Mad Money w/ Jim Cramer 12/19/24

Summary

Mad Money w/ Jim Cramer – Episode Summary (12/19/24)

Host: Jim Cramer
Release Date: December 20, 2024
Podcast: Mad Money w/ Jim Cramer, CNBC

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1. Federal Reserve and Interest Rate Policies

Jim Cramer opens the episode by delving into recent Federal Reserve actions, particularly focusing on Chairman Jay Powell's decision to cut rates by 25 basis points.

• Jim Cramer [02:15]: “Powell's been very true to his word, which is integral to maintaining his integrity and the integrity of the institution.”

Cramer praises Powell's credibility but points out a recent setback due to unexpected rate cuts that weren't backed by sufficient economic data. He emphasizes the importance of the Fed being data-driven and warns against making forecasts that cannot be met.

• Jim Cramer [04:50]: “If you make a prediction, you better beat it or else your stock's going to get clobbered.”

He discusses the market's negative reaction to Powell's rate cuts and the subsequent spike in the VIX, indicating increased market volatility and fear.

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2. Semiconductor Industry Analysis

Cramer analyzes the semiconductor sector, highlighting disparities between companies based on their forecasting and performance.

• Jim Cramer [06:20]: “Maybe that's why I like him so much. He never encourages you to get all boiled up about a stock.”

He contrasts Micron's stock plunge with the robust performance of Broadcom and Marvell Technology, attributing their success to more conservative and realistic growth predictions.

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3. Interview with Sean Connell, CEO of Conagra Brands

Cramer interviews Sean Connell to discuss Conagra's recent performance and strategic decisions amidst persistent inflation challenges.

• Sean Connell [15:23]: “We continue to prioritize having a strong business with consumers and keeping the momentum on the top line.”

Connell explains Conagra's focus on growth vectors—frozen foods and snacks—while maintaining a staple products segment for steady cash flow. Despite cutting earnings forecasts due to inflationary pressures, Connell remains optimistic about long-term growth.

• Jim Cramer [16:37]: “Your stocks have such high price earnings at multiples. Why?"

Connell responds by detailing the strategic investments that have allowed Conagra to maintain or grow market share in key segments, reinforcing the company's resilience in a challenging environment.

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4. Consumer Behavior Insights

Cramer shares his analysis of evolving consumer behaviors, categorizing consumers into two distinct groups: bargain seekers and those seeking premium value.

• Jim Cramer [30:58]: “If you're willing to pay up for quality but you're still somewhat cost conscious, they got you covered.”

He uses examples like Darden Restaurants and TJ Maxx to illustrate how different businesses cater to these consumer segments. Cramer emphasizes that understanding these behaviors is crucial for investors, as aggregate numbers often mask these nuanced trends.

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5. Interview with John Gibson, CEO of Paychex

In a conversation with John Gibson, Cramer explores the state of small and medium-sized businesses (SMBs) and their impact on the economy.

• John Gibson [24:25]: “Small businesses drive the U.S. economy. 99% of businesses are small.”

Gibson highlights Paychex's innovative solutions that help SMBs tackle challenges like attracting qualified workers and managing rising healthcare costs. He stresses the importance of upskilling the workforce and suggests that policymakers focus on immigration to bolster the labor supply.

• Jim Cramer [29:41]: “They need it because they are missing what is actually the bigger picture... the backbone of America is small business.”

Gibson reinforces the critical role of SMBs in economic growth and expresses optimism about their continued leadership in the economy.

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6. Lightning Round: Buy, Sell, Hold Opinions

In the fast-paced Lightning Round segment, Cramer provides his immediate buy, sell, or hold recommendations based on caller inquiries.

• Caller 1 [35:13]: Loves Walmart

  • Jim Cramer: “I like Walmart. As long as my daughter and I go there... we got the edge on them.”

• Caller 2 [35:38]: Concerns about Royalty Pharma (RPRX)

  • Jim Cramer: “It's a good company. I would not get rid of the stock here. It's too good a company.”

• Caller 3 [36:09]: Holds Magna

  • Jim Cramer: “I just would not want to own it. I'm seeing terrible things going on in the auto industry.”

• Caller 4 [37:42]: Asks about M&T Bank (MTB)

  • Jim Cramer: “MTB is a very, very good company. I would be buying it here. I don't have a problem with that.”

Cramer's recommendations reflect his broader market analysis, often aligning his advice with his commentary on economic indicators and specific industry performances.

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7. Interview with Raj Subramanian, CEO of FedEx

Cramer engages with Raj Subramanian to discuss FedEx's strategic move to spin off its less-than-truckload (LTL) freight business.

• Jim Cramer [39:35]: “This is a gem that you're spinning off. Tell us why people should maybe want to own both entities.”

Subramanian explains that the spin-off aims to enhance shareholder value by allowing both FedEx and FedEx Freight to focus on their core competencies. He highlights FedEx's global network and adaptability as key strengths amidst changing supply chain dynamics.

• Raj Subramanian [41:45]: “We serve 99% of global commerce... as the supply chain patterns change, we are here, there, and everywhere.”

Cramer applauds the decision, noting the market's positive reaction and FedEx's robust performance even in a muted demand environment.

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8. Conclusion

Jim Cramer wraps up the episode by reiterating his commitment to helping investors navigate market complexities. He underscores the importance of understanding diverse consumer behaviors and staying informed about strategic corporate decisions.

• Jim Cramer [47:25]: “What matters is choice. Right now consumers are lapping up absolute value... that's a good deal versus the competition.”

He encourages listeners to focus on companies that offer clear value propositions, whether through premium quality or unbeatable bargains, to make informed investment decisions.

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Notable Quotes:

• Jim Cramer [02:15]: “Powell's been very true to his word, which is integral to maintaining his integrity and the integrity of the institution.”

• Jim Cramer [04:50]: “If you make a prediction, you better beat it or else your stock's going to get clobbered.”

• Sean Connell [15:23]: “We continue to prioritize having a strong business with consumers and keeping the momentum on the top line.”

• Jim Cramer [30:58]: “If you're willing to pay up for quality but you're still somewhat cost conscious, they got you covered.”

• John Gibson [24:25]: “Small businesses drive the U.S. economy. 99% of businesses are small.”

• Jim Cramer [35:13]: “I like Walmart. As long as my daughter and I go there... we got the edge on them.”

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Key Takeaways:

• Federal Reserve Actions: Powell's rate cuts have created market volatility; importance of data-driven decisions emphasized.

• Industry Insights: Semiconductor companies with realistic growth forecasts outperform those with overly optimistic predictions.

• Corporate Strategies: Conagra's focus on growth segments and FedEx's strategic spin-off highlight the importance of adaptability in challenging economic climates.

• Consumer Behavior: Distinct consumer segments prioritize either premium value or absolute bargains, impacting various sectors differently.

• Small Businesses: SMBs remain the backbone of the U.S. economy, with Paychex playing a pivotal role in supporting their growth and addressing labor challenges.

• Investment Advice: Cramer's buy/sell/hold recommendations align with his broader market analyses, stressing informed and strategic investment decisions.

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This episode of Mad Money w/ Jim Cramer offers a comprehensive analysis of current economic trends, industry-specific performances, and strategic corporate decisions, providing valuable insights for investors aiming to navigate the complexities of the stock market.

Transcript

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[Jim Cramer]

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[Jim Cramer]

My mission is simple to make you money. I'm here to level the playing field for all investors. There's always a bull market somewhere and I promise to help you find it. Man Money Starts Hey, I'm Kramer. Welcome to Man Money. Welcome to Kramer. Other people make friends. I'm just trying to help you make a little money here. My job is not just entertain, but try to explain days like today or yesterday. Put them together. Call me at 1-800-743-CBC-TWEET, YouTube. Kramer don't make a forecast if you can't make the forecast. I know it sounds pretty silly, but in the world of Wall street, if you make a prediction, you better beat it or else your stock's going to get clobbered. That's what throw much of the sell off, Expectations not met, guidance too aggressive, promises dashed. It's why we struggle to bounce back from yesterday's hideous action. Dow gaining only 15 points. The S&P decline.09% NASDAQ dipping.1% even as we had much higher prices earlier today. Let's start with the Fed. I play with an open hand. I think Jay Powell is doing a fabulous job. What he does the only Fed chair since Paul Volcker in my lifetime who knows he has the power to take control of a difficult situation and do the right thing no matter what. Powell's been very true to his word, which is integral to maintaining his integrity and the integrity of the institution, which has never been done. When he says he'll do something the markets believe in him. That's because he has a lot of credibility. But yesterday I felt the Powell had a setback. I'll be a momentary because he didn't telegraph his views ahead of time. It was a tough call to cut rates by 25 basis points only because he made it a tough call. I think he felt that the Fed had to cut rates because he believed that would help bring down mortgage rates and auto loan rates. Solving two of the most intractable sources of inflation left in this country. But immediately after the first cut in September, double cut long term rates went up, not down. See, that was a sign the big bondholders weren't buying the need to cut rates. They were more worried about inflation. That's fine. The Fed can defy the bond market for a spell. But Powell should have quickly pivoted after the second rate cut and told people he needed to see more weak economic data and lower inflation before making a move. He didn't do that. Instead, Powell consistently signaled that there would be a third rate cut even as the data didn't justify it. If the Fed supposed to be data driven, then it had no business cutting rates yesterday. But Powell was trapped by his own prediction. One that he didn't need to make sure. The market got crushed yesterday because of a huge number of people who were shocked that Jay Powell now wants to wait and see rather than quickly make more cuts. Got him off the treadmill, but at a big cost as people question the credibility of the Fed. The fact that we saw a huge spike in the vix, the fear index told you that Powell overreached and then couldn't deliver on the inflation numbers. Of course Powell recover and so will the stock market. If long term rates stay high, the homebuilders will build far fewer homes. But we could see a generational shift that was more turnover in existing homes. Cars break down and eventually need to be fixed or traded in. It'll. It'll happen. But now Pals plan for time and he's gotten out of prediction it Data dependency is back. But we saw the frailty of the institution when its predictions aren't met. The Fed simply didn't need to forecast that third rate cut loudly or subrosa. The data was not there to justify it. Again, don't make the forecast. If you can't make the forecast now, consider really volatile stock that's very visible stock called Micron Commodity Chipmaker run by the irrepressible Sanjay merger. Anyone who knows Sanjay knows that he's a cautious industrialist who never wants to let anyone down. Maybe that's why I like him so much. He never encourages you to get all boiled up about a stock. He has at times tried to rein me in when I got ahead of the story. But not that long ago he predicted two things. One, that the data center business would be stellar and to the PC business would be strong and need a lot of chips. Unfortunately, the latter didn't come true. It's wrong. The IPC has turned into a bit of a bus practice. Now there's excess chip inventory in the system. Sanjay made a prediction. He failed to meet it or even come near it. Very, very disappointed. So the traders get out. The stock plunged 16%. From the looks of things, there were a lot of traders in Micron and they don't want anything to do with it because they don't even know what it does. Stocks now at a reset level, but it's much lower now. Contrast that with both Broadcom and Marvell Technology, which have similar exposure to both AI and personal computers. But their stocks have been fabulous. Neither was willing to predict good things for the personal computer or cell phone business. Now, the micro market at best, they were willing to predict a gradual recovery in the markets that that Sanjay would say, had said would have good numbers. Broadcom and Marvell soared when they reported because their businesses were on fire. And the other businesses, the ones that pulled Micron down, were no worse than advertised because they made no claims that things would recover or at least it would start going up for the recovery phase. Had Micron been more muted, or I should say much more muted about the PC business beforehand, had they not gotten too excited, needlessly bullish, the the stock would probably still be down, but definitely not down double digits. You think that everyone in the semiconductor world would be on their toes after Pat Gelsinger and that fiasco at intel where he became one of the most radical open CEOs I've ever seen. Opaques, the opposite of upon. It means over promise and under deliver. My hope is that the US government gets its money's worth from the subsidies of paid intel companies. Had the husband every penny to keep the rating agencies away. And so far it's done so. It's just moderate success. But gels are never stopped. Reassuring you right to the end. Now I'm worried about the balance sheet. I can't believe it. People have lost fortunes because of the reassurances that Gelsinger made. One thing for certain, you never want to be Estee Lauder CEO Fabricio Freda, who infamously called it an inflection point. Whereas luxury cosmetics and skin care company would return to growth. That was back in February of this year. Stocks soared 12% to 150. Waters stayed a bit on those words as business was stabilizing. But then we learned the problems were structural leading to number cut, number cut, number cut until the Stock fell to 60 to 62 at its lows on November 12th. Just a disaster. One of the worst stocks in the S and P. Sometimes it can't be avoided. People knew that mortgage rates stayed up. So Lenore, the giant homebuilder, so its stock plummet and we knew it would go down because the week for Toll Brothers reported mild miss stock got clobbered. Those are all because of higher rates. Nobody in the housing business can defy higher mortgage rates. Nobody. Other times, like with speculative names in nuclear power, space, wonder drugs, quantum computing, the companies themselves are hype or are hyped by others. And when disappointment almost never hits unless the people who own these stocks took something off the table. Well, I got to tell you, sell, sell, sell, sell. But the bottom line companies and even the Fed should not make predictions unless they know that the predictions are well within reach. No one ever held it against you for being too conservative with your, your guidance. And if you don't have enough visibility to make a good prediction, just say mom, we'll know exactly what you mean. Let's go to Richard in California.

[CNBC Announcer]

Richard.

[Caller]

Hey Jim, how are you?

[Jim Cramer]

I am good, Richard, how about you?

[Caller]

Pretty good. Seems like a great time to be picking up some stock, especially those health care ones that have been beaten up.

[Jim Cramer]

I'm going to agree with you on that. I think that I talked about that today in my meeting for the CNBC Investing club, which a lot of people said went well, but what do I know?

[Caller]

Wow. Well, Radnet just released its own AI powered informatics smart technology system workflow. Radnet also released news that its AI has already been built into two of the largest mammogram and ultrasound produce producers of machines Siemens and GE and is now being sold in these machines for the first time this month. Both Siemens and ge in a joint press release with Radnet say that Radnor is a game changer in these fields. Jim, is there any way to get the CEO of RadNor on your show?

[Jim Cramer]

Well, let's just say that Radnet stock has been good. It's up 105% for the year. Doesn't to me it's done a good job. I wish that health care, which I talked about in somewhat Disparaging ways today on my conference call would join the crowd. But Radnet's got the intellectual property. It looks like they've got the. Let's just say they've got the earnings growth. That's what matters. Perot in California. Perez.

[Caller]

Hey, Jim, thanks for taking my call. Happy holidays to you.

[Jim Cramer]

Thank you. Same to you.

[Caller]

The NBC family.

[Jim Cramer]

Absolutely.

[Caller]

Just wanted to talk to you about. As we move forward towards an economy of putting a higher value on asset light business models. Duff Grow stands out with a 42% annualized revenue growth over the past five years compared to Starbucks, 7%. Dutch Bros. Is a dynamic and high potential investment. For those seeking upside in the coffee industry, Dutch Bros. Is a clear choice. Are you a believer like I am in Dutch Bro?

[Jim Cramer]

I have been probably the. I would say I'm probably the foremost, earliest guy who's been on board or gal who's been on quarter. Dutch Bros. Everyone knows that. Why? Because I love the product. Now they're introducing food, they're doing a lot of growth. It just had a very big spike. So we want to be careful. But I've been on the Dutch Bro chain for a real long time. Ever since I had that annihilator which enabled you to stay up front. I got there on Friday night, I go to bed. Saturday, I didn't even have to go to sleep. And then when I left on Sunday, it was like fine. I couldn't believe how much time I got spent with my daughter Dust Bros. Daniel in California. Daniel.

[Caller]

Jim. Been a club member for a little over a year now.

[Jim Cramer]

That's what I want.

[Caller]

I've learned a lot that has really helped me be successful investing this last year.

[Jim Cramer]

So thank you. Thank you. That makes you feel good. Thank you.

[Caller]

A few months ago you hit the buy bye bye button on an E Commerce stock in the 60s. Since then it is nearly doubled. I wasn't able to get as big of a position in the stock as I would have liked, but it's pulled back from its high recently after a good earnings report. So, Jim, do I buy more, hold on to what I have, or do I sell the stock of Shopify?

[Jim Cramer]

Well, we caught a double in Shopify and that was because I've got to tell you, studied the company. I couldn't believe the stock went down to the 60s. It was a good quarter, people. It was a bad quarter. So I went out really hard on it and now we've got a double. And so my take is when you get a double, you got to take something off the table. Even though I think Shopify is a great company, that doesn't mean necessarily that the stock which has had a big move is, let's say, not capable of going down. So let's take something off the table. So a note to companies and to the Fed, reporting earnings and making statements. You can be conservative with your guidance, no one's going to hold it against you. Made by tonight, Conag reporting an earnings beat combined with a cut forecast. So what's ahead for the maker of Bird's Eyes and Slim Gems? I've got the CEO then fresh off report from Paychecks this morning. I'm talking to top brass about the Fed's latest cut and what it means for the state of small business. And later, FedEx delivered some big spin off news. I can't believe we got this story on our show. I'm talking delivery giant, CEO to map out the road ahead and the stock is climbing after hours. Stay with Kramer.

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[Jim Cramer]

Very tough environment for the food stocks. What are we supposed to do with the stock like conagra Brands House of packaged foods that you know as Bird's Eye, Slim Jim, Angie's Boom Chicken Pop, among many others. This morning, Congregate report a solid quarter with some real growth. But at the same time, management had to cut their earnings forecast for 2025 fiscal year because they haven't been able to get the inflation relief that we all are hoping for. As a result, the stock got hurt early morning, was down 4%, did finish the day down 2%. So you got to ask yourself, is the stock with a 5.2% yield but they gotten too cheap to ignore, or is the backdrop simply so difficult for these food stocks that you just got to wait? Let's take a close look with Sean Connell. He's the President CEO of Conagra. Toward more Mr. Conley, welcome back to Money.

[CNBC Announcer]

Hey Jim. Happy holidays.

[Jim Cramer]

Same to you, Sean. All right, so the market has decided that even though you've definitely back on your growth path and I thought that was terrific because you said you would be, that we really what we have to worry about is the sticky inflation and how it impacts you, almost as if what you do doesn't matter and what the inflation of the price of protein does does. How do you reconcile this?

[CNBC Announcer]

Well, about a year ago, Jim, we said that the single most important thing in our mind in terms of long term shareholder value creation was pushing our volumes back to growth. You know, the inflation supercycle put a heck of a burden on consumers. Consumers became stretched. They started trading down. And we said the most critical thing we can do is invest to get back to growth. And so we've been doing that for about a year now. We've made steady progress in this quarter. We did return to growth, which is excellent. So the question now is with inflation being a bit peskier than we had hoped, do we keep our foot on the gas in terms of top line momentum or do we back off of our investments to prop up the bottom line? And we chose the former. We are continuing to prioritize our having a strong business with consumers and keeping the momentum on the top line. And part of the reason for that as well is we do see relief on the horizon in terms of inflation because our inflation is concentrated heavily in our animal proteins. And it's just not going to happen as early as we expected. So we're going to continue to push to build our business with consumers. Our market shares are extremely strong. Our frozen business is rocking as, as, as is our healthy snack business. And we think it's, it's mission critical to keep that momentum on the top line.

[Jim Cramer]

Well, let's talk about something that is, that is growing. Well, permissible snacking has always been yours. And your snacks are meat snacks, which are actually what GOP that one says are permissible. And your volumes are quite positive. But your growth did seem to drop from the 1.1% in the first quarter. Something we should be concerned about.

[CNBC Announcer]

Stacks business performed really well in the quarter. We had one soft spot in snacks, which is actually our Swiss Miss hot cocoa business. And that's entirely tied to winter starting late. But when you look at our core snacks businesses, it's about protein and it's about fiber. And so meat sticks is our biggest business. Our largest meat stick business is slim Jim grew 5%. Our seeds business grew 9%. Our popcorn business grew 4%. So snacks remain very strong. And increasingly, in this $80 billion snack space, you're seeing consumers prioritize healthy, or as we call it, permissible snacking over sweet snacks and high carb, high fat snacks. And that's where we play. And, and we've got brands there that provide great choices.

[Jim Cramer]

You guys have some fabulous frozen, you've got the best snack franchise. At what point do we say to ourselves, you know what? Those are the growth ones. I don't want to put money behind some of the others. I want to put money behind growth. Because you want to always, of course, invest in what's doing well, not in what's necessarily not doing well. Is that something that your board might consider? Yeah.

[CNBC Announcer]

The way to think about our portfolio is we've got two growth vectors, frozen and snacks. Frozen grew over 3% in the quarter. I just mentioned the snacks performance. Those businesses are going to be reliable growers moving forward. Our third business is what we call staples, their utility products, cooking ingredients, things like that. That's really not focused on growth. It's Focused on cash flow. So the strong cash flow that comes out of our staples business funds, the innovation programs in our growth businesses of frozen and snack. And we like that trifecta.

[Jim Cramer]

Now, we want to talk about GOP ones because everyone is worried, but except for you don't need to be worried because you've actually built a portfolio that it's a tailwind for, not a headwind.

[CNBC Announcer]

Yeah, well, when you think about GLP1 or even people who aren't on GLP1, you know, just about everybody you talk to these days is in pursuit of healthfulness, and they want to be a little healthier. For those consumers that are on GLP1, it's pretty clear what they want and what they don't want. They want portion control, they absolutely want protein to protect against the loss of muscle mass. They're trying to avoid sugars, carbs, things like that. But they also need vegetable nutrition. So when you look at our portfolio areas like frozen, where we've got bird's eye vegetables, we've got our meals business, we can offer all those things. And in our snack business, it's heavily focused on protein and fiber, which fits extremely well. But for as many people as are on GLP1, there are a lot of people who drop off GLP1s, and those folks need an off ramp. They get to their ideal weight, but they want to maintain it. When they go off GLP1. Healthy choice is a brand of ours that works equally well for a GLP1 user or somebody who's coming off a GLP1 and is looking to maintain that weight. So our businesses are very on strategy for anybody who's pursuing healthfulness, whether it's on GLP1 or just through working out and managing their diet.

[Jim Cramer]

Okay, so people might want to buy the stock and they hear that and you've got the snacking business and you've got frozen, they're going to say, okay, what is this inflation? Here it is you talk about in your conference call. It will be pricing. The biggest driver for us has been protein. It's meat, eggs, things like that. How do you. How does the country bring down meat and eggs?

[CNBC Announcer]

You know, it depends upon the type of protein. Beef takes the longest because it takes a long time to rebuild the beef herb, but that's well underway. Poultry can be affected by things like avian flu, other things like that, and pork. But poultry and pork can come back pretty quickly. So. So we see progress on the horizon here. And it's usually pretty predictable. You know, these animal proteins go up they come down. It's just a question of when do they inflect. And so we still do see relief on the horizon. And that's one of the reasons why we're betting on the consumer right now. We think the single most important thing we can do with a stretch consumer is continue to keep prices in a place where they appreciate it, what we're doing, and keep the momentum and avoid these trade downs that we saw a year or so ago. More scratch cooking. At the end of the day, consumers love convenience. They don't like meal planning, they don't like meal prep, they don't like meal cooking and they don't like cleanup. So when you've got convenient products like our frozen, frozen meal business, it's just a great utility for consumers and they can avoid it for a little bit. But now they're coming back in droves.

[Jim Cramer]

Let's put some figures in that. That's a growth of 3.2% last quarter. We don't get much, let's say low mid single digit from food. I expect 1, 3 is 3.2 is very, very strong. And that is, that must mean that you're taking share within the aisle too.

[CNBC Announcer]

We have the best share performance really in the food industry, Jim. If you look at our strategic businesses of frozen and snacks together, we maintained or grew share in 87% of that portfolio. That is well above our peer set and it gives you a sense of the strength that we've got. And frankly, it's a result of the investments that we pledged to make a year ago. They've worked steadily since then and it was fantastic to break through to absolute growth this quarter.

[Jim Cramer]

Well, I want to congratulate you on being a man of your word. You said there'd be growth, they got growth. There's some things beyond your control obviously that I think could go your way. And people have to be patient with a 5% yield, which isn't so bad. Sean Connelly, President CEO of Conagra CAG. How much? You have a good holiday. Thank you for covering the social.

[CNBC Announcer]

Thanks Jim. Same to you.

[Jim Cramer]

Absolutely. Make money back, everybody.

[Mad Money Announcer]

Coming up, what can a payroll processor tell us about the state of small and medium sized businesses? Kramer's looking for answers next.

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[Jim Cramer]

After a baffling Fed meeting yesterday, we're going to take clues. We can get any, any clues from the broader economy. Thankfully this morning we got results from Paychecks, the payroll processor focused on small medium sized businesses with a big human capital management outsourcing division. These guys have the best read on small business in America. So what do we learn? Well, paychecks reported 2 cent earnings beat off a $12 basis with modestly higher than expected sales. In response, the Stock jumped almost 1 1/2 percent, was up really big at one point making up a big chunk of yesterday's losses. Remember, a lot of stocks were down yesterday. I think this was a really good one. Don't take it from me. Let's check it with John. John Gibson. John's the president and CEO of Paychecks. He was just a point in New York Fed's 2nd District Advisory Council going out. Real business person in there. Mr. Gibson, welcome back to Man Money.

[John Gibson]

Hey Jim, Happy holidays as always. It's great to be back.

[Jim Cramer]

I'm so glad you're here. John, I got to tell you, I was reading your conference call was really a thing of joy because you are doing so well. And I want to ask you how much of it is because we're alive and well in this country in small business and how much of it is the incredible things that you offer that are taking a lot of share?

[John Gibson]

Well, look Jim, I think we're blessed right now to have a little bit of both. What I would tell you on the macro side, what we see is continued modest growth in small business employment. We see optimism on the rise. It's really the highest it's been since June of 21. We, we see our clients wanting to hire and wanting to grow. I was real happy to see a recent report that the US Economy is getting more productive. That's critical given the labor challenges that we have. And so I'm really excited about it. And then when you add on top of that what you said, we've been developing some very innovative solutions that really are resonating with small medium sized businesses because it's helping solve real problems they have like attracting and retaining qualified workers, trying to figure out how do they, you know, deal with the rising health care costs that they're faced with. And quite frankly they're trying to compete against larger firms and they generally don't have the benefits packages that they need. And we're doing a lot to fix those problems today.

[Jim Cramer]

I see that you also have to I the data. So I could call and say listen, I want to get this guy in this area and you could tell me basically whether I'm within reach or not. You could tell me whether I've got the right benefits package versus others. And that would be really valuable because small business people aren't clued in as much as they'd like to be.

[John Gibson]

There's no question. Jim, we've launched a series across the HR spectrum of AI enabled capabilities. You mentioned a few of them in the recruiting co pilot. We have got over 20 million workers in that that we can proactively give you a list by you just telling us what you're looking for. We have over 14 billion data elements we collected last year alone. And so on top of that we now have a compensation survey tool that has access to 20 million employee records. So now you can actually ask yourself the question, am I paying enough to attract that qualified person or am I paying too much? So when you go across the board recruiting compensation benefits, we're offering a host of AI enabled products that make it easier for small businesses to compete with larger firms.

[Jim Cramer]

Well, when you go up against anybody else, who else who has that breadth of knowledge and data? Any company that's against you?

[John Gibson]

Well, there may be a couple companies out there that may claim that they have a similar size data set. What I would tell you when you look over 50 years of gathering data on small medium sized businesses, you look at all of the millions of interactions we have with prospects and with our clients and our clients employees and then you look at the amount of time we've been doing this over a decade of really making the data clean. Jim, that's so critical. I really think we have the biggest and cleanest data set on small medium sized businesses and I think it's one you can trust when we tell you what's going on with small medium sized businesses in the U.S. well, you know.

[Jim Cramer]

John, I was thinking about all these good things you're saying, I want to put them in the context of the Federal Reserve. I mean, I think that Jay Powell would have expected that the economy might rebound a little bit if you cut rates. I don't think he expected that there'd be so much optimism. I think a lot of us involved, either because we got finished with the election or they liked the election results, but I think they misread the economy. They should have been looking more at small, medium sized business and realized the level of optimism could create, you know, let's say some, some bidding wars for talent because you want to get bigger quickly.

[John Gibson]

No question. Jim, look, I think this economy is a difficult thing to read you and I've been talking about that since the COVID days and it really boils down to this is what you said. Small businesses drive the U.S. economy. 99% of businesses are small. 50% of all workers work for small businesses. And when you go back over the last decade, 63% of all the net job gains are happening in small businesses. So it's not, it's not about chips and bitcoin. We're talking about Main street, we're talking about barbers, we're talking about electricians, we're talking about everyday people that are out there. And what I think we're missing today, we've been talking about this is the labor market challenge of falling, finding qualified people for small medium sized businesses. So when you look at the employment numbers, I think it masked the bigger issue which small businesses want to add people. They just can't find the qualified people to hire. And so I think that mask what the real growth is. So I think the policymakers, I'm not sure there's anything the Fed can do about that. But I do think policymakers need to start focusing on how do we upskill the workforce and how do we, and I know be new. Interesting to see on the new administration how they begin to look at immigration as a positive way to add workers to the workforce.

[Jim Cramer]

Well, what I'm hoping is, is that you, I don't know what kind of role you can play with the Federal Reserve, but I don't think there's anyone with the breadth of knowledge you have and it's quite obvious that they need it because I think they're missing what is actually the bigger picture, which is, you know, the backbone of America is small business.

[John Gibson]

Well, Jim, I'm honored to be asked to serve on the New York Fed advisory board and have a chance and an opportunity to lend the voice and really the insights that Paychex has to offer. We try to be strong advocates for small medium sized businesses both in Washington and now at the Fed. And I tell you, if we can get the optimism of small businesses matched with access to capital, it's not just the cost of capital, it's access to capital and we can get a labor supply of qualified people. I think small businesses in America are going to really continue to lead the economy forward. And so I'm very optimistic as we go into this new year.

[Jim Cramer]

I'm glad you are. I think that I'm not as worried about every little bit of inflation as I am about keeping people employed and starting new businesses because that is what our country does best. John Gibson is president and CEO of Paychex. Thank you, John.

[John Gibson]

Thank you, Jim. Happy holidays.

[Jim Cramer]

Yeah, same to you. Okay, man. Money's back after the break.

[Mad Money Announcer]

Coming up, has Kramer finally cracked the code behind the consumer's habits? He's sharing his findings and the names that are benefiting next.

[Jim Cramer]

We always get confused about the economy because we act like there's such a thing as the consumer. But we don't have just one class of consumers. Behavior encompasses everything that's going on out there. So how do you make sense of the consumer? I think I figured out I should say the two hers. One consumer is going out looking for absolute bargains. The other consumer is looking for like a premium value or value at a price more expensive but relative to similar offerings, you get a great deal. That's my determination after listening to all these retail and restaurant conference calls. You know, I don't like to rely on big aggregate numbers like national retail sales. I don't trust them. I prefer to look at host of individual companies and then put them all together into a pastiche, if not a mosaic. Get my own sense of what's happening. So what do I mean by absolute bargains and premium value? Take a look at the stock of Darden today. The parent of Olive Garden Longhorn Steakhouse is up almost 15%. Now these places are not cheap. The never ending possible one of my favorites is not cheap. Starts at 14 smackers. Longhorn is not cheap. The New York stripe strip is 27 29. Outlaw ribeye 33 29. Porterhouse 35 bucks. Burger 16 Bloody Mary's. Out of this world. Despite the prices, the Darden's numbers are outstanding. And that's because all of these prices I just mentioned, they actually represent premium value. 14 bucks for an endless pasta bowl is good deal. 35 smackers for a Dynamite Porterhouse cut. I know it sounds like a lot, but go compared to other steakhouses, you will find it is a steal. Gordon joins three other premium value business Williams, Sonoma, Ralph Lauren and Lululemon all had great numbers. Also goods that cost a lot of money. Yet in each case, consumers recognize that their product is worth every penny. That's why I call it premium value or value at a price. If you're willing to pay up for quality but you're still somewhat cost conscious, they got you covered. At the same time, there's the other consumer who only seeks absolute bargains. The under $11 meal at Chili's Own by Brinker and Texas Roadhouse with same deal. Incredibly attractive to patriots. Texas Roadhouse overwhelms you with fabulous food at a price that seemed like they forgot to put one of us on the bill. And those cinnamon rolls. Wowza. This bargain seeking crowd loves to shop at tjx, TJ Maxx right next to us which is offering bargains unlimited. Good, good name for the place by the way. See I got this belt there. I mean can you even tell? Well, it's little. You can't tell. It wasn't expensive. They found Ali's Bargain Outlet and have really volunteered. They've got so many people volunteering for that army. Any officer or grunt can get outstanding outstanding prices for close us. This card also enjoys going to Walmart. Can't believe how low the prices have become. They've taken down a lot of prices cheaper than the dollar stores in many cases. Now that those places have broken the buck, amazing designer clothes can't be beat prices. Now there are some straddlers that seem to please everybody. Like Costco and Chipotle. Maybe that's why their stocks have such high price earnings at multiples. Costco appeals that 55 multiple. Costco appeals to anyone who has enough space at home to take advantage of its bulk merchandise Chipotle straddles. Because everyone knows you can take a Chipotle meal and split it into two. One for lunch, one for dinner. I think these two kinds of consumers have confounded Wall Street. We used to have one kind of consumer and she either spent or she didn't know. Now we have two. They just spend at different places. The bottom line, Stop trying to figure out if the consumer's cash trap. Forget the headwinds. What matters is choice. Right now consumers are lapping up absolute value. The lowest price or premium value meaning better stuff. That's a good deal versus the competition. But everything else maybe not so much. Hence why? The aggregate numbers just don't tell the story, man. Money is back after the break.

[Mad Money Announcer]

Coming up, Cramer takes your calls and the sky's the limit. It's a fast fire lightning round.

[Jim Cramer]

Next. It is time to start with the light round. Clergyman by three squalls. Rob. Fighting the stock, excited by myself. And then the lightning round is over. Are you ready, Ski dag? Time for the lightning round. Crazy rivals start with James. And Mr. James, Big Jim, thank you.

[Caller]

For taking my call.

[Jim Cramer]

My pleasure, Jim.

[Caller]

We've made some great money in the stock market, so can we please get a booyah?

[Jim Cramer]

Booyah.

[Caller]

Okay, Jim, my question is we love Walmart.

[Jim Cramer]

We've decided long on Walmart.

[Caller]

What are your thoughts on Walmart?

[Jim Cramer]

Both Walmart the same, James. I like Walmart. As long as my daughter and I go there. We cannot believe the buys we love going to Walmart. A lot of the rich guys in New York, they don't even know what Walmart is. That's how we got the edge on them. Let's go to Jack in North Carolina.

[CNBC Announcer]

Jack.

[Jim Cramer]

Hey, Jim, how you doing? I'm doing well. How about you, buddy? Oh, I'm living the dream. I have been an investor in the stock for a while. Royalty, pharma, ticker, rprx. Disappointing stock, man. I can't believe it. Really well run, but disappointing. I don't know what to say. I don't know what gets it going. It's healthy care with a great earnings stream and it just doesn't seem to matter. I want you to stick with it. I would not get rid of the stock here. It's too good a company. Let's go to Dale, Louisiana. Dale.

[Caller]

Hey, it's a bayou. Booyah, Jim.

[Jim Cramer]

Well, that's where it came from. So I'm glad to have him on the show.

[Caller]

Hey, hey. I'm thinking I may have the next American Video for you.

[Jim Cramer]

You read my book. That's my dad lost everything at a company called National Video. Everything we had, he lost on it. That's why I wanted to come back and do this stuff.

[Caller]

Part of what I got for you, a stock that I bought about three years ago. I bought it when it was down 40% five year high. I bought it for 65. Over the last two and a half years, it hasn't treated me good. It's gone down to $41.

[Jim Cramer]

Oh man.

[Caller]

What is company? $42 billion company. Four and a half percent dividend. Okay, tell me, Jim, do I sell it and take the tax write off this year? Do I hold on to it.

[Jim Cramer]

What should I do here? This stock is what?

[Caller]

Magna?

[Jim Cramer]

Oh, I gotta tell you, the auto stock are the worst place to be. I mean there are two economies. There's the auto and housing economy. Then there's everything else. And you're in the heart of the bad part. I don't want, I don't. I would not want to own that stock is the way I would look at it. I just would not want to own it. I'm seeing terrible things going on in the auto industry. Let's go to Gary in my home state of New Jersey. Gary. Booyah.

[Caller]

Jim, Happy holiday for you and your staff.

[Jim Cramer]

Same to you and your family.

[Caller]

I got a question about a stock I'm heavily invested in. It's a bank stock. With the Fed's drop in the rates recently, this stock is 18% off its 52 week high in the last month. Pays a dividend of 3% or $1.35. What do you think about MTB?

[Jim Cramer]

MTB is a very, very good company. I would be buying it here. I don't have a problem with that. I actually like the banks. I'm going against the grade. And that. Ladies and gentlemen of the Lightning round.

[Mad Money Announcer]

The Lightning round is sponsored by Charles Schwab. Coming up, how is FedEx gearing up for the holiday shipping rush? Kramer's catching up with the CEO Fresh off its latest earnings report. Next.

[Jim Cramer]

Look at the stock of FedEx. Go. At the close, this iconic company reported what was technically, let's call it a mixed quarter. Slight revenue miss, slight earnings beat, lowered full year forecast. Not that much. But because FedEx also announced that it would be spinning off its less than truckload freight business as a separate company. The stock caught fire in after hours trading. Fantastic news for shareholders. This is a huge move. So let's dig deep with Ross Subramanian. He's the President and CEO of FedEx. To learn more. Mr. Raimi, welcome back to Man Buddy. This is very exciting. Tell us why you did it. What do you think it'll mean?

[Raj Subramanian]

Hey, hey Jim. Great to be on his on your show again.

[Jim Cramer]

Well Raj, I got to tell you, I was looking at your less than truckload. Your separation is creating two industry leading public companies. The value that you have to that you will bring out. If I look at all the comparative companies that are in the industry is extraordinary and is not even reflected by the move in after hours. This is a gem that you're spinning off. Tell us why people should maybe want to own both entities.

[Raj Subramanian]

Well, I think that's a Great question right there. And I think the decision that we made here is basically because it's the potential for creating long term shareholder value for Both companies, both FedEx and FedEx Freight. Let me talk about both of them. In fact, I'll start talking about FedEx. As you know, we have gone through a significant transformation over the last couple of years. And in a very muted, especially B2B demand environment, we have improved our market position and we improved our operating margins in this environment. Just imagine when we get some tailwind on, on our industrial production now at the same time we also look forward. This announcement is a catalyst for us to create more value for FedEx. And there are significant things underway for us as you look forward to the next couple of years. Whether it is the restructuring in the United States, whether our opportunities in Europe, whether the share we are taking globally on our international air freight. But I think there are two things that I want to point out. There are enablers for this. One is what we call drive is the way we work. We have built a fantastic execution engine. The second thing is the innovation that we have on technology that actually powers everything. And you know, if you think about the boardrooms these days, supply chains have become a topic of conversation in every boardroom. And we think we can, can bring a lot of value here. That's why we have changed our vision to, to for FedEx to make supply chain smarter for everyone. And there we know we are sitting on global supply chain insights. So not only do we want to be a leading transportation network provider, but also a global supply chain technology provider. Now about FedEx Freight. You know, FedEx Freight is the largest LTL company and it is, it's got the, the broadest network, is the fastest transit time and it's as you call it, a gem. And you know, we are, you know, the increased focus, you know, we'll play offense on revenue, we'll make sure that we improve our customer experience and but I do want to point out that you know, FedEx freight benefits a lot by being part connected to FedEx.

[Jim Cramer]

Right.

[Raj Subramanian]

And so we are going to make sure that the linkages like on the commercial side, on the operational side, on the technological side as we go forward.

[Jim Cramer]

Well, look, I think that it's remarkable because I don't know if people realize how much the market, the market is willing to pay for ltl, which is less than truckload entities. They're scarce, they're hard to find and when they're good people pay up for them. Now in the, your, your other Business, of course, your main business. You do say Federal Express segment delivered operating profit growth despite several headwinds including the continued weak US domestic demand environment. This is fine because you know, all day today I heard the economy is too strong and the Fed shouldn't have cut. In reality, you are the economy and it would seem like it wouldn't be so bad if interest rates went lower.

[Raj Subramanian]

So I think we knew when you look at the economy and especially in the United States, we have to split it up into the B2B and the B2C or the industrial economy and the E Commerce. And it's stunning to me that, that the PMI, the ISM index for manufacturing has been in contraction mode for 24 of the last 25 months. And the E Commerce side on the other hand has reset post the pandemic and starting to grow. 60% of our package business and 80% of our LTL business are really driven by the B2B side of the equation. So that's what it is. The fact that we are able to generate income expansion, particularly in the FVC segment, even with muted demand is a very good thing for us because as we, as you know, when the demand comes back, there is significant leverage going forward.

[Jim Cramer]

Now you've got a situation where so many things are in flux. We have China maybe arguably turning against us. That was a fabulous market for FedEx when I was basically growing up. Meaning When I started 20 years ago, I started the show you've got tariffs where I mean I talk with, as you know, I talk with Mexican businesses all the time. No body knows what's going to happen. So things are being pulled forward, but we don't know if that's right either. Are you seeing pull forward by people who just don't want to take a chance that the tariffs go up?

[Raj Subramanian]

Well, you know, I think we are actually seeing better than expected demand during this month of December. And part of that I think is below because I think the consumers are feeling more bullish and part of it is perhaps, and we just saw that the December might be a record month for the Los Angeles port, for example. So there's maybe some pull forward happening. It's too early to tell and but I think those are the initial indications. But having said that, you know, I wanted to say that China represents roughly 28 to 30% of global manufacturing today. And the good news for FedEx is that our network is global in nature. We serve 99% of global commerce. So as the supply chain patterns change, we are here, there and everywhere. And it's easier for us to move, you know, adapt and more capacity around and connect any node in the network to the whole world and the whole world to that particular node than any other company. So that's an advantage people sometimes miss. The fact that we have a scaled network in place provides us an advantage in these dynamic times.

[Jim Cramer]

We got to speak as you know, because we called you with Fred Smith, the founder this weekend, chairman and he gave my wife something to say. Are there any countries that you're not in?

[Raj Subramanian]

The only countries we really are not in are the ones by law that we cannot go go into. So literally we are, we serve 99% of global commerce. So we see this now because as the supply chain patterns change. So for example, Vietnam is going very strong right now, India is going very strong right now. And all those businesses are, you know, we are there and of course into the extent, of course we are here in the United States. So the extent that us is growing, then again there's opportunity for us here to.

[Jim Cramer]

Now short holiday season. How is it impact? What are you seeing in terms of freight every single day? There have been times when other freight companies were over overwhelmed by this period and we know they did not do a good job. How are you handling the huge amount in a contracted period of time?

[Raj Subramanian]

Oh no, it's just. Well, I just couldn't be prouder, could not be prouder of the FedEx team right now. We are just really doing very well delivering an outstanding service to our customers during this very tight peak season. You know, I speak to the team every single day and we're just doing a bang up job. And they know as you're getting close to Christmas here, you know, we've got only a couple of more days left and I believe Santa Claus is working in our Memphis operator.

[Jim Cramer]

Well, let me ask you one last question. Is Santa Claus a robot? I understand you're putting robots in that are actually unloading. That will save a huge amount of job. Really, you can't find everybody who can work. Are the robots replacing Santa?

[Raj Subramanian]

No, not, not, not yet. But you know, listen, as you point rightly pointed out, we have, you know, working on robotics to make sure to see those opportunities, especially on the truck loading and truck unloading, that's, that's a really interesting problem for robotics. But I think with the, with the latest moves and AI, this is now a solvable problem and it actually, you know they're going to work hand in hand with our team members to make everybody more productive. So that's for that's for the future. It's coming up. But in the tomorrow, will you let.

[Jim Cramer]

Us go to where you are doing that, even if I don't care? Go to Memphis where you are having robots load and unload. I want to see that.

[Raj Subramanian]

Well, we, we will welcome you and I will join you when you're going to get here.

[Jim Cramer]

Fantastic. Okay, Raj to Romanian Making so much money for shareholders tonight. Thank you so much for coming on the show. It's great to see you.

[Raj Subramanian]

Thank you so much. Jim, good to see you.

[Jim Cramer]

Excellent. Wow. I got to tell you, I love when money's being made instantly by bringing out value. And that's what happened tonight with FedEx. I like to say there's always more market somewhere. I promise to find it just for you right here, buddy. I'm Jim Cramer. See you tomorrow.

[American Express Representative]

All opinions expressed by Jim Cramer on this podcast are solely Kramer's opinions and do not reflect the opinions of CNBC, NBCUniversal, 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 Cramer as a specific inducement to make a particular investment or follow a particular strategy, but only as an expression of his opinion. Cramer'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. To view the full Mad Money disclaimer, please visit cnbc.com madmoneydisclaimer.

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