How can it be that the stock market is celebrating an interest rate hike -- the very thing that eventually kills all bull markets? Jim Cramer told his Mad Money viewers Wednesday that the quarter point hike announced today will have very little impact on stocks, but that won't be the case forever.
The Federal Reserve has two mandates: promote growth and fight inflation. In their efforts to fight inflation by raising rates, the Fed also makes bonds more attractive, thus taking the spotlight away from equities. This will eventually matter, Cramer said, but not for the foreseeable future.
What does matter to the markets, however, is the other killer of bull markets: euphoria. When insider selling spikes like it did in 2000, when people begin trading houses like they were in 2007 and when there's a surge in margin debt, that's the time to be worried, Cramer explained.
In the meantime, it's always prudent to take gains where you have them and build a cash position so that you'll be ready when the selloff arrives. There is still a lot of money on the sidelines, Cramer concluded, so the bull could stick around for a while longer.
Over on Real Money, Cramer says Janet Yellen's transparency has been good for markets. Get more on Cramer's insights with a free trial subscription to Real Money.
No-Huddle Offense: Disney and Fox
In his "No-Huddle Offense" segment, Cramer opined on Walt Disney Co.'s (DIS) proposed acquisition of a large part of 21st Century Fox (FOXA) . He said the price of the deal (reported to be around $60 billion) doesn't really matter because Disney will get what the market craves… scale.
Scale is both an offensive move and a defensive move, as it gives Disney a ton of great assets, but also prevents those same assets from falling to the hands of Apple (AAPL) , Facebook (FB) or worse, Netflix (NFLX) .
Scale also affords Disney some unique opportunities, like the possibility of combining ESPN with Fox Sports and spinning off those assets as its own company. But more important, it buys Disney some time from the constant drumming of analysts worried about cord cutting and subscription losses.
Unlocking Hidden Value
When stocks head higher, it's often for a good reason. Sometimes, that reason is a smart management team unlocking hidden value by breaking itself up. That was recently the case with Manitowoc (MTW) , which spun off Welbilt (WBT) , its restaurant equipment business.
There's no universe where construction cranes and restaurant equipment belong under the same roof, Cramer proclaimed, which is why the company's breakup announcement in 2015 was initially met with much fanfare. In the months that followed however, shares tanked as the company's construction business saw double-digit declines.
By 2016 however, construction was recovering, and the split was met with bull markets at both companies. Since the split, shares of Manitowoc are up 145%, while shares of Wellbilt rose by 64%. All told, shareholders were rewarded with an 83% gain and two great companies that are still both thriving.
That's what can happen when management takes control of their own destiny, Cramer concluded, and why he still likes both companies today.
Cramer and the AAP team take a close look at the central bank's sentiment on future rate hikes. Find out what they're telling their investment club members and get in on the conversation with a free trial subscription to Action Alerts PLUS.
Is J.M. Smucker in a Jam?
How do you know when a stock has finally hit bottom? That was a question Cramer explored with J.M. Smucker Co. (SJM) , a stock that's been quite a roller coaster as of late.
Shares of Smucker bottomed at $34 a share during the generational lows of 2009 and rallied to a high of $157 in mid-2016. This stellar move was thanks in part to a number of smart acquisitions that took this sleepy maker of jams and jellies to a packaged foods powerhouse that included Folgers coffee and a number of pet food brands, like Meow Mix and Milkbone.
But then in 2016, food deflation and slumping sales took its toll on the company, resulting in multiple false bottoms in January, May, July, September and November. Shares are now up 19% from their lows in November, but Cramer cautioned that one good quarter does not make for a turnaround.
Cramer said while it does look like things are improving at Smucker, he still doesn't trust the company and wants to at least one more quarter before becoming a believer.
Off the Tape: Just Rewards
In his "Off The Tape" segment, Cramer sat down with former Sprint (S) CEO, Dan Hesse, to discuss his involvement with JUST Capital, a non-profit organization that has released its 2017 list of the most "just" companies.
Hesse, who serves on the board of directors, explained that JUST Capital asked 72,000 Americans about what behaviors they wanted to see from the companies they buy products from. Then, they gathered the facts and data to rank which companies most closely kept to those ideals.
Topping this year's list were a number of technology companies including Intel (INTC) , Nvidia (NVDA) and Microsoft (MSFT) . Hesse explained that all of these companies had customer-centric and employee-centric cultures that allowed them to flourish.
Overall, companies that make the Just 100 list deliver a 33% higher return on equity than those that don't make the list.
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