Mad Money w/ Jim Cramer 1/27/25

Summary

Mad Money with Jim Cramer – Episode Summary (1/27/25)

Released on January 28, 2025

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1. Market Turmoil Triggered by AI Developments

Jim Cramer opens the episode by addressing a seismic shift in the technology sector, particularly focusing on Nvidia’s significant downturn. At [00:00], he introduces Venu, a disruptive player in the live music industry, highlighting its impressive financials with "$166 million in assets" and "56% year-over-year growth."

However, the main discussion kicks off at [01:03], when Jim delves into the tumultuous market reactions following Chinese tech firm Deep Sea's announcement. Deep Sea claims to have developed a solution that drastically reduces Nvidia’s dominance in the AI chip market. Jim notes, “[02:15] “Nvidia’s decline was the biggest shocker with the stock plummeting 17%. It was breathtaking.” This revelation led to a Nasdaq plunge of 3.07%, while other indices like the Dow surged by 2.89%.

2. Sector-Wide Impacts and Potential Pitfalls

Jim explores the broader implications of Deep Sea’s advancements, questioning the necessity of extensive spending on AI infrastructure. He speculates, “[05:25] Maybe all the spending going to video is needless overpay,” and extends his concerns to sectors reliant on Nvidia’s technology, including data centers and renewable energy firms. He remarks, “[06:40] ‘Nvidia in a way tried to help out in a positive I guess way,’” but remains skeptical about the company's future amidst these disruptions.

3. Navigating Portfolio Strategies Amidst Uncertainty

Cramer emphasizes the importance of disciplined investing in volatile times. At [14:42], he warns against succumbing to FOMO (Fear of Missing Out), stating, “[14:42] ‘When you let FOMO control your portfolio, you get eviscerated on days like today.’” He advocates for diversification, advising investors to avoid over-concentration in any single sector or stock, particularly those experiencing parabolic movements.

4. Listener Engagement: Stock Picks and Investment Advice

Throughout the episode, Jim takes calls from listeners seeking advice on specific stocks:

• Ian from Miami ([[07:50]]): Inquires about VRT (Vertiv), a data center play. Jim responds, “[07:50] ‘When you see stocks fall $43 on one $50 basis, that means the sellers are not done.’”

• Jack from Ohio ([[10:07]]): Asks about Ford amidst warranty issues. Jim advises caution, noting, “[10:08] ‘The problem with Ford is they have big warranty issues… five times earnings tells me that something is wrong there.’”

• Corcora in Illinois ([[09:00]]): Discusses CMG (Chipotle). Jim emphasizes holding the stock as an investment rather than a trade, “[09:00] ‘It's not a trade, it's an investment.’”

5. In-Depth Interview: Julian Francis of Beacon Roofing Supply

A significant portion of the episode features an interview with Julian Francis, CEO of Beacon Roofing Supply, at [30:15]. The company is grappling with a hostile takeover bid from QXO for approximately $11 billion. Julian defends Beacon’s value, stating, “[33:19] ‘We are here to generate shareholder value through being a great company.’” He elaborates on Beacon’s robust performance and strategic initiatives, highlighting a “300% stock increase” since his tenure began. Despite acknowledging the takeover pressure, Julian remains optimistic about Beacon’s prospects and their ongoing “Ambition 2025” growth plan.

6. Commodity Markets Under Scrutiny with Carly Garner

Jim introduces Carly Garner, a commodities expert, to discuss unusual correlations in the commodity markets. At [19:25], Carly explains, “[19:25] ‘We're witnessing the same dynamic now... aggressive correlations are always temporary.’” She analyzes the synchronized movements of crude oil, cattle, and corn, pointing out their “over 90% correlation” which is atypical and unsustainable. Carly predicts a potential downturn, especially for oil, citing factors like a strong dollar and high interest rates. She warns, “[25:45] ‘Cattle prices are bumping against a monthly trend line… they can still go higher, but the downside risk is big.’”

7. Lightning Round: Rapid-Fire Stock Opinions

The episode features a Lightning Round where Jim provides swift takes on various stocks:

• Michelle from California ([[36:54]]): Asks about Danaher’s complacency. Jim acknowledges her concerns, “[36:54] ‘I want them to show me that they understand we’re getting restless.’”

• Paulette from Louisiana ([[37:10]]): Inquires about Katera Energy. Jim suggests waiting, “[37:10] ‘It is the cheapest natural gas company… very good for a president that wants export of natural gas.’”

• Sam from Pennsylvania ([[37:30]]): Discusses Grail’s acquisition by I/F. Jim advises caution, “[37:30] ‘I may just wait until that gives back a lot of the gain.’”

• Eric from Michigan ([[38:00]]): Talks about BlackRock as a portfolio hold. Jim is optimistic, “[38:00] ‘Long term growth rate of this thing is fabulous. I think it’s going to stay that way.’”

• Susan from New Jersey and California ([[38:30]]): Questions about DLR Digital Realty Trust and Microstrategy. Jim recommends waiting for DLR’s pullback and owning Bitcoin directly rather than through Microstrategy.

8. Analysis of Venture Global’s IPO Performance

In the latter part of the episode, Jim scrutinizes Venture Global’s IPO performance. He outlines the company’s ambitious plans to become a leading LNG exporter but highlights the challenges it faced:

• IPO Pricing and Market Reception: Jim explains, “[40:15] ‘Venture Global raised the size of the offering from 50 million to 70 million shares but cut the price range almost in half.’” The IPO initially valued the company at $100 billion but plummeted to under $50 billion within a week.

• Underlying Issues: He attributes the poor performance to “noisiness” in the financials and unresolved arbitration proceedings related to contract disputes, “[42:30] ‘If they have to start fulfilling those long-term contracts, low price contracts, the numbers go look a lot worse still.’”

• Impact on IPO Market: Jim remains cautiously optimistic, suggesting that while the Venture Global IPO was flawed, it doesn’t necessarily spell doom for the broader IPO market. “[45:00] ‘I actually hope that everyone involved in the IPO market takes note and try to avoid making the same mistake twice.’”

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Notable Quotes:

• "Nvidia’s decline was the biggest shocker with the stock plummeting 17%. It was breathtaking." – Jim Cramer [02:15]

• "When you let FOMO control your portfolio, you get eviscerated on days like today." – Jim Cramer [14:42]

• "We are here to generate shareholder value through being a great company." – Julian Francis, CEO of Beacon Roofing Supply [33:19]

• "Cattle prices are bumping against a monthly trend line… they can still go higher, but the downside risk is big." – Carly Garner [25:45]

• "Bitcoin's a great thing to add that have in your portfolio. But not Microstrategy. Just own the Bitcoin." – Jim Cramer [40:30]

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Conclusion:

In this action-packed episode of "Mad Money," Jim Cramer navigates through the chaos unleashed by breakthroughs in AI technology and their ripple effects across the market. From dissecting the downfall of Nvidia to advising on commodity investments, Cramer emphasizes the importance of disciplined, diversified portfolios amidst volatility. The episode also sheds light on strategic corporate maneuvers, such as Beacon Roofing Supply’s defense against a takeover bid, and provides insights into the tumultuous IPO landscape with Venture Global's underwhelming debut.

For investors seeking to understand the intricate dance between technological advancements, market reactions, and strategic investments, this episode offers a comprehensive analysis and actionable advice to steer through uncertain financial waters.

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Disclaimer: All opinions expressed by Jim Cramer on this podcast are solely his own and do not reflect the views of CNBC, NBC Universal, or its parent companies. Investing involves risks, and listeners should conduct their own research or consult a financial advisor before making investment decisions.

Transcript

[Jim Cramer]

Meet Venu on the NYSE American Symbol Venu Disrupting a multi billion dollar live music industry, Venu owns and operates upscale music venues outdoor amphitheaters with seven revenue sources $166 million in assets Luxury suite sales of $77 million in 2024 $200 million expected in 2025 56% year over year Growth venue on the NYSE American.

[American Express]

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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. Mad Money starts now. Hey, I'm Kramer. Welcome to Man Money. Welcome to Kramer. I hope you make friends. I'm just trying to save a little money here. My job is not just entertainment but to educate, to teach them. So call me 1-800-7-for3 CNBC or treat me Jim Craver. What do you do when you don't know what to do? How about nothing? I mean that's how I felt today when the world of artificial intelligence was upended by a Chinese company that claims to have a solution to the colossal toll that Nvidia exacts on anyone who wants a piece of the AI action Chinese Alphabet. Deep Sea apparently has figured out a way to get much more of an each in video chip. Get much more out of them. Much more than anyone thought possible. And that news crushed the Nasdaq which plunged 3.07%. Dow advanced 2.89% S&P lost 1.46%. Now we really don't know how deep sea did. We do know that many big companies have ordered a huge amount of chips from Nvidia and there could be some serious buyers remorse. Now maybe all the spending going to video is needless overpay. Maybe the the gigantic number of data centers are being built huge driver of growth in our country simply aren't need. Maybe all the cooling process expenses are a big mistake. Maybe the rush to reopen old nuclear plants and put up more renewable generation and even bring back coal. Totally unnecessary. Today the air went out of every one of these balloons. Nvidia's decline was the biggest shocker with the stock plummeting 17%. It was breathtaking. Single largest loss in a day of market capitalization in history. Wait a second. The second largest single day loss? Well that was also. Nvidia mostly has a habit of getting clobbered, but then there's also a habit of people coming in by the dip. What happened again? If there are more revelations about deep sea doing much more with less fewer Nvidia chips, more compute then Nvidia stock is unfortunately not done going down. Though I will say the pin action off this Chinese outfit did more than just knock over Nvidia reseller stocks like you for Nova, the builder of so many power plants that are needed for these big data centers, debt just get hammered, falling nearly 22%. We saw a huge collapse in the merchant utilities, the ones with clean nuclear power like a Vista Energy Constellation which dropped 28% 21% respectively. So buy opportunity, selling opportunity. How about a do nothing opportunity Because I just don't know. As always I told investor club open hand right what I'd be doing with the Travel Trust, but I didn't really have all that much to say because Nvidia didn't have much to say. Now Nvidia in a way tried to help out in a positive I guess way. But where the releases said quote Deep Seek is an excellent AI advancement and perfect example of test time scaling, end quote. They also said that you still need significant numbers of video GPUs and high performance networking to make it happen. Reassuring? I don't know. Certainly not enough to get in front of this speeding freight train. We do know one thing, every time anything bad happens in video, you can battle the negatives we out there in full force along with those who think that the benefit from deep seats open source AI offering are going to move away or don't need as much in video power. Salesforce for example has pretty much called this a tectonic shift in the AI world from hardware, which CEO Mark Bennett now calls a bit of a commodity, to software. As a service companies like Salesforce, which are proprietary, you can interrogate the data and create real value. Hey, the market ate it up. Salesforce word today almost 4% and a lot of it was the stuff that Mark was tweeting. I wasn't alone actually I wasn't lying. I feel a lost year. Apple stock rallied I mean it's dead sweet because they can now buy cheaper, cheaper meta platforms even as it already spent billions on Nvidia chips took off because of a belief that it won't need to spend that much more money in the future. But Oracle, Microsoft and Alpha, they got crushed. And yet they're also gigantic buyers in various chips. They've all gone up like meta or down, I don't know. It's part of the confusion. And the real quandary is why didn't Nvidia say that it's become much more of a software company and that you need the hardware to run their softw? It also would have been good to find out how many chips Deep Seek is really using. But it is. Think about it. If it was a lot, right Then our government would simply ban all of the exports to China. What a high risk situation. If you're in video, you're really in a jam here. See if Deep Sea really didn't need many chips to make its generative AI platform work, that could be very negative for the Nvidia story because then you don't have to order as many chips. But if it turns out the Deep Sea had hundreds of thousands of chips like the American hyperscalers, then you'd have to believe the new president make it much harder for Chinese companies to buy anything else. Now how about all these energy and data center stories? Well these were overheated stocks like Constellation, not the SDG kind or Vista or Vertiv, the power system creator or the Day for the data center or G Renova which makes the turbines. These are all part of the quandary because their stocks were up so much going into today that you could argue that today's hideous declines are barely even meaningful. Sure this was down almost 30% but that's just means it back to trading where it was in mid mid December. I don't know when something is that hard when you really don't know the answer, you got to do something that's very alien. You have to sit on your hands and you have to say that one is too hard for me to figure out right now. For example, not that long ago we saw some Broadcom for the travel Trust much higher than where it's pointed out today. If this one stabilizes, I think it might be a buy because they have a ton of business away from the data center and after this decline this stocks no longer expensive. Expensive however, I don't know, I mean it could be a freight train. How about the world of a risk in networks And Marvell technologies, they fell 22%, 19% respectively. They're very good companies, but again, they're up so much that I don't know where the owners do. What are they going to do tomorrow? Maybe the owners said, maybe a group of analysts downgrade all these stocks. These deep sea revelations happened so quickly that many analysts didn't have time to assess the situation. Of course, the money that streams out of these hot stocks has to go somewhere, right? And today was flowed from put into, well into something that had been pretty cold. So we got these absurd moves into the consumer packaged goods place like Procter and Gamble or the retailers like Walmart, Costco. I mean, I like Travel Trust was Costco. But come on, these kinds of explosive moves are totally mystifying to me, even as they were terrific for my Travel Trust. Nothing's happening to these companies. Nothing. It's just sector rotation. So what are we supposed to do here? Take some Costco stock and sell it because of rational exuberance, Just enjoy the win? I don't know. Believe me, it is tough enough to figure out whether to say to people, okay, Apple's up huge and that's a big overreaction. I don't need to apply on Costco. All that said, the real issue is the former largest company in the world, Nvidia, and whether numbers now have to come down because there will be a freeze in spending as clients reassess those multibillion dollar orders. Maybe it'll be like the pause in the Internet built out of 2000 that turned out not to be a pause at all, but a collapse. At what point is that loss built in? Honestly, we don't even know if there'll be a loss. But there have been so many people saying that Nvidia run is too much. It's over. It was all about momentum, perfection and dominance. But the momentum, perfection and dominance have now been called into question. Bottom line, I have no view on deep seat yet because we just don't know enough. Sometimes you have to do the hardest thing in the world and we play with an open hand on this show. We, we got to wait. Gotta wait until we know more rather than taking knee jerk action and pretending that we know the answers. How do I go to Ian and far bees. Ian. Jim. Booyah. How you doing? Not bad, Ian. How are you? I'm doing okay. Doing all right here in sunny Florida. Nicer place down here. Yeah. Actually, you know, investing in the club, of course. Yes, very happy. Thank you. Second time caller. Oh, excellent. Jim. I wanted to Ask you today was kind of crazy with this deep seek AI and I've been looking at a stock that kind of goes hand in hand with Nvidia. It's a data center and it got really whack today. To be honest with you. I think it's down in the low 104. It's. It's a data center play and it's called a vrt. What do you think? The inner plumbing's vertive. It's Dave Cody's. The chairman is my next door neighbor. Used to be. I'm an extra neighbors from a. From Honeywell. I have to tell you that that stock fell so much that here's what's going to happen. When you see stocks fall $43 on one $50 basis, that means the sellers are not done. They will come back again tomorrow. They will break the chart. They will make things happen that will issue that you bought this stock at 80, not 100. That's typically what has happened. I need to go to Jack in Ohio. Jack. Hi Jim, how are you? Big fan. Thank you, Jack. Thanks for call. What's happening? Well, I got an RMD I'm going to have to take this year and I'm trying to figure out what stock to go within my portfolio. I've got a position in Ford and I'd like your opinion on. Should I hang on to it for a while?

[EY]

I am.

[Jim Cramer]

I'm sorry. All right. Well, here's the problem with Ford is they have big warranty issues. They got. They're all coming back to haunt them because it costs so much to fix the car. Now we have GM tomorrow. Mary Barra, I think she might report a good number. But I got to tell you, the autos are part of the economy that people are saying we need rate cut, we need rate cut, we need rate cut. And Ford in particular, five times earnings tells me that something is wrong there. Oh, Holly, you know we got to do. We got to go to Corcora in Illinois. Corker. Hey, Jim. Go, go Eagles. Go Eagles. How are you? Birds go Bergs. Man, we were all over the birds this week. I picked my wife there with the dogs and everything. It was really something. Go ahead. Yeah, first time caller and also a member of the club. Well, my question to you is CMG polling. What do you think? What's going on? You know, somebody came out today and said that they think that the growth rate for next week, next year is not going to be that high. That was a devastating call. And what did the stock do? It went up anyway. So my take is, look, I think Scott Boatwright's doing a good job. I have no desire to trade Chipotle. That's been a sucker's game. Let's just own it. If it comes down with buy a little more there, that's, that's the Chipotle story. It's not a trade, it's an investment. Look, the decline in some of the market leaders say, I have to admit, was what I have to say. It was just breathtaking. And I'm not willing to take either side of this trade until we know more about the impact from deep sea. I wish I could. Everyone seem to know so much. Say I'm making millions of calls. I didn't find out anything. Or maybe how is the fear of missing out shaping today's tape? I'm telling you where I stand. The latest parabolic moves and how diversification comes into play. Then could the prices of corn, cattle and oil keep heading to get heading higher together? What is that about? Let's go up the charts on the rally in these markets. And later, I'm sitting down with a very consc versal, the CEO of Beacon Roofing as the company responds to a takeover hostile takeover bid from Q X O. So stay with Kramer. Don't miss a second of Mad money. Follow Im Kramer on X. Have a question? Tweet Kramer. Hashtag mad mentions. Send Jim an email to madmoneynbc.com or give us a call at 1-800-743-CNBC. Missed something? Head to madmoney.cnbc.com.

[American Express]

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[EY]

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[Jim Cramer]

What happens when you let FOMO fear of missing out control your portfolio? You get eviscerated on days like today where everything AI related gets crushed thanks to some headlines from China. On the other hand, if you maintain a diversified portfolio, can save you now for weeks now, we've been gripped by FOMO at the CNBC Investing Club. When there's fomo, we often go the other way and sell into a parabolic move like we saw in so many data centers related tech stocks today. Now we trim back a bunch of Magnificent seven stocks as they skyrocketed and we know these moves can give up their gains in a second. It's been painful as some of these positions like Alphabet, have whittled to the point where they're almost purely symbolic, but today shows you why parabolic moves are dangerous. There's no telling what can wreck a turbocharged rally. They just always seem to end badly. This time it was in video stock that got laid to waste. Good thing we sold some in video for the Chapel Trust, a right size position that had grown too large. I would say own it, don't trade it, but you have to sell something on the way or else your portfolio will become the Nvidia Fund. And you don't want to be the Nvidia Fund. As we saw today. You don't want to be the Apple fund either. Even as one came roaring back today, that was something. Discipline must always, always trump Conviction, discipline, conviction, go with discipline. At the end of the day, you always want to diversify portfolio because that's what saves you whatever's been working stops working. We went out to the J.P. morgan Health Care Conference two weeks ago and it was a nightmare of negativity because most health Care stocks have been left by the wayside and even the winners in the group like Luly had recently given up the ghost. Take Kramer Fab. Abbott Labs. That's a great company. It's had a very underwhelming stock. Who we spoke to in San Francisco. Before the interview, CEO Robert Ford and I talked about how undervalued Abbott was versus its growth rate. But we couldn't think of anything that might change investors minds, save a big win. Maybe an important series of lawsuits involving special infant formula. I was also marveling at all the good things Procter and Gamble had to say about packaged goods when they reported. But it meant as little as Abbott's accomplishments. Next thing you know that these two stocks are off like musk spaceships. Abbott and Proctor both rallied more than 3% just today. Abbott's now 19 points to 129 since that conference. And weirdly, I bet they've got more room to run. Yeah, the fallout from this tech fall could be that dynamic. You rarely have a one day buyer strike. They tend to last for ages. And the money that comes out of tech has got to go somewhere. Look, FOMO is an insidious force. Very few people actually end up making money when they join a parabolic move based on price earnings, multiple expansion meaning paying more for the same set of earnings. When something goes wrong, the stock goes back to where the parabolic move started or even lower. That's what I think could be happening right now with the data center stocks if you chase them in the last few weeks. You're kicking yourself today now that the Chinese may have come up with a way to use general with a lot less harbor, a lot less heat. We're seeing the same thing in the nuclear power stocks is their tangential data center plays too. Right now you can see that they've the hardest hit because they have the least earnings from what could turn out to be the slowed build out. Remember this day. It's a perfect explainer for why you can't lose your discipline. And you must always be seeking diversification even if it hurts you short term, longer term. In this case, probably two weeks time. It's worth it. Mad Money is back to get to the break. Coming up, from commodities to crude to currencies. Cramer spotted correlations across the market. But what does the thread connecting the assets mean for where they're headed next? Kramer going off the charts.

[EY]

What's next?

[American Express]

Every day thousands of Comcast engineers and technologists create connectivity solutions that change the way we work, live and play. Like Kunle, a Comcast engineer who is focused on revolutionizing the in home WI FI experience today and for the next generation. Kunle builds powerful Xfinity WI Fi devices that deliver a fast reliable connection with capacity to connect hundreds of high bandwidth devices at once and next level latency for the applications of the future like augmented and virtual reality and cloud gaming. Learn more at comcastcorporation.com Wi Fi what's.

[EY]

At stake when administrations change from the first 100 days and beyond, EY brings insights on the issues that matter. Executive orders, regulation of AI, the fate of billions in tax credit, global trade and workforce stability. No matter the policy shifts, EY helps business and government leaders remain resilient and sees dynamic growth. I navigate the geopolitical and economic landscape with confidence.

[Jim Cramer]

I know we saw a lot of crazy action today, but we see some really crazy action. Got to go to the commodity space. Just huge rallies in corn and cattle and oil. You can think of it maybe as a trump trade because this started not long after he won the election. Or you can think of it as a commodity traders collectively trying to hedge their inflation risk. Either way, these various different commodities are moving in lockstep. You know, it's actually rarely a good sign for the commodities. Maybe not for you, but for commodities. All right, that's why tonight we're going off the charts with the help of Carly Garner, a terrific technician who's the co founder of the garlic trading, the author of Higher Probability Commodity Trading and our resident commodities expert. She gives a lot of perspective. Also trying to figure out what's good for you, what's bad for you, what's good for the traders was bad for. I want you to take a look at this daily chart of crude oil futures in black, live cattle futures in red, and corn futures in yellow. Look at this. You can see that all three of these commodities have caught fire together. And although oil started to pull back, corn and cattle remain red hot. What's weird about this is before the election, each of these commodities get traded pretty separately. Right? Which is what you'd expect because they all have their own supply and demand situations. In the last few months, though, they've been trading in the same direction nonstop. Garner says this looks very similar to the commodity rallies we saw in 2022. Okay, we're going to see those later on, but that's taken from me. Inflation was rampant. I don't remember that period. I do. Traders didn't want to miss out on big move. As she sees it, we're now witnessing the same dynamic now some of these correlations are nuts. Over the last 30 trading days, West Texas Intermediate crude oil futures, they've settled in the same direction as naturally as 80%, 7% of the time. Corn 88% of the time, live cattle 90% time. Gold and soybeans are more reasonable, 75% and 79% of the time respectively. For the most part, they've been trading in lockstep and now oil's broken down. Garner thinks that oil is probably the leader, which leaves all these other commodities vulnerable in the coming weeks. She's also betting that the oil downturn will be a will be persistent. We've got a strong dollar, high interest rates, lackluster demand from China, bearish seasonality and economic weakness from the rest of the world. But there it goes, right at the same time, OPEC hasn't been able to stabilize prices with its production cuts. And no amount of violence in the Middle east has been able to truly prop up the price of crude. Plus, we've now got a job White House, which tends to push down the price of oil. I want you to take a look at the weekly chart of the West Texas Intermediate crude is really compelling. Since peaking in March of 22nd, that's that, that's the spike that I was mentioning. Garner notes that oil has consistently made lower highs. The recent rally was stopped in its tracks by the 200 day moving average at $80. All right. The previous downtrend line from which oil broke out earlier this month will now become the floor of support at $73, right about where it settled today. If we can't hold this level, Garner suspects that we will see oil flow fall to the mid to low 60s in short order. The next floor of support is 65. Managed to reject each sell off since the peak in March of 2022. But the more times we knock on the door, the more likely it is to open. Put it all together and Garner wouldn't be surprised if oil ends up sliding all the way down to its multi year pivot line at 51 bucks. Hey, that'd be great news for us, wouldn't it? All right, now, what about cattle? When you just single out the live cattle futures, you see a market that's fueling unsustainable inflation. And we know that when we go to buy beef, right, it's a nightmare. Live cattle futures are now trading over $200, which is $2 per pound. Okay, may sound like a great deal for beef, but keep in mind that's the price of the live cow and not the Final stake. Garner points out that there's a reason the cattle futures have been roaring in this country. We're currently facing the lowest per head cattle inventory since 1951, thanks to Perpetual droughts and a few years of obscenely high feed costs like coffee. High beef prices haven't deterred consumers, even if people prefer to go to places that offer relative markets like Longhorn Steakhouse. According to Garner, the bullish narrative for cattle is deafening. As a result, we are getting word of an uncivilized cash market where buyers are willing to acquire beef at any cost. You know what, that kind of situation rarely ends well when you look at the chart. Garner points out that the last time cattle supply was similarly tight and managed commodity futures were this aggressively positioned on the long side of cattle futures, that was all the way back in 2014. The result wasn't permanently higher prices. Instead we got a market top that took an entire decade to regain. Even so many believers, the tight supplies are distinctive, tight size are deceptive and that the markets focused on on the headcount. But individual cattle are coming in at higher weights than ever. So the seemingly low numbers might not result in a meat shortage. Garner points out the cattle prices are bumping against a monthly trend line. The monthly relative strength index right here. Okay. It has started making lower highs. See that's a little bit lower than there. See that, that's like that. You got to pay attention that. And they keep doing that. She thinks cattle can still go higher, but the gains would likely be temporary. On the other hand, the downside risk she thinks is big. The line separating the bull and bear 150 or $1.50 per pound. And if high prices are the cure for high prices, so to speak, as we've seen in the past. And she thinks that 90 cent live cattle isn't an impossible expectation. Wow, we're all going to do any need to go to Walmart Would be great for your grocery bills too. Of course, it's not just commodities that are trading in lockstep. For example, the British pound, the euro, they're running a negative correlation of over 90. 90%. This is beyond my ken, but I'm a big believer in Garners. Let's go over to the currencies here. At the same time, the Japanese yen and the US 10 year treasury note have been settling in the same direction 93% of the time. Now the yen has also been selling, settling opposite the dollar index 91% of the time. According to Garner, such aggressive correlations are rare and generally unsustainable this is actually pretty incredible. Is it? Further, she believes that there's a sign that many of the trends we've grown to accept in recent months could be in the final innings of the game. If something surprises or disrupts one asset, volatility the other. And things can get quickly become very chaotic. Just look at this daily chart of the 10 year note in green and the yen in blue. Okay. This is because the yen suffers from a massive interest rate differential versus the dollar. A few days ago the bank of Japan raised their equivalent of the Fed funds rate 2.5%. That's the highest been 17 years. Even if the Fed cuts again at the next meeting though, we'll still be above 4%. What? Here's what people do. Rich people, typically big hedge funds. People borrow in yen, then buy dollars and Invest in the 10 year. But as Garner sees it, something's going wrong here. Like we saw when the yen carry trade imploded in August, things would get very ugly in the end. Garner's Adam that these obsessively close correlations are always temporary. Especially the commodity space where she thinks a breakdown is inevitable. Bottom line, the charts as interpreted by Carly Garner aren't obscenely high when we're talking oil or corn. But oil could be volume. By the way, she does think cattle prices are an accident waiting to happen. Now. I hope she's right. Why? Because this is all hedging and creating inflation risk traders have been direct directly causing inflation. That's what's really happening. And sooner or later that has to stop. And it could be very good news for you, the consumer. Consumer, very bad news for the traders who own these contracts. I'm going to Tyler in Texas. Tyler. Hey Jim. Love the show. Watch it every day. Great, thank you, Tyler. It's great to have you on the show. Just wanted to get your thoughts on the executive orders for the wind generation and how you thought it might affect Nextera going forward. I know they were talking a lot about natural gas on the earnings call. Right. You know, look, we did buy a Nextera as a trade, as a hedge trade. On Vice President Harris, former Vice President Harris winning, it did just. It did spike oddly. But the wind stuff is very different. Solar. Solar is something that the President has said he likes. Wind is something that offshore. He doesn't like him by the way. Nor does she vern over. So I'm not that worried. Nextera is a very cheap stock. Let's hope that somebody realizes that the 100% sourced in America and doesn't Good job. Let's go to Stafford in California. Stafford. Hey Jim, how you doing? I'm doing fine. How are you? Good, thanks. Hey, I want to get your thoughts on jdtm. Jdpm. Yes. Okay, let me get that. Jbtm. All right, I'm looking it up. JD yeah that would say was in the Barron's roundtable this weekend. Oh J.P. the M.A. okay, sure. You know look, this is one of those companies I don't really understand is consistent gainer to me I've liked you know we ought to look into this. I mean this is kind of stuck to be it's food processing automation which is kind of like IFF but in a different way. I think we should look into this. This is the kind of company that I don't understand why it isn't dramatically higher because it's been so consistent. So let's do that. Rather than cuff it and say hey I like jbtm. That's not good enough for you. We're going to do better for you. And if that's Stafford in California and it's the Stafford that we beat, I just want to say thank you. The charts never by Carly Garner point to some pretty close correlations the commodity and currency space and she thinks a breakdown is inevitable in these areas. Now much more money at QXO is aiming to acquire Beacon roofing supply within 1111 billion dollar tender offer unlearning the latest with the roofing company's top risk plus a major LNG player venture global went public last week but with a much lower valuation than versus expected. I'm going to take a closer look at the market's newest energy name and of course all your calls Rapid fire in tonight's edition of the Lightning round. So stay with Kramer on a crazy day for the market with some huge headlines on the air front I've been keeping a close eye on a hostile takeover bid that might have flown under the radar for you. This morning QXL launched a tender offer to buy Beacon Roofing Supply for about $11 billion $24.25 per share Stock close to $119.58 is up $1.16 now this been an ongoing saga starting November when the Wall Street Street Journal published an article stating that acquisition offer been made by qxo. But Beacons management team wasn't receptive. Well, it's not receptive believing the company will be worth substantially more than what QXO is willing to pay now. Last week Bloomberg reported that they're soliciting takeover bids from rivals we got to find if that's true. It could be rival suitors, who knows? But what does it all mean for the building supply company that you know, I have liked for many, many years? Let's check in with Julian Francis the presence here supply to find out. Francis, welcome to everybody.

[Julian Francis]

Thanks Brian. Great to be here.

[Jim Cramer]

I said, Juliet, I've always admired your company because you are the dominant company 50 states, you do incredible work. Everybody knows that when we think of roofing in our business, we always think of beacon. So how is business?

[Julian Francis]

So Jim, you know, it's been a terrific run for us. I mean this, this company is in, in great shape. We've, we've transformed the business over the.

[Jim Cramer]

Last several years since you came in, frankly.

[Julian Francis]

Since I joined the company, yeah, we, the stocks performed, you know, we've done that transformation. The stocks performed. We're up 300% since I joined the company. That's about four and a half, $5 billion of value created over that period of time. So incredibly proud of that. We navigated the pandemic, we focused the pull folio on our core business. We brought in some great talent and we launched our Ambition 2025 plan which was to grow top line, grow bottom line. And we've been continuing to do that and that's been an environment where the macro has not been the kindest to us. I mean we've had rising rates environment, we've had very low housing starts on a historic basis. You know, about the underbuilding and the commercial sentiment on the non residential consumption instructions also been a little bit soft and choppy post pandemic. So we think we've been doing great, create a lot of value in a tough environment.

[Jim Cramer]

Well now Julian, I've got to tell you, my colleague David Faber this morning said a couple of things that really kind of astonished me. He said, look, in this new regulatory regime they can make this offer, Brad Jacobs behind it and it can get done in little as 20 days. Is that possible?

[Julian Francis]

Well, possible. You know, I'm not sure that that's possible, Jim, but look, we are where we are. Obviously we got the news this morning. It's going to be, you know, it's an exciting time for the company. We've been trying to get the news out. We wanted to share the news that we had with, with qxo, but we're excited to get our investor day, which is March 13th. So we're looking forward to getting to that.

[Jim Cramer]

Yeah, I hope that if David wrong then you get a chance. But no, you know, things it's fluid. There may be, absolutely. But yeah, we did some back of the envelope work here. There was a company that we own for my child trust called Home Depot and we were really thrilled that they bought this company called srs. Now I know they paid a lot for it, but it's worked out really well. If we use the same EBITDA multiple we beget on your stock, when you run 19, you get $204. So I'm trying to figure out how they came up with the 1:25. Now of course I could go to Brad for that. I've known Brad for a long time. But what is the price that you think? You know what? I think we've done a great job, but this price is one that I can't get us there in five years. Let's take it.

[Julian Francis]

Look, I'm not going to speculate on what the board determines the, the value of the company is. But what we're dealing with right now is an offer for 12425 per share. We determined at the time, the board determined at the time that that was insufficient. We went back and tried to be constructive with, with Q.

[Jim Cramer]

Constructive, meaning, look, we can do better. Constructive, meaning this is where we could be. What's constructive? Constructive? I don't think you may think that.

[Julian Francis]

Constructive is we try to engage with them and we try to have a conversation. We offered them long range plan, let them under the hood to show them what we were capable of doing and to revalue the company based on what we were prepared to share with them. They said no. We tried once again to go in there. We offered them an NDA agreement that allowed them to continue to do what they've done today. And it was a short term NDA that still allowed them to take the offer straight to shareholders. They said no at that as well. So here we are. We try to be constructive, as I said, with engaging with them to see if we could get the value to where we thought it was the right number.

[Jim Cramer]

Let's puzzle through this. I think there are probably people at home are saying, who is this guy who suddenly creates this vehicle and then goes after another person? Company that's done quite well. It seems unfair. Should that even matter in the equation?

[Julian Francis]

No, this is about shareholder value. I mean, ultimately we are here. I lead this company in order to generate shareholder value.

[Jim Cramer]

Right.

[Julian Francis]

That's fundamentally, we do it through being a great company. We do it by hiring great employees. We do it by delivering rooms and doing hard things. So no, it's not personal it's, it's not about that. It's about value and about shareholder.

[Jim Cramer]

Could you argue that the stock would be somewhere around here without a takeover bid? Or do you think it would fall drastically if Mr. Jacobs bought. Walked away?

[Julian Francis]

Look, I can answer that question.

[Jim Cramer]

That's a very fair, very clear question. Because I think I know that I would have paid more for Beacon than the market was paying for it. Because you can become. I'm looking what's happening in North Carolina, I'm looking what's happening in California. And I'm thinking this is a stock I would reach for and I might reach for for more than the stock price. Yeah.

[Julian Francis]

Look, I'm very proud to be able to say that we operate nearly 600 branches across the US and Canada. We are in all of these communities. We're in Asheville, we're in L A, we're in Augusta. We're in these places that get hit. Our people are part of those communities and we're very proud of the work we do helping rebuild these communities. It's a terrific industry, It's a terrific job. We got terrific customers and terrific shareholders.

[Jim Cramer]

Just be sure people should know you reported revenue CAGR of 8% from 2019 to 20233 during a very difficult period for the housing business. Is not like you guys have been said. Yes, woe is me, the housing business, not building houses. That's not been the case.

[Julian Francis]

No way. This has been something that, like I said, that goes back to the transformation and the launch of our Ambition 2025 strategic plan. We'd paid down a lot of debt. We had very high debt load. When I joined the company, we got that. We got down that. We saved $50 million in interest expense every year we put that back into the business to refresh our fleets, to refresh our facilities, to invest in growth. And that's what we've been delivering.

[Jim Cramer]

I hope the shareholders hear you. I think that you've done a great deal. I know it. Look, it's may the best offer with whatever, but I wanted you to tell your side and I think you've really told your side excellently. And I know like the best offer win but I certainly know that you've done a great job for your company.

[Julian Francis]

I appreciate that, Jim. Very kind of.

[Jim Cramer]

Absolutely. That's Julian Francis. As President CEO of Beacon Roofing Supply, Even from my days at my old hedge fund, I'd always say this is the only one in the category that's a winner. Thank you so much. Thanks for coming on the show. Coming up, lightning doesn't just strike twice in Cramerica. Booyah. Jimmy, chill. Booyah.

[EY]

Booyah.

[Jim Cramer]

Booyah. Thanks for taking my call. It strikes every day. Kramer is back in a flash with your questions. Next, it is time playing into sound and then the lightning round is over. Are you ready? Skate diet or the lightning round? Kramer's head. But I want to start with Michelle in California. Michelle. Hi, Jim. Thanks for taking my call. Thanks for your whole team. Oh, thank you, Michelle. What's going on? I'm a new club member. Been loving it so far. And on the call last week you mentioned something about Danaher being kind of complacent. So I was wondering if you can elaborate on that a bit. Well, I think, you know, it's funny. Today was a big rotation day into healthcare and the stock went up. When I say complete. Look, I think think that those guys are great. The Rales brothers are amazing. Even when I'm on, you know, they have rails, but they got a stake there and a commander. So I love me more. But here's what I mean by that. I want them to show me that they understand that there's been some serious underperformance here. But they could come back and say we've outperformed for so many years. Jim, give us patience. I just want something that shows me that they understand that we're getting restless. I think that's a reasonable thing to say. And I do like them very much. Much. Let's go to Paulette in Louisiana. Paulette, hi. Thank you for taking my call. Of course. What do you think about Katera Energy? Okay, so we sold a little guitar because it's up on a straight line. It was in a parabolic move. Now we're watching it and waiting. But I do think it is the cheapest natural gas companies. Very good for a president that wants export of natural gas. Let's go to Sam, Pennsylvania. Sam. Jim, first order of business, the gala. Go Birds. That's. Oh, absolutely. Let's go Birds. Absolutely. What's happening? So, Jim, I got a question about a company grail. You know, it was acquired by I. Look, it's a terrific science, just great science, but it is parabolic. It had a parabolic move and those are going to be repealed. I. May I please wait until. That gives back a lot of the gain that it just had. It just started going. I just started rolling over. Let's go to Eric in Michigan. Eric, Jim, I'm calling, calling on BlackRock today. Okay, so BlackRock is a fundamental position for the portfolio for My travel trust. I think it's been resting the way this stock works. It has a big move that it rests. Big move. And it rests. And the overall, the long term growth rate of this thing is fabulous. I think it's going to stay that way. I'd like you to buy the stock. Let's go to Susan in New Jersey. Susan. Hi, Jim. Thanks for taking my call and. Absolutely. Thank you for calling. Yeah, yeah, you guys, you show the national treasure. My question, my question is about DLR Digital Realty Trust. Okay? I want you to wait till that comes down. That's another stock that got overheated because of the data centers. And we cannot, we cannot, we cannot get involved with a parabolic move of a stock that could go much lower. It's 2.9% yield. I think 4% yield is probably right for that one. Let's go to Susan and California. California, Susan. Hey Jim, thanks for taking my call. So, a bit of a cold. I'm calling about a stock that decided last October to put up to 42 billion capital to be buying Bitcoin. Since it started buying it, it's got around $30 billion, but it's worth $46 billion. Of course, the stock's jumping up and down and as you well know, Microstrategy is Microstrategy. Okay, look, I see. Say if you want to own Bitcoin, own Bitcoin. I own Bitcoin. You should own Bitcoin. Bitcoin's a great thing to add that have in your portfolio. But not Microstrategy. Just own the Bitcoin. That's enough. And that, ladies, concludes it of the Lightning Round. The Lightning Round is sponsored by Charles Schwab. Tomorrow, kick off the trading day with Squawk on the street live from post nine at the nyse. You're like my wife. I'm at the middle of the game. I am. I am your wife. Don't you think it's time to text Jensen? I said, do you mind if I watch to see whether we win the game first? I mean, TV wife. Let's just see if we can get this coverage. TV wife fretting about Jensen. Call Jensen. Why didn't you call Jensen in the middle of the game? You're more worried about Jensen. It all starts at 9am Eastern. Coming into this year, a lot of us were looking for a major acceleration in the IPO market. Something you heard about repeatedly when the investment banks reported earlier this month. You know, they put in some pretty darn good, good numbers. Sure enough, last Week we got our first major deal of 2025 from an energy infrastructure company is called Venture Global. Regular viewers might remember that Rusty Brazile, co founder and chairman Executive chair of RBN Energy and one of our go to guys mentioned this one in our interview last Wednesday. So we were kind of curious about it. Venture Global is rapidly growing to become one of the top liquefied natural gas exporters in America. And it was supposed to be a major deal now that we've got a much more fossil fuel fuel friendly White House. But the actual offering was priced last Thursday night, began trading on Friday, turned out to be significantly smaller than expected recently. Metro Global is looking to sell 50 million shares at somewhere between 40 to 46 dollars apiece. That's a deal that would value the company around $100 billion. In the middle of last week though, they raised the size of the offering from 50 million to 70 million shares. But they slashed the price range, almost cutting in half, asking for 23 to 27 bucks. In the end, the deal price is $25 and Venture Global got a $60 billion valuation. Rather Gate, not bad, but also a far cry from what people expected. Then the stock fell a dollar on Friday, closing at $24 before slipping another $4, or 17% today and closing at just under 20. Wow, that's some gut wrenching decline. The company's now valued at less than $50 billion. Now this is still the largest energy IPO in over a decade, but when you look at how the enthusiasm for this one just evaporated over the course of a week, it's worth taking a closer look to figure out what the heck went wrong here. First, what's the story with this company? Venture Global was founded 12 years ago and it's now working on five natural gas export terminals in Louisiana near the Gulf of Mexico. I'm sorry, not near the Gulf of America. Their first facility began producing liquefied natural gas in early 2022, and the second one started running last month. Once it's fully operational, they'll be the second largest LNG exporter in America behind Cheniere Energy. When all five projects complete Venture Global Police, they could produce 144 million metric tons per year. By comparison, right now our entire country only exports 88.3 million metric tons per year. One of the reasons why I thought the deal would be received better. What sets this one apart is that they're able to build these LNG export terminals far more quickly than their competitors because they take a modular approach to construction. But there's Also some controversy here. See when Venture Global was building its first LNG export terminal, it lured in partners by promising cheap gas prices in exchange for the customers agreeing to lock into long term supply contracts. With those long term contracts in place, the company is able to obtain the financing it needed to build these complex facilities. But after Russia's invasion of Ukraine in February 2022, natural gas prices skyrocket, least overseas. Looking to take advantage of the moment, Venture Global started selling LNG cargoes at high spot prices rather than selling those cargoes to its initial customers at the lower prices that they've been agreed to for years before. Management said they could do this. They can do it because the plant wasn't yet fully operational. But the customers were obviously upset and Venture Global disclosed it in its IPO prospectus that is currently involved in arbitration proceedings to deal with this issue. Now that's why I don't want to dive too deep into the financials here because yeah, look, if they have to start fulfilling those long term contracts, low price contracts, once you know the numbers go look a lot worse still. Venture Global has been profitable for at least the last three years. Through the first nine months of 2024, however, revenue was down 45% year over year. Operating income was down 72% and net income was down 79%. Hard to tell how much of that's because the numbers were inflated the year before and how much comes down to lower spot prices in 2024 or some of the deterioration of business. Venture Global second facility just began production in December, which should help, but it's hard to say by how much the numbers are just too noisy. I think that a major reason why the Venture Global IPO was far less successful than these guys hope was the noisiness. While it seemed as though if that everything was coming together all at the exact right time for this company. IPO coming merely days after President Trump rescinded Biden's ban on new liquefied natural gas facilities, they just couldn't get investors on board at a high price. After a couple of days of declines, Venture Global's valuation is roughly in line with your energy. That makes sense. Current market leader, you could argue it deserves a higher valuation because the facility built it's building new facilities faster than anyone else. And I would buy that argument. In fact, I actually down here would give my best to put on a small position because this is a great story even if the near term numbers might be bumpy and the deal looks like it fell apart. But what does the Venture Global move meltdown mean for the broader IPO market. Now, this was certainly an inauspicious start for one of the first major deals of the year, and I've been hearing a lot of people claim it was a very bad sign. Now, they may be right. I got different takeaway though. Different entirely. See, the hallmark of last year's IPO market was the fact that things worked pretty darn well for the few companies that managed to come public and the new shareholders because the banks running these deals did a fantastic job in pricing. Basically priced the offerings low enough that they were tracked to investors. And people make good money on most of these deals. Sure. In some cases, like Reddit, you could argue they left money on the table by price the deal too low. I call that a high quality problem. In the end, everything generally worked well because no one got too greedy. I think the Venture Global or whoever was responsible for the initial pricing range that was floated. Maybe the Goldman Sachs bankers got a little greedy trying to obtain a valuation that was double what people were paying for the industry leader Cheniere Energy. And then they got slapped down by investors who saw what they were trying to do and they just said no. I don't have any grand prognostications about what the Venture Global deal means for the IPO market, and I'm certainly not ready to say it's dead on arrival because of what happened last week. The bottom line, as I see it, Venture Global was an imperfect deal that was initially priced for perfection. In fact, I actually hope that everyone involved in the IPO market, especially those bankers who did a good job last year, but not last week, take note of what's happened here and try to avoid making the same mistake twice. If the investment bankers learn from their failure, then the 2025 could still prove to be a very good year for IPOs. I like to say there's always a bull market summer, I promise. I find Just for you right here, Mad Money. I'm Drew Kramer. See you tomorrow.

[American Express]

All opinions expressed by Jim Cramer on this podcast are solely Kramer's opinions and do not reflect the opinions of cnbc, NBC Universal, or their parent company, or Affil, 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. At Capella University, learning the right skills could make a difference. That's why our business programs teach you relevant skills you can take from the courseroom to the workplace. A different future is closer than you think with Capella University. Learn more at Capella. Eduardo.