who disagree with that, you've got to read a shareholder letter and you'll understand why it's a tax on you, okay, before you make a political judgment, it's a tax on you. When it's in China, you have written passionately about the need to engage, it's also a tremendous opportunity for CHUB. You're a leader in this country, in business, with our relations with China. Give me the state of play and how you feel things could go right or wrong, and what we can do about it. You know, right now we have what I'll say is tactical stability. Both countries need the stability in the relationship. The US-China relationship and the rivalry and the competition between the two, colors all geopolitical events today. It is the one constant around the world. And you said it. Two great powers, the two largest economies in the world, both nuclear armed, each wants to pursue its own vision of greatness, its own prosperity, its own sense of greatness for its people, we have to find a way to coexist. And it's only going to happen, that coexistence, where we can, because think if it isn't coexistence, then it's the opposite of coexistence. And that's why, again. One of us doesn't exist. That's why it means engagement. I want everyone to read this, move my view about how we should put China because it's rational. The most rational shareholder letter I have ever read and very convincing. I want to thank Evan Greenberg, Chairman, CEO of Chub Limited and Chub Group. Thank you so much. Jim, thank you. Thanks for having me. Yeah, I'm going to go right now. Coming up, hit us with your best shot and electrified, fast fire, lightning round is next. It is time, it's over the light round, congrats, we're wrapped up. What was everyone we said in this talk, we thought about ourselves, but we didn't play this out. And then the lightning round is over. Are you ready, ski, dad? It's over the light round. Kramer's the most over with William and Massachusetts. William! Boo, boo, yeah, Jim Kramer. Excellent. How can I help you, William? Jim, about last summer. On the club member, last summer, you can discuss on the show about vertical things and you gave me the green light and I'm very happy. I want to get you more. What do you think? Okay, so here's the deal with Virtum as well with everybody else involved in the data center. People decide, you know what, Justin's going to crack down in Nvidia and therefore this whole data center business is going to go bad. That's a one day reaction, it's wrong, buy more Virtum, this is down nine, I think the stock's terrific. Let's go to Dave in Illinois, Dave! Dr. Kramer, my mad vegetable gardening friend, anything new in your 36th garden season? I will tell you that the stream beans came up yesterday and they look real good. I'm not kidding, that's a very near term report. Let's go to work. Jim, I know it's Thursday but I want to talk to you about Monday. This $11 billion software applications company specializes in workflow and sales management. It has outperformed the S&P so far this year. Jim, your thoughts on MNDY? MNDY is really good, it's just a good throw and hub spot, I'll give Dave a two for this Dave deserves that. I will tell you that Enterprise Storefer had kind of a resurgence today, a bit of bear market was led by Salesforce but Monday's a very good come to you, you got a good cold air. Luana and New Mexico, Luana! Yes, Kramer, thank you. With AI driving the market, I heard getting into the nuclear power sector as a smart buy at SMR, New Scale Power Corp, what you thought? It's a very good company but we've got to be very aware that the nuclear power industry is many, many years before we'll see anything coming from that company and it's going to lose money for a very long time and need to know that because a lot of people are very hopeful about new coming back and I think it's still too early. Let's go to Michael in New York, Michael! Good evening, Jim. Good evening, Michael. Good evening, Michael. Good evening, Michael. Long Island. Hey, how you doing, Michael? I'm good. Thank you. I've been a club member for about three years, my wife and I watch your show every night. Thank you. I'm calling about a very successful cybersecurity stock that's had a great run but it seems to have stalled over the past couple of months. It's had its one-year resistance level and the middle of it's relative to strength and next. Okay. I'm talking about Palo Alto Networks, hand W. Alright, Palo Alto Networks, well, I'll tell you, it's been a tough time. See because CrowdStrike is doing better than Palo Alto. CrowdStrike didn't miss cash and CrowdStrike's never missed and Palo Alto's had three straight quarters now where I'm worried so I think they're right and all I can tell you is I am concerned. Alright, let's leave it at that. And that ladies and gentlemen's conclusion of the lightning round. The lightning round is sponsored by Charles Schwab. As we watch Nvidia go from two trillion market cap a few months ago to three trillion yesterday, I figured it was only a matter of time before the Biden administration's antitrust regulators went to work investigating the company for anti-competitive behavior. Turn off, we heard late last night federal regulators have reached a deal that allows them to proceed with antitrust investigations into the dominant roles that Microsoft, Open AI, and Nvidia play in the artificial intelligence industry, thank you New York Times. The trust department will go after Nvidia, the FTC will handle Microsoft and Open AI terrific. Ready to hear that antitrust and the FTC are on the case, but it protects us from any company with massive market capitalization even if it hasn't done anything wrong. It's been a long time since I studied antitrust and Harvard Law to the greatest antitrust scholar of all time, Phil Loretta, and I actually took the class seriously but it or not. But I can tell you that antitrust doctrine has been stood on its head by these two agencies. We want the government to promote fair competition and prevent monopolies that could harm consumers, harm you, businesses. We want innovation, we want competition. We want what's a good deal for the people of the United States, but that's not the doctrine of the Biden administration, at least not that I see it, to me the doctrine is pretty clear. If it's big, it's bad. Whether it's Apple with its app store dominance or Google with its online advertising dominance or Amazon with its retail dominance to approximate their terminology, you know that there's this overwhelming sense of punitive action simply because these companies have achieved trust tremendous success. Now Nvidia joins that club of Prius because it may have too much control over AI. I say that's what happens when you invent the chips that make AI possible. Let me put my cards on the table. For the longest time our country dominated just two industries, soft drinks and movies and that was it. Periodically we might develop a drug that people might think, "Oh gee America did something." But for the most part, I think when you grew up in my era, America felt like a pitiful helpless giant that the rest of the world was running circles around. Then Apple and Microsoft came along, followed by Amazon, Alphabet and Nvidia. All of these tech companies are part of what I call the scrum. Great businesses going out of each other to see who is the best in the world. These days America leads in everything tech, not just in carbonated water and syrup and movies. Plus in each case these making tech companies have done their best to straddle the line between making the product superior and still getting a healthy return on capital. I phrase it like that because Nvidia is charging a fortune for black well chips. I get that. That's the latest version they have, but it also spent billions designing and manufacturing them, they deserve to help, they deserve some return on that. I know greatness doesn't fit into these lawyers thinking, but if we dig down and we find amazing levels of customer satisfaction and even wonderment, I don't want to be too simplistic. But Apple looks to be in trouble. Why? Because it makes the best phone in the world with the best ecosystem. Amazon has been targeting because of superior prices and customer service. Nvidia is in the crosshairs because it's been fortunate developing a product that most people never even thought about with old chat GPT. It's changing the world. Google, it's supposed to dominate online advertising according to Justice, but geez look at what trade test is done. Factor that in. This is crazy. I say enough with the jack boots. Enough with going after the biggest businesses simply because they're big, even when they're the best at what they do and they are the envy of the entire world. It's not like they're ripping off their customers. Listen to Nvidia's customers. They're all thrilled. It's simply that they have no competition because their products and services are so superior. I don't think it should be punished for that. If that didn't, it should be rewarded. If we let the regulators punish companies like Nvidia for innovating, our country won't be able to maintain its dominance and tech for very long. In the end, we need to go back to a simpler doctrine. Was there a rapacious, malleplistic behavior that destroyed competition and hurt the consumer? If not, then just let them keep helping us keep prices down and make our country stronger than it could ever possibly be without them. I like to say, there's always more markets on my prom. I'm starting to find out just for you right here on Mid Money. I'm Jim Kramer. See you tomorrow. 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. (upbeat music)