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Jim Cramer (1:39)
Hey, I'm Kramer. Welcome to Mad Money. Welcome to Kramerica. My friends, I'm just trying to save a little money. My job is not just to entertain, but to teach. Explain days like today. So call me 1-800-743, CNBC or tweet meyim Kramer. We've been very dismissive of this government shutdown on Wall Street. You know why? Because we've been through so many of them. They usually mean nothing to the stock market. Well, it turns out this one is different. The government's now been closed for 37 days with no sign whatsoever the two parties even trying to reach an agreement. It's taking too darn long. At this point, it doesn't feel like a distraction anymore. In fact, when you look at today's selling with The Dow sinking 399 points, S&P losing 1.12% and the Nasdaq coming 1.90%.
Jason Robbins (2:26)
The House of Pain.
Jim Cramer (2:27)
I put a lot of these losses on the shutdown, if only because we haven't been getting economic data from the government so nobody knows what the heck is really happening. And when you get that, it starts to freeze decision making, freeze the system. Now we do have some pieces of information, but they aren't good. There's an employment service called. It's called Challenger, Gray and Christmas which puts out a monthly report on job cuts. It's authoritative. It's called the Challenger Report. Here's the headline, quote, job cuts surpass 1 million. Highest October total since 2003 companies cite cost cutting AI in October. Holy cow. That crystallizes pretty much everything nasty. What else? There are two payroll processors, the ones that cut checks, ADP and paychecks along with a software company helps manage employment, paycom. Here are their hideous charts. These three charts, well, let me just say they tell you the entire story of this economy better than any numbers that come out of commerce or labor. Who the heck wants to hire people in this environment? Certainly not me. Others obviously agree or these charts wouldn't be in the charnel house. In the end, the government shutdown starting to hit home as we learned today that the FAA is reducing air traffic by 10% at four different airport, 40 different airports. Things have been slowing for weeks, but travel held up pretty well. Was a bastion. That's probably too now we've been able to skate past the bear for the past few weeks. I don't think it's possible anymore. There's just too many negative headlines, including some that are impairing what I have called the year of magical investing. For this I have to go to a tremendous picture from a report called Eye on the Market by Michael Semples, chairman of market and investment strategy for J.P. morgan Asset Management. And permit me a good friend that predicted what's happening almost to a T. Shamblaz had a vision back in September that we were about to be engulfed by what he called the data center blob. I've been in sync with Semblance. You never want to go against the best strategist on Wall street that the data center theme was beginning to get out of control. The bill is so humongous that it's had a major impact on the economy. And until recently, that was pretty darn positive. But today it felt like now the bob's become increasingly menacing with incredible expansion of an outfit that's not public. It's called OpenAI. It's a company that wants to use AI to take over the Internet. They've made so many partnerships that they're on the hook for a fortune. Open is committed to building hundreds of billions of dollars of data centers using Oracle as a partner. OpenAI remains extremely confident that they'll have enough money to build this stuff out. They're privately held. We don't know what their finances look like, so who knows. But I mean, maybe they can raise hundreds of billions of dollars. They decide to go public. That'd be terrific. While there's some skepticism about Open Air, they've been so confident that most investors haven't feared the data center blah and their partner Oracle needs to borrow a ton of money too. They've already raised $18 billion in debt to build out what they can, and Wall Street's concerned about that amount just because the insurance in the bonds Oracle sold has become very costly. Thank you David Faber for that story. They may need 20 times what they've already raised to uphold their end of the Blob. Still, the opportunity so big that Wall street generally accepted Open Air ability to pull all this off and welcomed it until last night when Sarah Fryer, the well known CFO of OpenAI, mentioned that the government could backstop the company and its data center build up if needed, it seemed offhanded. But as she quickly clarified that the company doesn't need any kind of bailout, it doesn't matter. Her reputation is so pristine that it's hard to walk back the term backstop though. Why did she say she didn't mean it somehow she's not a cavalier person. Given that this government has backstop intel when it got in trouble, and given that we've been suddenly been saying to ourselves that perhaps OpenAI has gotten too big to fail, it's hard to dismiss the backstop possibility out of hand, even if she hadn't mentioned it now. The CEO Sam Altman talked today, but how? He expects Open Air to end this year, about $20 billion revenue run rate going to hundreds of billions by 2030. Sounds promising. Also mention of $1.4 trillion in commitments, but it's over the next eight years. That's okay. Open Air wants to be able to sell computing power like the incredibly lucrative Amazon web services. I like that. Again, I want to be sure that OpenAI is in terrific shape. But is it too late to contain the Blob? That's all anyone's really talking about. That is, you know, it's called a lot. Now we know that. As is so often the case, JP Morgan's Michael Semblance was pretty prescient here. The Blob is growing too quickly. So when Fair Sarah Fryer made that backstop comment, it sobered us and made the whole market worry about the possibility that OpenAI may not be able to afford its ambitious plans. It either has to scale back, which is bad for every partner and every company in the data center food chain or it may need government help, which is just awful for everything. Now I think this market could actually handle the pressure of OpenAI because the other companies involved, the data center build out are all rich, solvent and I think prudent, even as we're growing tired of how much money they're spending. But the comments from Fryer could not have come at a worse time for all of the publicly traded stocks in the space as they've been roaring for weeks. And now they ran into the proverbial buzz saw. Just this Monday, Palantir, the revere but richly value consulting company, reported a picture perfect quarter, yet its stock went down anyway. That's a warning sign for any market. At the same time, the White House decided to block the largest company on earth, Nvidia, from selling its most sophisticated semiconductors to China. I know China isn't in the numbers, but some were disappointed. Kudding me, I can't blame anyone for selling. We didn't. Palantir and Video are the faces of this bull market though, and now they've been defaced. Today we had a host of stocks that would have been unchanged or going higher even if you weren't. This funk Robin is a good example. Reported this very morning. Quarter looked darn good. Market didn't care for it at all. You know what? I'd actually say the same thing about Doordash, which is spending a lot of money to become more dominant. People hated the quarter. That's become the norm since Palantir reported on Monday. It's like a switch has been flipped and if the stock's highly valued like Palantir or Robinhood, then there's nothing it can do to satisfy Wall street right now. So let's put it all together. The regular economy is being crushed by the government shutdown and by worries about destroying jobs while causing higher energy energy prices. The data centered economy may need some help from the government, which may or may not be forthcoming. And the high fliers, the speculatives, they're descending all too rapidly. That's the Bears melody. It's playing right now, though it may not be playing in a few days or might get louder. But the bottom line, what matters is we need the darn government to go back to work and we need the data center blob to be cordoned off in the rest of the economy and we need some of the hottest stocks to continue to cool off further. Until then, we are indeed at the mercy of the headlines. And lately the darn negative headlines are the only ones that anyone's paying attention to. Hey, let's go to Bill, Massachusetts. Hey, Bill. Hi, Jim.