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Fidelity Representative (0:00)
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Jim Cramer (1:55)
Hey, I'm Kramer. Welcome to Mad Money. Welcome to Kramer. I got to my friends hey look, I'm just trying to make you a little bit of money. My job is not just entertain, but to put in context. So call me at 1-873CBC. Tweet me at you. Kramer. Performance is not in the eye of the beholder and it's pretty easy to see that some formerly unstoppable stocks have momentarily lost some of their mojo. So on a day where The Dow soared 646 points, S&P advanced point to 1%. But the Nasdaq, where much of tech dwells, declined point to a point. 2 6, let's take a hard look at what should be done with beloved stocks that have been stalled. Stocks like Apple, Matter and Tesla, all of which are up about 10% for the year, let's start with what's happened is happening with the actual stock market. Today, for example, was a very logical day. Yesterday the Fed cuts rates. Today money managers rotated into stocks that will benefit from rate cuts. Makes Sense, right. Rational. Even if they had to sell other things to raise money. Things like tech. Sell, sell, sell. First, lower rates spur consumer spending. So naturally the conspicuous consumer stocks are up nicely. Starting with the totally discretional cruise line. Discretionary cruise lines. Does that mean more people necessarily called Norwegian Cruise today to book a cruise? No, but if they were thinking of booking a cruise on credit, that just got cheaper. And a lot of what happens with stocks is theoretically based hard for you at home, trust me. Second, lower rates spur homebuilding and home buying and they spur home improvement, which can be financed by a home equity loan. There's a second day business after a rate cut. So predictably, Home Depot was really on the move again. Even as I'm sure nothing extraordinary is going to happen there with a quarter point cut. Still, we own it for the charitable trust. I'm going to talk about it in tomorrow's club meeting. But long story short, I think the despot works here. Even if ice, the immigration police get keep prowling their parking lots looking for people to deport and that has hurt the stock. I know Home Depot has been doing poorly. Okay, I totally get that. What matters is management just told us that they do better if rates came down and then rates came down. Don't out think it, trust them. I do. More broadly, retailers work when the Fed cuts. Always have, always will. Here I'm thinking of companies like tjx which underperformed today. Wal Mart, even Target, which could roar if it can demonstrate any sort of turnaround. Depot kills two birds with one stone. The dollar stores, if they have good numbers, will get higher price earnings multiples. Those are really flying. Industrials always work in response to a rate cut because every hedge fund has been schooled to believe that these stocks go higher when the economy improves. We saw that yesterday with many of the industrials and again today. Second one, second day. What I saw go up, I saw 3M go up. Dupont and Dover. The the latter two in the Chabel Trust which you can follow along by joining the CBC Investing club and get in on tomorrow's strategy session slash club meeting. These kinds of stocks can all work for a couple more days. They have the wind at their back now. I love the transports which are clearly breaking out here. I mentioned JB Hunt yesterday. It just started. It's going higher. Transports tend to run at least five days after a Fed rate cut. Not too late here. I by the way, reiterate that this could be the breakout quarter for Federal Express, FedEx. Not too late for the companies that make Aircraft or aircraft parts either. Check them out. For ages, banks have been valued on their net interest income, meaning how much they make on the difference between what they pay for your deposits and what they charge you for your loans. Now you have to switch direction and think which banks will lend more as there's going to be plenty of demand. And that's a much better way to bank stocks. That's why I like Wells Fargo. Now that this asset cop is cap has been lifted and Capital One because it bought discovered is about to rival the big other credit card companies. They're up on a spike, both of them. Maybe you got to wait a bit. But I got to tell you something, you want to own them now? Especially I would tell you if JP Morgan were back where it was the other day. Remember I said to buy the stock because they had that meeting and sent the stock down. Stock was. It went down to 2, 300, 317. I mean enough already. Finally, because we have a president who thinks that rates are still way too high and he'll appoint Jay Powell's replacement who takes over next May. We don't even need to play the guessing game about how many more cuts we're going to get. Although people constantly do it and it does drive me crazy because it makes you no money. I say go to Kalshee. What matters is that the lower rates go, the more people will seek income from higher yielding stocks because the bond market just won't be as competitive. I spent a great deal of time and how to make money in any market discussing these kinds of stocks. But the best ones right now are the nat Gas pipeline operators are all in the book, almost all of which have higher yielding. They're much higher yielding in Treasuries. Now let's get back to those three formerly magnificent stocks that only rallied about 10% this year. Apple Matter and Tesla. Apple's not really impacted by lower rates. It has an immense cash position, probably earn less on its cash. It's considered an a loser. Even though I think their installed base of over 2.3 billion devices and 1.5 billion users means one of these big chat bots will pay them a fortune to be the default platform. Just like Google did with Search. The long knives are always out for Apple. But if we all think that the hyperscalers are spending too much money on data centers, a continual big theme today about Oracle, then how the heck can we chide Apple for not doing much at all of spending on Data centers? If OpenAI were to pay Apple $25 billion a year to be its default AI choice. It might be the greatest free rider case in history. If Gemini were to do it today, with today's Alphabet stock already red hot, that would go up another 50 points. All that said, Apple simply is not a beneficiary of lower rates. And when you're within a day of a rate cut, it's not the kind of stock money managers have any interest in. Apple's a momentary yawner and underperformer as people sell Apple to move into these industrials and these banks. The other stocks I talk about like maybe the retailers, that's just what's happened. It's happened no matter what. There's no way to relate matter to rates either. It simply doesn't matter to the company. The stock is listless because it's become a one day story. The day it reported sorts. I could argue that a Fed cut actually hurts better because it calls attention away from what might be happening at the company, which is very quiet but very good I think the world of this company. And we hear that they're raising prices for their, their products. They should, they're too cheap. But it doesn't matter unless Mark Zuckerberg comes on to tell the story right here. Finally, Tesla's transitioning from auto company to tech company. From a company that's getting its head handed to it in sales to a company that's a nascent leader in robots and self driving cars and in energy storage. The auto business benefits from a rate cut, but Tesla no longer trades like an auto stock. Everything else is totally unrelated to the Fed. It doesn't work. No wind at the back of any of these. Worse, when you get bad news from big company like today, a tech company like Oracle. Oracle obviously seems to be promising more data center construction than its balance sheet can handle. If your data centers are built, that's bad for Nvidia and the entire cohort. There's nothing from the Fed that helps any of these stories. And right now money, money managers only want to want rate cut beneficiaries and not else. So everything trades down in tech makes. Well, listen to me. I wish that there were more to it than this. I wish I could tell you that there was something good happening with the winners or something bad happening with the losers. But it isn't. It just happens to be the stock market bottom line. You're ultimately just looking at fund flows. The more trading oriented hedge funds are doing what I just described. How do I know this? I plead guilty. I was one for 14 years and I did this exactly periodically, though. You know what I did? I get fed up with what everyone was doing. I try to deviate, drifting from the hedge fund playbook, the bottom line. You know what happened? I got pancake pretty much every time. It doesn't work. When you freelance, when you want to be a pirate, when you want to listen to the beat of a different drummer. Hedge funds are like pack animals. When they move at once like they did today, it's very costly to try to go against them and buy a lot of tech. I know. I have the tire tracks my back to prove it. Robert in New York. Robert.