The rally in the tech stocks isn't going to be derailed by the same things that derailed the dot-com stocks 20 years ago, Jim Cramer told his Mad Money viewers Wednesday, but that doesn't mean tech isn't vulnerable.
Many investors are comparing Wednesday's rally in big tech to that of the dot-com rush of 1999. But Cramer said the two eras only appear alike on the surface. Back in 1999, he said, most tech stocks weren't profitable, many were ethically challenged with lots of insider selling, and there was a huge influx of IPOs that the market simply couldn't support.
Today, however, that's not the case. Our biggest names in tech are profitable, they're built on solid business models, and there aren't waves of insider selling or waves of new IPOs to derail the market. But that doesn't mean there aren't things to worry about.
As our economy reopens, money will naturally rotate into the cyclical stocks, Cramer said, and that will stop the tech rally in its tracks. The government could also interfere with the rally through increased regulation, tighter restrictions on China or with higher capital gains taxes, the kind Joe Biden has proposed. Inflation could also begin to rise and knock the wind from the tech rally's sails.
Cramer said he doesn't expect the rally in tech to collapse any time soon. However all of the above are legitimate worries that investors must stay vigilant and watch out for.
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Special Interview: Nancy Pelosi
In a special interview, Cramer checked in with Speaker of the House Nancy Pelosi for an update on additional stimulus measures from the government to fight COVID-19.
Pelosi said there are still a few days left to reach a deal on additional stimulus, just as there was with the HEROES act, which was passed on May 15 to help support essential workers. She added that the Federal Reserve and Treasury have provided a floor under the stock market to help support it and Congress needs to do the same for American workers who have been displaced by the pandemic.
When asked about testing, Pelosi explained that America still doesn't have the testing equipment or infrastructure it needs to provide timely results. She said we still need to invest in testing so that tests that currently take a week can instead be completed in a day.
Finally, Pelosi commented on the death of Rep. John Lewis (D-Ga.), saying that she had worked with Lewis, a civil rights activist, for over 33 years and considered him family. She called Lewis a "super patriot" who was only concerned with making our nation a better place.
Executive Decision: First Horizon National Corp.
In his first "Executive Decision" segment, Cramer spoke with Bryan Jordan, president and CEO of First Horizon National (FHN) - Get First Horizon Corporation Report, the bank that just delivered a three-cents-a-share earnings beat. Shares of First Horizon currently yield 6.5%.
Jordan said he's very excited about their recent acquisition of Iberia Bank. He said the combined company has a lot of cost savings and leverage and will ultimately create greater shareholder value.
When asked about their business, Jordan admitted that loan volume has been fairly benign, but he noted that First Horizon also has a few counter-cyclical businesses, including fixed-income and mortgage services, both of which help maintain revenues even during a slowdown. He remained optimistic for the rest of 2020.
Cramer said he felt First Horizon was cheap at current levels, especially with its bountiful dividend yield.
Executive Decision: Medallia
For his second "Executive Decision" segment, Cramer also spoke with Leslie Stretch, president and CEO of Medallia (MDLA) - Get Medallia, Inc. Report, the customer experience management platform that the company says pays for itself in just six months. Shares of Medallia are down 4% for the year.
Stretch explained that Medallia helps companies collect feedback and sentiment from their customers using a variety of channels, including surveys, videos, call logs and more, so they can make better decisions. He said that especially in today's world, consumption patterns and behaviors are changing rapidly and companies need to stay on top of what's happening.
Stretch added that companies like Dick's Sporting Goods (DKS) - Get Dick's Sporting Goods Inc Report are among Medallia's customers and Dick's uses the platform to gauge what customers expect from them regarding reopening their stores safely. Dick's also uses the platform to gauge sentiment and even used their feedback monitoring for important decisions, like whether or not to continue carrying firearms at their locations.
Cramer said Medallia is another great cloud software provider that you've probably never heard of.
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End of Fund Reporting Requirement?
The market needs more transparency, not less transparency, Cramer told viewers, as he sounded off against the Securities and Exchange Commission's proposed rule change regarding disclosures.
Cramer explained that since 1978, money managers with more than $100 million in assets have been required to disclose their holdings once a quarter. The proposed rule change would raise the minimum to $3.5 billion, thereby eliminating the reporting requirement for all but the largest of funds.
While the change is being billed as regulatory relief for smaller funds, Cramer said he's not buying it. Reporting your holdings was never a problem at his hedge fund, he noted, and the 45-day filing period allows funds to protect their short-term strategies.
Adjusting for inflation, the requirement should be set at $400 million, Cramer calculated. Anything higher than that equates to a handout to the industry the SEC is supposed to be regulating. Investors need more transparency, not less, Cramer said. He urged viewers to learn more and let the SEC know their opinions during the 60-day comment period, which is underway right now.
Here's what Jim Cramer had to say about some of the stocks that callers offered up during the Mad Money Lightning Round Wednesday evening:
Illumina (ILMN) - Get Illumina Inc. Report: "This one, Thermo Fisher Scientific (TMO) - Get Thermo Fisher Scientific Inc Report and Danaher (DHR) - Get Danaher Corporation Report are all great companies."
Kinder Morgan (KMI) - Get Kinder Morgan Inc. Report: "I don't like the pipelines. This was a once-great business but now doesn't have the growth. If you want oil, I'll recommend Pioneer Natural Resources (PXD) - Get Pioneer Natural Resources Company Report, Parsley Energy (PE) - Get Parsley Energy, Inc. Class A Report and Chevron (CVX) - Get Chevron Corporation Report"
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At the time of publication, Cramer's Action Alerts PLUS had no position in the stocks mentioned.