The market may have faced a brutal decline on Friday led by the stock of Apple, but CNBC’s Jim Cramer knows investors could handle a dip in the stock of the world’s largest company.
“And we can handle the yield on the 10-year Treasury surging ever closer towards 3 percent. But we can’t handle both in the same day,” the “Mad Money” host said. “Hence today’s shellacking.”
Cramer blamed the algorithmic processes that direct machines to sell stocks and buy bonds when Treasury yields approach 3 percent, noting the influx of good earnings reports that happened ahead of the weekend.
With that negativity in mind, Cramer turned to the stocks and events he’ll watch in earnings season’s fullest week yet, which will include the most eagerly anticipated report of the year from Facebook.
The social media giant’s report will hopefully answer a slew of investors’ questions: How badly did the Cambridge Analytica scandal hurt business? Has growth drastically slowed? Have expenses gone up due to new cybersecurity measures?
“The stock’s real cheap now, and if there’s been no lasting impact, this is a bargain,” Cramer said. “Otherwise, though, expect a test of its lows, which would take it down 15 points from here.”
Ten years ago, then-businessman Donald Trump criticized U.S. leaders for not calling on OPEC, the Organization of the Petroleum Exporting Countries, to lower oil prices.
“Oil that’s close to 100, going to be over 100 and nobody in this country calls and says get that goddamn oil price down,” Trump said in a 2008 interview with CNBC’s Jim Cramer.
Fast forward 10 years, and now-president Trump is at it again, slamming OPEC on Friday via Twitter for keeping oil prices artificially high.
But Cramer saw one big problem with the president’s view of the oil markets.
If Trump calls OPEC, “there’ll be no one at the other end of the line who matters, because it’s not OPEC that’s behind the rally. It’s the oil market itself,” Cramer said on Friday. “The OPEC that exists today? It’s a shadow of its former self. … You see, OPEC no longer controls the price of oil.”
In honor of 4/20, the unofficial marijuana holiday that falls on April 20, Cramer took a look at the state of the red-hot bull market in marijuana.
“[It’s] the hottest sector of the economy that remains totally illegal according to the federal government,” the “Mad Money” host said on Friday.
So far, 29 U.S. states and Washington, D.C. have legalized medical marijuana, and nine states and D.C. have legalized recreational marijuana. As related businesses in those states flourish, they have also created new ways to invest in the marijuana industry.
“So while I may not be a cannabis connoisseur … and I don’t know the best way to tell you to get baked, I can absolutely help you figure out how to play the booming bud industry,” Cramer said.
Investors may be panicking that the 10-year Treasury yield is inching closer to 3 percent, but it hardly phases Bryan Jordan, CEO of regional banking system First Horizon National.
“No, the sky’s not falling,” he told Cramer in a Friday interview. “That’s about as predictable as the sun coming up tomorrow. Interest rates had to go up and the Fed has been very clear that not only have they raised rates, they intend to raise rates, in all likelihood, two or three more times this year.”
Jordan, whose bank has more than 300 locations across the Southeastern United States, added that the steepness in the yield curve is actually good for the economy.
“[There’s] a sense that it’s going to slow down the economy and I don’t see that happening,” the CEO said. “I see pretty good fundamentals in the economy. But to your larger point, financial institutions clearly do better when interest rates are higher and when you get that steepness in the yield curve.”
After a strong earnings report with 6 percent organic sales growth, Waste Management CEO Jim Fish told Cramer in an interview that his business tends to correlate with the strength of other key sectors.
“The strength in the solid waste business came from commercial, industrial and landfill. The resi[dential] business has been a little bit soft for the last few years … but, boy, commercial was outstanding, landfill was good, industrial’s been very good,” he told the “Mad Money” host.
Fish said it was tough to pick a particularly outstanding geography due to the broad-based strength in Waste Management’s business lines.
“The ones that are doing the absolute best are probably in the South – Florida, Tennessee, Texas, California,” Fish said. “I think it kind of parallels the economy and the strength in that in both U.S. and Canada, and also some of what we’re doing on our customer experience and our disciplined growth.”
In Cramer’s lightning round, he flew through his take on some callers’ favorite stocks:
Applied Materials: “I like Applied Materials so much, but you know what, every morning I wake up and take a look at it and see what’s going on in China. Three o’clock, I get up, I don’t like what I see. Applied Materials has a good business in China. We’re going to let that stock come down a little more, break down a little more, see what happens in China and then [pull the] trigger.”
Qualys, Inc.: “Look, the last bastion of stocks that are still holding up are the cybersecurity stocks. And I’ve got to tell you, I think that’s a good company you’ve got. I’m not going to discourage you. My problem is, just so you know, everything is coming down. Everything is coming down and we have to wait to buy any more for those. Let things come in. We’re going to get better prices.”
Disclosure: Cramer’s charitable trust owns shares of Apple and Facebook.
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