Transcript
A (0:00)
Homes.com knows that when it comes to home shopping, it's never just about the house or condo, it's about the home. And what makes a home is more than just the house or property, it's the location and neighborhood. If you have kids, it's also schools, nearby, parks and transportation options. That's why homes.com goes above and beyond to bring home shoppers the in depth information they need to find the right home. And when I say in depth, I'm talking deep. Each listing features comprehensive information about the neighborhood, complete with a video guide. They also have details about local schools with test scores, state rankings and student to teacher ratio. They even have an agent directory with the sales history of each agent. So when it comes to finding a home, not just a house, this is everything you need to know, all in one place. Homes.com, we've done your homework. This episode is brought to you by Schwab Market Update, an original podcast from Charles Schwab. Join host Keith Lansford for this information packed daily market Preview delivered in 10 minutes or less, including projected stock updates, monetary policy decisions and key results and statistics that may impact your trading. Download the latest episode and subscribe@schwab.com Market Update podcast or find Schwab Market Update wherever you get your podcasts.
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Hey, I'm Kramer. Welcome to Mad Money. Welcome to Kramerica. If you want friends. Hey, I'm just trying to make a little bit of money here. My job is not just to entertain, but to explain. So call me at 100-743-CNBC. Tweet me Jim Cramer. You never want to see what's happening right now in the stock market. You see the market's developing a thesis and it's not the thesis you and I were hoping for. You can't really spot it in the overall average as Dow slipping 42 points, SB losing 0.53% by the Nasdaq, tumbling 1%. But underneath, it's there and it's not good. What am I talking about? Simple. The wrong stocks are going higher. Let me explain. In a good market, you want a broad rally led by growth stocks with the cyclicals taking a backseat but still going higher. It's just time. For example, it's okay if the Magnificent seven rally, by the way, also with their adjacencies and accoutrements, it would help it if the Bed Dragon software stocks could move higher too. They've been awful techs. A used percent of the SB500. It makes for a tremendous leader. I also like to see the transports rally because they represent the health of the economy. Most of all, I like to see the bank stocks go higher. When the banks are winning, it tells you businesses are expanding, need loans, companies are coming public to raise capital. We have mergers and acquisitions galore. And individuals are taking out loans, maybe to buy houses, maybe to renovate. At the same time, I don't mind when high growth stocks like Eli lilly with its GOP Dash 1 diabetes and weight loss drugs keep moving higher. That's very positive. What I just described is the jovial bull market we had most of last year. Today, though, we saw something very different. This was a market where the winners were consumer packaged, good stocks and the oils, the worst possible leadership. The consumer package, good place are recession stocks. The oils are zero sum. That's the kind of relationship we have in the rest of the economy. At the same time, the banks are in favor of free fall whether they missed earnings that were just reported or not. I'm going to have more on that group later. Problematic, but let's just say the market's reaction to these numbers was just plain miserable. We'll go into the reality of bank earnings, but there's a clear perception created by the bankers that if the President puts a cap on credit card rates like he says must occur and he's going to make happen, the entire economy will be trash. I don't disagree with him. If you cap credit card rates at 10% and people, most people simply won't qualify for credit cards, the default rate for these things is 3 to 5%. It's just not worth the risk for the banks to give you an unsecured loan. If they can't charge extortionate interest rates, if, well, you spend some time out paying them and not paying them back immediately. The only people who qualify for credit cards are the ones who don't need the money. And that is a recipe for economic disaster. Sell, sell, sell, sell, sell, sell, sell. Now, I don't think something like the Capitol really happened. You needed Congress to make the law. And if Trump tries to browbeat the banks into losing money, they probably won't roll over. But it's still a risk and it's not something shareholders want to worry about. And of course, it's not just bad for the banks, really bad for retail and traveling, a host of other discretionary products. I think that today's market reflects Trump's persistence on this issue. He's not going away. You'd think capping credit card rates would be more of an Elizabeth Warren Senator, Massachusetts Kind of thing. She thinks, by the way, that all the bankers are like Potter and it's a wonderful life. It's a surprise to see this coming from a Republican. But then again, when it comes to credit card business, I imagine most politicians think that Tony Soprano had more reasonable rates. So again, I think this policy is unlikely. But the fact that people are seriously discussing it enough to scare investors away, right? I think it's. I think it's driving money out of the banks and a whole lot of other sectors. We also live in a points economy. Now the banks don't make much of anything on points but the retailers in any of the myriad outlets outfits that offer them would see their businesses take a severe ugly hit. It would be a nightmare. It would be like Saks all over again every bunch of other places. So no credit for tens of millions and no points either. I don't know, that seems scary to me. The presidents always talk about booming economy but if you tamper the credit card market, I got to tell you're ensuring that the economy goes bust. And that's why I'm so dismayed to see that what we call the CPG is the consumer packaged goods stocks running today because that's exactly what you buy if you think the banks will more or less withdraw from the credit card market to cope with a very damaging policy. So let's talk about Procter and Gamble and then let's talk about a pharma company, jj. Now here are two companies that have products that you buy no matter what you need. Toothpaste and medicine. Regardless of how the economy's doing, JJ can thrive in a weak economy. If you look at the chart of the recent action, you might think it's found some. Maybe the fountain of youth JJ deserves to be going higher, but not at this speed, not at this pace. It's only rallying like this because a lot of money managers want to bet on a slowdown. They are passing on Eli Lilly now because it has a much higher price journeys multiple and those kinds of stocks are too risky to buy. Proctors, a different kettle of fish. They've already told us the business isn't that hot and they have lots of problems. So be prepared for the worst because they told you the worst is coming, they might exceed that. Yet it's stock went up big today. That's because even if it's bad, Procter and Gamble is still going to do fine versus the cyclical stocks which are going to get crushed. When you see this one rallying on bad number, it's a real tell that things could go south. We bought Proctor for the Travel Trust totally just as a hedge, hoping that we don't get a weaker economy on a day like today. It's coming in very handy. Maybe you should have a hedge too. Normally I'd say that this minor cord might just last a little while. Couple days until we put the bank, credit, credit card assault to bed. Or we get more great home sales numbers that we had this very morning. I'd assume this sell off was just temporary. Unfortunately, there's another wrinkle. Oil looks like it's headed higher even if it finished the day in the red because the President's $50 barrel plan is suddenly going the wrong way thanks to the newfound uncertainty out of Iran. And the facts on the ground, Venezuela. You take out Venezuela's leaders and oil goes lower. You take out Iran's rulers and you better believe it goes higher. The result, the real leaders in this market are Exxon and Chevron. Both have tremendous CEOs, both have long historic records, and both represent the very problematic leadership. We don't want the type that keeps you and me up at night. And not just because my wife Lisa just had her knee replaced and there's no sleep to be had without Oxy. And I am not talking about Occidental Petroleum. Lisa's no sissy though, and she wouldn't take the oxy anyway. The problem with the oils is that energy costs are attacks on the entire system. So when this group wins, it means everybody else is losing the bottom line. We have to hope that these two new leadership groups aren't long lasting. I don't think they will be. You also need to have some hedges, some proctor, some jj. Hey, listen, I'll throw in Colt Gleat and Merck if you want to. Just something that keeps you in the game until things get better. You know why? Because they always do. Hey, I want to go to Brett in California to start. Brett.