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Jim Cramer (1:39)
Hey, I'm Kramer. Welcome to MAV Money. Welcome to Kramer. I'll be with my friends. I'm just trying to make a little bit of money here. My job is not just to entertain, but I'm trying to teach. Little education. Call me 1-874th B CBC, tweet, Mew Mcramer. We have three economies right now. Not one, not two, but three. Two of those are booming, although one shouldn't be, and the third one is hurting badly and it needs help right now. Of course when you look at the averages with The Dow dipping 1.2 points today, the SB gaining point 5%, the Nasdaq jumping 1.12%, you can't see it because all three groups are mixed together. That's why tonight I'm going to break them down for you. The first and the most exciting is everything connected to artificial intelligence in the data center. We are constantly being told this is a bubble, an accident waiting to happen. Ever since the launch of Chat CBT in late 2022, the data center's build out has been responsible for 75% of the S&P 500 returns, 80% of its earnings growth, 90% of capital spending growth. Thank you Michael Semblis, Chairman and Market of market and investment strategy for JP Morgan, Asset and wealth management for that, for calculating those for us. The Bears want to throw freezing cold water on the whole air complex. Which is why they constantly compare to the end of the dot com era. I hate that analog. The heavy hitters in this business think Metta, Alphabet, Amazon, Dell, Micron, amd, Microsoft, Qualcomm, Oracle and of course Nvidia all have incredibly deep pockets. Open air is a little more opaque. But they've had no trouble raising money. Oracle might be overspending on data centers. I would argue it definitely is. But worst case, they can sell some stock and offer a whole lot of corporate bonds. And remember they have a tremendous track record. All of these companies have been criticized for spending money like drunken sailors. There's a cottage industry of bears who spent the last couple of years urge you couple of years urging you to short these stocks, not just sell the short sell especially the biggest short of all in video. And they never stop. Even though they've been wrong every step of the way. I question how they stayed in business. I've been saying you either believe in the fourth industrial revolution as described by Nvidia CEO Jensen Huang, or you don't. The Bears don't believe it. Could they be right? Of course. But I've been telling people to just buy in video since I named my dog after the company when the stock was just under $4 and now it's 189 bucks. So far it's paid much more to be a believer. That goes double on a day like today when Micron rallied nearly 6%, Dell gained 9% and AMD jumped over 11% on data center orders and accelerating growth rates. Those are like takeovers. As for the comparison with dotcom collapse, most of the companies that went under back then had no earnings and little revenue. And a lot of them were dishonest. Their stocks traded on page views. Nearly everyone involved with the data center story makes real money. There's no real basis for comparison. I know that because I ran money in the year 2000. My hedge fund finished the year up 36%. Why? Because we shorted everything in sight. We knew that these companies were going lower. So I can tell you the stocks look nothing like those. I know one when I see one. Those had no earnings, very little sales and bad balance sheets. The second economy, that's the so called real economy which is kind of not so hot. We lack economic data because of federal furloughs. But the reliable Carlyle Group just put out a survey showing that hiring has really slowed down. We know from street research that freight has just gotten softer. A great indicator of the future. FedEx. Quite a downgrade. Housing has slowed as mortgage applications have gotten weak even as interest rates have come down. Retail sales are not great, especially if they're related to housing, and much are. Industrial numbers are slowing. Autos seem like they're about to roll over along with used cars. Travel and leisure finally seems to be slowing. Now of course the pockets of strength in real economy. Banks are still lending and have surprisingly solid credit numbers. Small and medium sized businesses are doing well. Another surprise. But all sorts of big companies are struggling. Even the one safe consumer packaged good stocks that seem to dominate the new low list. More on that later. Then there's a third economy. It's the speculative economy. This actually looks like the end of the dot com era. And I do hope that this economy runs out of steam for it drags down the entire market. The bears love to invoke the year 2000 to condemn the AI stocks, but like I explained earlier, the stocks have very little in common with the hundreds of dot coms that got wiped out back then. Instead it's the speculative stocks that remind me of the dot com era. A group of companies with no earnings to speak up that need to raise money to stay afloat. Now we see these in nuclear power crypto or quantum computing stocks. These have all been bid up furiously by retail investors. Stocks like OCLO or Rigetti Computing. I think they're too high. That's the fault of retail though. I fear we're at the cusp of some gigantic equity offerings for some some kinds of these companies. We got one on Monday from an also ran quantum company called Quantum Computing and another one today from Joby Aviation, the flying car company. It offered 30.5 million shares of new stock at 16.85 per share. It closed up from the deal 17.37, but way down from the nearly $19 price of yesterday's close. That's brutal and very 2000ish. These speculative companies will all need institutional money. But because their stocks were no real volume, thanks to retail buyers, the big institutions won't want to touch them unless they're offered a big discounts. And even then don't count on them to hang on to their stock for long. They'll be banging them out, making a couple of making a buck here and buck there. I think that the speculative part of the economy needs to run out of gas. It needs to burn off the fraud. I wish the bears would Just go after these names instead of constantly harking on Nvidia now amd I mean, come on. Sure, there's gold up on a spike of calamitous buying. I'm the wrong guy to say it's a red flag though, as I've been a gold bug for decades and to me it's finally going to where it has to go. Scarcity of gold, abundance of federal debt say it all. Stick around. We're going to hear from Agniqual, my favorite gold miner, later in the show. Show putting it all together. The first economy is the fourth industrial revolution. And while there might be periodic overbuilds, previous industrial revolutions tended to burn out only when there was too much debt layered on. That's what happened to the railroads in the 19th century. People started laying track everywhere using borrowed money. Most these companies went under. That's when you need to start worrying. But the hyperscalers, except for Oracle, have so much cash, there's nothing to be concerned about at this point. The second economy, the real economy, needs multiple rate cuts definitely to save it because employment may be running one empty for all we know. Third economy, other than Palantir, which actually has earnings but is incredibly overvalued, although I think it could still go higher. This speculative cohort has to be stopped before its froth overwhelms everything else. I want the Bears to direct their wrath and ire on these stocks, not the companies of great balance sheets and very long term records of track tracks of success that seem to be ignored entirely. Here's the bottom line. If these speculative stocks that are the real bubbles, not the AI place yet, you never know. If you listen to the Bears, they conflate them all. As I say in how to make money in any market, these people aren't there to help you anyway, so please stop taking them so darn seriously. Let's go to Josh of Vermont, please. Josh.