The stock market is up big so far in 2019, but Jim Cramer warned his Mad Money viewers Monday that they need to be prepared in the event the Federal Reserve or President Trump throw us a curveball.
Cramer said it's remarkable that the S&P 500 is up over 25% for the year given where we were just 12 months ago. This time last year, the Fed was raising interest rates and sending stocks into a tailspin. Companies like Apple (APPL) were pre-announcing weaker sales and no longer breaking out iPhone unit sales.
But it wasn't long after that the Fed realized their mistake and reversed course. Soon after the yield curve returned to normal. Apple successfully pivoted to service, leaving only the trade war for the alarmists to fret about.
Now, months later however, it's clear that even the trade war isn't enough to derail our economy. With full employment and low inflation, Cramer said President Trump has all the ammunition he needs to hike tariffs even higher or delay negotiations completely until after the election.
Cramer said investors need to be prepared however, in case the Fed says something unexpected later this week. They also must always be prepared for something unexpected from Trump. These are the only two worries left in the stock market, Cramer concluded, but it still pays to be cautious.
We're in the middle of the holiday shopping season, Cramer told viewers, and the retail landscape continues to fracture, with names like Walmart (WMT) - Get Report, Target (TGT) - Get Report and Costco (COST) - Get Report thriving, while Macy's (M) - Get Report, Kohl's Stores (KSS) - Get Report and Nordstrom (JWN) - Get Report wither. There are a number of trends conspiring against mall-based department stores, Cramer said, and those trends are only accelerating.
For one, it's a lot easier to return items like clothing online at Amazon (AMZN) - Get Report than it is to try them on at the store. Most stores can no longer afford to provide a decent shopping experience, leading to poor service and disorganized shelves. Then there's the cell phone. With the whole Internet in your pocket, the lowest price almost always wins.
The mall is simply the wrong environment for today's shopper, Cramer said, which is why only high-end retailers like Lululemon Athletica (LULU) - Get Report are thriving. Add to that, many retailers were enticed by Wall Street to buy back their stock, leaving them undercapitalized to make the investments they need to survive.
Unless your store can provide a superior shopping experience you can't get online, there isn't much to love about retail.
Shares of AT&T are still up 33% for the year, largely due to the involvement of Elliott Capital Management, an activist investor looking to shore up AT&T's management to unlock value. After paying $67 billion for DirecTV and $109 billion for Time Warner, Elliott felt AT&T needed focus on fiscal discipline to get its house in order. The company agreed and laid out aggressive targets for 2022 as a result.
The bears in November argued that those targets were unattainable and many of AT&T's legacy businesses, like wireline phones and cableTV are in decline.
But Cramer noted that the losses in AT&T's legacy businesses seem to have stabilized, while the upside in the 5G wireless upgrade cycle has not been accounted for. He said even if the company misses their 2022 targets, the company is working with Elliott to address their biggest issues and return to growth while paying down its debts. As a forced turnaround stock, Cramer said he'd be a buyer, especially with shares trading at just 11 times earnings.
For his "Executive Decision" segment, Cramer spoke with Dheeraj Panday, chairman and CEO of Nutanix (NTNX) - Get Report, the network management provider with shares down 20% for year as the company transitions to a subscription model.
Panday explained that Nutanix is making the same transition to subscription pricing that Microsoft (MSFT) - Get Report and Adobe Systems (ADBE) - Get Report have, and as with those companies, the move will take some time to complete. Nutanix is already almost a year into the transition, Panday said, and customers are loving the ease of use and the portability of their new licensing model.
Panday added that the transition is comparable to the shift when digital music transitioned from owning music to streaming songs instead. Companies today are increasingly choosing not to own technology, which is constantly advancing, and instead just pay for access.
In the Lightning Round, Cramer was bullish on Pepsico (PEP) - Get Report, Teladoc (TDOC) - Get Report, Iron Mountain (IRM) - Get Report, Exelixis (EXEL) - Get Report, Revolve Group (RVLV) - Get Report, StitchFix (SFIX) - Get Report and Advanced Micro Devices (AMD) - Get Report.
The retail world has gotten a lot tougher, Cramer told viewers. If your store doesn't have what customers want, they'll take their business elsewhere. Case in point, the stock of AtHome (HOME) - Get Report, which plunged 34% last week after the company reported its second big miss in just the past year.
Shares of AtHome have plunged from $41 to $6 a share in the past 18 months, as the home decor retailers have split into the "haves" and the "have nots." Among the "haves" are RH RH, Williams Sonoma WSM and even Target TGT and TJS Companies with its HomeGoods chain. The "have nots" clearly include AtHome, which isn't a luxury retailer, nor a discount chain.
Once thought to be a regional to national growth story, AtHome has instead become a disaster, Cramer said. The company's same store sales are plunging as the company blames the weather, the economy, trade and whatever else they can think of to cover for their operational problems. As for the stock, Cramer said it no longer appeals to growth investors and its no value investors will touch it either, leaving shares to drift even lower.
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