Here are Jim Cramer's top thoughts on some of the biggest stories of the week.
Jim Cramer: Amazon's Foray Into Food Will Squeeze Everyone
At what point do we say "OK, it's going to be everything. It's all going to come down?"
You know, I have pondered this kind of juncture so many times, that all I can say is you are looking at a market that doesn't know how to value itself.
Let's use the foods as an example. For most of the last year, food companies have been valued at the price that one of the least organic growth -- and organic, for that matter -- companies will pay: Kraft-Heinz (KHC - Get Report) .
Ever since the aborted Unilever (UL) deal, we know that nobody's too big to be spared from this colossus that has no growth whatsoever and needs to purchase it, and then hone it, and then have a little more cash flow to raise the dividend or do another deal.
But along comes Amazon (AMZN - Get Report) , and Amazon wants to offer the consumer a fabulous deal. That's pretty much what it does for a living: have enough scale that it can lower prices and still make a lot of money. There's a model for that: Walmart (WMT - Get Report) .
Amazon has been out-Walmarting Walmart for ages, in all but one aisle: the food aisle.
Now, with the closing of the Whole Foods (WFM) deal, it's ready to take on Walmart, too.
Why not? Walmart's where the money is. Walmart has almost $500 billion in revenue, and it's the nation's largest grocery store.
Amazon won't cede any market to anyone.
Of course, now the big issue is how are they going to offer such low prices? The answer? Squeeze everyone who Kraft-Heinz was supposed to be buying. Why not? What's it to them? These food companies are like book publishers to Amazon. They are made to be squeezed.
And the others, who sell groceries? They are now collateral damage to these two giants duking it out.
Now, back to stocks. What do you see on your screen? The shrinking of the Kraft-Heinz premium right before your eyes. Now, these stocks are going to where they belong, given that even the best of them has low single-digit organic growth.
Then, if it turns out that things aren't so bad, they will be bought back.
Now, the ETF selling pressure plus the individual selling pressure will create bargains. Not all of these companies compete directly with Amazon or Walmart, and not all of them sell into them, but there's still a good chance that their stocks are in the miserable ETFs. So bargains get created. But they are barely worth even thinking about until real damage like Thursday's gets wrought.
Is this playing out in every group that's turning down? Is there some sort of price war breaking out everywhere?
Not really. Lots of cycles are strong. There are lots of places that have nothing to do with Amazon and Walmart. They simply aren't nearly as visible as the companies involved in this titanic tussle, because they aren't in our faces.
There are plenty of breakdowns, for certain. We know that. It is August-September. I have been saying that for months. This is a tough time to invest.
But we will get through it, provided we avoid the stocks of companies that are directly involved in Amazon driving down food -- and stock -- prices for all of us.
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Jim Cramer: 6 Market Gremlins That Keep Putting Up Roadblocks
Why do we always stall out after we've developed a head of steam? Why are days like the one earlier this week, where the market rallied, so lacking in follow-through as we see today?
There's plenty of gremlins at play in this market that seem to counteract the items that work in favor of any advance. Let's tick them down.
First is the president. When he is on prompter, the stock market goes higher. When he is all caught up in the enthusiasm of the moment and without prompter, he says things that get in the way of his economic agenda. Then he blames the Democrats for getting in the way instead of saying he's sorry he got sidetracked. Legislation isn't like love, where you never have to say you're sorry, and Trump loves to campaign even after he has won. You are real media if you agree with him and fake media if you don't.
So let me be real, Mr. President: I like your economic agenda and would you mind being kind enough to emphasize it when you extemporize? It could be fun! Instead, anything about the wall, or repeal-and-replace or about protesters or about the media that is not Fox creates a distraction that pushes out the agenda. It is no coincidence that the market could rally hard after the president read the prompter.
Because of this new spat, we have to worry about the debt ceiling again. While stocks have rallied into and after debt-ceiling controversies, except for 2011 when the S&P downgraded our debt, the economic agenda will be done in by this issue and the acrimony it produces.
Second is a total lack of interest in the stock market other than FAANG. I don't know who convinced everyone to be in index funds or CDs and I don't know how the stock market became some tarnished asset -- probably because of the ability for it to wipe out capital so quickly -- but new money just doesn't come in at the pace it did during the great advances. Without that firepower and with the diminished buybacks, it's very difficult to simply levitate as we did during some of the great advances of our time.
We know stocks have gone out of style as a method of investment and it's possible that, at this stage, the baby boomers are pulling money out in record numbers. Still, with no transom money coming in after big gains as there used to be, there's a tendency to ring the register, not buy more. Oh and it's unseemly to champion stocks. I think I am the only one anywhere who says, "You should buy some." In the '80s, so many people embraced stocks and made fortunes holding on. But stocks feel like vestiges of an earlier day. Wall Street One.
Third, there is FAANG itself. So much of the advance depends on Facebook (FB - Get Report) , Amazon (AMZN - Get Report) , Apple (AAPL - Get Report) , Netflix (NFLX - Get Report) and the former Google (GOOGL - Get Report) that unless they rally, nothing seems to matter. Yet those are the only stocks that strike people with spare cash as compelling. Otherwise the brainwashing of single-stock risk has made it so we don't see any real interest in any other stock beyond the day that it rips or trips. (Facebook, Apple and Google are part of TheStreet's Action Alerts PLUS portfolio.)
Fourth, the endless bearishness of hedge fund managers does weigh on us. Earlier this week we heard from Ray Dalio, another hedge fund genius, saying things are risky.
You almost never, ever hear some hedge fund manager say, "This stock market's a screaming buy." And before you laugh at that, think about it like this. If you took every single "this market is risky and overvalued" comment that we have gotten endlessly from hedge fund managers and you changed the wording to "this market isn't that risky and is undervalued," then that manager would be right and I would certainly respect him more.
But we live in a world where we quote managers who are and have been wrong and there's no harm, no foul. So, if you aren't ostracized or chided by making a comment about how risky and dangerous the market is, then why wouldn't you always say it is risky? What's the percentage in saying it's undervalued and attractive? None! None whatsoever! No one ever plays a tape of someone who says it is "risky and overvalued" when the market goes higher. But we would hear a tape endlessly of someone who said it is safe and undervalued. Nonetheless, every time a new "fantastic" manager is taped disparaging the market, it's always noted. Thank heavens for Warren Buffett, who is being interviewed next week. Odd, isn't it, that the world's greatest investor isn't afraid to say stocks are cheap? Maybe he's known as the world's greatest investor because he's been right?
Given how much we revere big money, this asymmetrical approach to hedge fund jeremiads is appalling. I guess they all think the only way we can really advance in life is through Powerball. I guess I have to move to Massachusetts.
Fifth, the analysts and this better-than-expected ethos has been the bane of so many existences. What moves stocks up short term is so different from what moves them up long term that it makes it so if you like something they don't, and their orientation is that of a mayfly, you feel like a dope. This is the "own Apple, don't trade it" view that I have. Only on Wall Street could this view be some sort of outsider, counter-intuitive concept.
It plays out every day, though, in the analyst/journalist financial complex. Don't believe me? Let's take Salesforce.com (CRM - Get Report) , which reported earlier this week. I had done a ton of work before the quarter including a view of what I needed to see to like the stock. I got it in spades. But there were some shortsighted people who seized on the notion that there was some gross-margin line that was not as good as expected and the stock sold off. That begat dozens of articles about how the quarter wasn't good.
I was aghast and said so, but when the stock didn't initially go up I was viewed as a houseman and a crank.
Now it is up big. Do those who sold it and their acolytes have to pay any price for their shortsightedness?
No. In the meantime, though, tons of people fled the stock.
Sixth and final: An obsession with the Fed has kept out so many investors that it sickens me. Do you know how many times we have had to wait for the Fed to signal "all clear" before we buy? Guess what. They never have. We play this endless parlor game of what are they going to say, including this week with the venue at Jackson Hole. A moose is going to tell us more than these people. Still, my thesis is that because we have been told endlessly that when they raise rates or when they sell bonds, many people fear investing. The mindset this nonsense has created is so counter-productive to making money with your money that it should be a financial crime. Has anyone noticed that in the end it hasn't mattered what the Fed did? Some would say it is just lost opportunity. I say it borders on criminality. It ought to be a video game: Grand Theft Portfolio.
So we have no follow-through, as one of these six negatives always seems to surface to kill things. Why can we go up at all? Because this is a market of stocks and stocks represent the future longer-term prospects of companies, and despite all of these six sideshows, the main event keeps going ever higher because most CEOs work hard to create value for their shareholders despite the never-ending restraints on those who would like to own them.
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Action Alerts PLUS, which Cramer co-manages as a charitable trust, is long FB, AAPL and GOOGL.
Originally published Aug. 24 at 1:32 p.m. EDT.
Jim Cramer fills his blog on RealMoney every day with his up-to-the-minute reactions to what's happening in the market and his legendary ahead-of-the-crowd ideas. This week he blogged on:
- What BHP means for oil.
- How ADP could have avoided a showdown.