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Right now we are dealing with three different stock markets masked as one, Jim Cramer told his Mad Money viewers Monday, and each one must be treated differently.
The first market are those stocks like Time Warner (TWX) , living, breathing companies that are creating value no matter what the Federal Reserve does or where the price of oil happens to be. Cramer praised Time Warner's tie-up with AT&T (T) , as it was a full $22 a share higher than previous offers for the company, all of which were rejected. Cramer also called out T-Mobile (TMUS) as a highlight of the day, saying the company "crushed it" with blowout earnings that sent shares soaring 9.5%.
The second market consists of stocks that consumers just can't live without. Stocks like Facebook (FB) , Amazon.com (AMZN) and Alphabet (GOOGL) , an Action Alerts PLUS holding, also control their own destinies and couldn't care less about an interest-rate hike.
But then there is the third market, Cramer continued, those stocks that DO trade in lock-step with the latest economic news. That's why apparel maker VF Corp (VFC) lost 2.9% on the day, and the company reported weakness across the board, as a fickle consumer chose to purchase elsewhere. Likewise with Kimberly-Clark (KMB) , which also reported weaker than expected results. The weakness in Kimberly did have one positive however: Investors took shares of Pepsico (PEP) , another Action Alerts PLUS name, higher as that company still has strong organic growth.
M&A Monday: What's the Big Deal?
Now that the AT&T and Time Warner deal has been announced, what should investors do if they own either stock? Cramer said he wouldn't buy either company.
While Cramer commended Time Warner for bringing out tremendous value for shareholders, he said the AT&T deal is likely to face many regulatory hurdles and may require unpalatable divestitures to get the deal done. Regulators have nothing to lose by denying the merger, he said, and the old system of fairness and due process seems to have been throw out the window since the financial crisis.
Cramer said he's also skeptical of the $85 billion price tag, which screams of desperation, and of the over-optimistic comments from AT&T management, which up until now has no experience in the content business.
From a business perspective, the deal admittedly makes sense, Cramer said. Interest rates are low and competitors like Verizon (VZ) and Comcast (CMCSA) are both making similar acquisitions, but the question remains as to whether any synergies can actually be realized.
Cramer said investors can get better income and growth opportunities elsewhere, and he wouldn't be a buyer of either of these stocks given the amount of uncertainty surrounding this merger.