As stocks surged on Monday, CNBC’s Jim Cramer knew he had to explain what triggered the recovery after the prior week’s big declines.
The Dow Jones industrial average, the S&P 500, the Nasdaq, and the Russell 2000 all ended Monday’s trading session in the green, each one seeing at least a 2 percent gain.
“How does a market go from dismal and dejected on Friday to beyond exuberant on Monday?” the “Mad Money” host said.
With that question in mind, Cramer explained the four drivers that brought stocks out of their Friday rut, including the stabilizing stock of Facebook.
“Washington has set its fangs into Facebook … and the stock took a big dive when something that was reported already, an FTC investigation, was reported again,” he said. “Hey, is that not the classic oversold thing, when we already know something’s happening and it still goes down … when it’s reported again?”
Few people expected U.S. fast-food giant Wendy’s to drop a hip-hop mixtape, but that’s exactly what happened on Friday — and CEO Todd Penegor was all for the exposure.
The mixtape, which was called “We Beefin’?” and targeted Wendy’s rivals like McDonald’s, focused on the chain’s core message of serving fresh food, Penegor told CNBC on Monday.
“It’s really about telling our food story, that we’re fresh, never frozen, and we called out a few of the competitors along the way, but we want to really make sure that people understand that we are fresh and we’re a little bit different,” Penegor told Cramer.
With a powerful presence on social media and 2.46 million Twitter followers, Wendy’s is no stranger to the pop-culture scene. The company is very active on social media, frequently targeting competitors and engaging with consumers on a hyper-personal level.
And after 20 consecutive quarters of same-store sales growth, a key metric for restaurant operators, Wendy’s will continue leveraging its ties to customers, Penegor said.
In recent weeks, Cramer has noticed a new group becoming “hated” on Wall Street: the natural gas cohort.
“Not long ago, everybody was touting this stuff as the cleaner, safer bridge fuel to a clean energy future,” the “Mad Money” host said on Monday. “But lately, there’s been a major backlash against nat gas from state and local regulators, … and their negative attitude appears to have spread to investors.”
And when he dug deeper, Cramer realized that the weakness went beyond natural gas as a commodity. Shares of natural gas producers, transporters, storage providers, exporters and even utilities that use natural gas to produce electricity have also fallen under pressure from sellers, he said.
“If you have any exposure to this stuff, you know what? That should scare you,” Cramer warned. “Because if a brutal winter can’t deliver a sustained natural gas rally, can anything?”
Also on Monday, Paychex CEO Marty Mucci addressed how rising interest rates, job growth and wage growth boost business at his payroll and administrative services company.
“We’re seeing job growth not increasing as much, but it’s steady and it’s very sustainable,” Mucci told Cramer. “We’re seeing wage growth, as you know, around 2.7 percent. It’s come down a little from the almost 3 [percent] we saw, but it’s still a 2.7 percent wage increase. Those two things are very positive for us, that’s for sure.”
And while wage inflation worries some investors due to the increased potential for more rate hikes by the Federal Reserve, Mucci said the steady-as-she-goes trend was beneficial so far.
“I think if we can stay in that 3 percent range, I think that’s a good thing,” the CEO said. “That’s going to get consumers to feel better about saving and buying more and that’s just going to spur more small business growth because of the growth in demand for services. I think that’s a very positive thing.”
Finally, Cramer opined on a new worry among investors that has been bubbling up since the early February sell-off: the potential for ETF selling to cause a market crash.
“The theory? Concentrated ETF selling can overwhelm the actual equities within an ETF and the market will therefore have to come tumbling down,” the “Mad Money” host said.
But without systemic risk, Cramer argued that ETF-fueled drops could actually be buying opportunities than the beginnings of prolonged downward spirals.
“In short, being nimble when stocks get oversold can be a terrific way to make money. You have to be willing to go where others fear to tread,” Cramer said. “As long as there’s no systemic risk, any kind of monster pullback related to ETF selling is going to create buying opportunities that people are going to take advantage of.”
In Cramer’s lightning round, he ripped through his take on some callers’ favorite stocks:
Blackberry: “I’ve got to tell you, it’s got great intellectual property, it’s got great growth and [CEO] John Chen is for real.”
Walmart: “I think Walmart fell too much on the weakness of the e-commerce slowing down a bit and I think it’s OK for a buy. Should go back to the mid-$90s.”
Disclosure: Cramer’s charitable trust owns shares of Facebook.
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