Transcript
Jim Cramer (0:00)
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Jim Cramer (0:48)
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. Hey, I'm Kramer. Welcome to Mad Money. Welcome to Kramer. Other people make friends. I'm just trying to make you a little money. My job is not just to entertain, but also to educate. So call me 1-800-713- CNBC. Tweet me. Jim Craver Sometimes sometimes the stock market's so brilliant that you just have to accept the judgments. Other times it's dumb as a bag of hammers. At this moment, the market's alleged reasoning powers are are totally impaired and we're getting this bizarre gyrating action like we had today. Dow gained 486 points, S&P jumped 1.12% and the Nasdaq shot up 1.46%. That was easy. It was totally the opposite of the last two days. But nothing really happened. We just revalued the same stocks in a different light and it's truly maddening. Before I give you examples of some of the markets clairvoyance and it's lunacy, understand that there are now two kinds of companies right now. The companies that are in the crosshairs of the President, sell, sell, sell. And the companies that are in the clear. Now normally when I'm looking at a stock, I think about its price, its earnings, its revenues, its gross margins, and the mode it has versus the competition. That's a good starting point. If I have a excellent feel safe for all these easily available online, I then consider whether I should crack open the file, which means reading the most recent conference calls, going over their website, of course, checking out a bunch of analyst notes. If I like those two, then I try to judge the valuation of the stock price. Now that's often when I pass on a stock, either because it's too expensive or maybe it's just suspiciously cheap. Now, though, I start with a simple question. Can President Trump hurt the stock? Can he damage it with an offhanded comment? Can he crush it in anger? And most important, does the price turning multiple make sense in this new world in light of the President's love of tariffs and total hostility to the way this country's been run in the past, not to mention many of our country's friends? Now, with that in mind, let's tackle first the market's brilliant clairvoyance. And I've been perplexed by the fact that Ford and General Motors are some of the lowest price earnings ratios in our stock market. 7.2%.3 and 4.3 times earnings, respectively. 1.3. Remember, the average stock of the S&P 500 trades at roughly 22 times earnings. Ford and GM look like the single greatest bargains in the world. Ford pays a 6%, 6.2% year. General Motors, that's one of the most voracious buybacks I've ever seen. Both seem incredibly cheap, at least until this tariff stuff started. So you have to remember that the orders were a huge reason why we first instituted NAFTA and why Trump renegotiated NAFTA in his first term, creating the usmca. One of the most important reasons for this trade agreement was to save our auto companies from oblivion. Without nafta, auto companies couldn't compete against the flood of imports from Japan and South Korea, which only have a 2.5% tariff on the tariffs President Trump slapped on American companies that import product from Mexico or Canada 10 times that. When we signed NAFTA in the 90s, it made tons of sense to try to bring as much manufacturing as possible we can, and especially Mexico. At last, our manufacturers could compete on an even ground with East Asia. But now Trump wants to take away the exception that made US Cars competitive and affordable. The automakers just got a one month reprieve on the tariffs caused the market to go crazy today. But if they only end up paying these tariffs or relocating to the United States, replacing cheap Mexican labor to get expensive union labor, well, their earnings, let's hope they're only cut in half. Aha. Suddenly we know why those stocks look so cheap is because their future earnings are in grave danger. Turns out Ford and GM could be ridiculous value traps. While the President thinks these tariffs are a great way to create jobs in America, they're going to put our automakers at a severe disadvantage to Nissan, Toyota, Mazda, Subaru and Honda, along with Kia and Hyundai. A 25% tariff on imports from Mexico is basically a subsidy for those companies. Look out for big earnings cuts that will make the P multiples go from seem very small to very large, making the stock's true colors come to life. Now, how about one that makes no sense to me on the upside, we own blackrock for the Chapel Trust. Oh, it's been a complete. It's been trying to crack into infrastructure and really done anything. Well, wait a second. CEO Larry Fink had a brilliant idea. Trump wants the Panama Canal back. You know there are ports on either side and they're owned by a Hong Kong based company that were for sale and well, Think wanted them. The company CK Hutchinson wanted to sell these two and 41 others want to buy them. Put them in through that new infrastructure portfolio that Think bought. Others had the same idea, but Think got those properties and now he is the premier infrastructure product in the world. To go with his recent purchase of global infrastructure partners. Could be an amazing return both for BlackRock and its investors. Fink kept Trump up the whole way. Trump obviously loved the deal. Doesn't hurt that he praised the Panama Canal last night. These BlackRock shares, what they do well, they're still down 5% for the year and way below where the company traded after its last good quarter. It's ridiculous. I think BlackRock stock is worth much more than it's selling for. We're buying for the trust. But then there's Intel. This company may have been the single biggest winner from the previous administration's CHIPS act, which was meant to stimulate more domestic semiconductor manufacturing. Intel was awarded a grant of $7.86 billion to expand in the United States under their old CEO Pat Gels. Here he's gone but. But the expansion plan he set up is still on, albeit in a way. Now we can't tell how much of the grant will actually go to intel, except that it's already took in 1.1 billion last year, another 1.1 billion this year. Even if it hits all of its benchmarks though, a big if. I wonder if the rest of the money will still be there. We can't tell if Intel's going to get any more money from the government, but the company needs it badly. Intel has 46 billion in long term borrowings. We keep hearing that there's a lot of interest from buyers for a stake and they're more about Altera division. I'll believe when I see it. But honestly, it's Shocking that Intel stock isn't down even more here. It fell only 52 cents. That after that speech last night. Given that so many of the expansion plans seem still boring. President's mad as hell and not going to take the Biden chip back anymore. Intel desperately needs to break bread with the President. Maybe Trump will help get them a partner to see them through this. Without good news on the intel front, I think the stock's way too expensive here at $20 and change after last night's speech. Just being valued wrong. Talk about being in the crosshairs. Intel's now ground zero for the end of government largesse, especially after Taiwan SEMI committed 100 billion to build semiconductor foundries here in America. And that brings a total of 165 because they made a previous commitment. Who the heck needs Intel? I don't know where it fits in the President's plans other than be a poster child for President Trump's in view of President Biden's legacy. Of course, these days we see all sorts of wholesale revisions and no one knows how to value them either. This morning, Footlock reported a terrific quarter, much better than expected as CEO Mary Dillon's turnaround plan takes hold, aided by Nike's attempts to repair its relationship with actual shoe stores. Nobody care too much on weight under the previous year, Nike didn't really care for Foot Locker. They wanted more of an emphasis on direct to consumer. It was stupid. That didn't work out. But Elliot Hill, the new CEO, is working very closely with Foot Locker. So is on holding. So is Deckers, the owner of Uggs and and Hoka. So is Adidas. It's a new footlong. Asics likes it New Balance, but people are way too gloomy to even note the same store sales improvement this morning. That's nonsense. I think it's a genuine winner. I go on. And yes, despite all these positives, the Stock only gained $0.89 because things are being valued incorrectly. Here's the bottom line. This market is fiercely trying to revalue stocks because of the President's comments. And we do it day after day after day because he's always making so much news. So it's been doing a poor job and that's created a ton of opportunities for you to both buy and sell. And I say you take them right away. Joe in Indiana. Joe, hi Jim.