Investors looking for a way to capitalize on the rise of legal cannabis should look no further than Canadian cannabis giant Canopy Growth Corp., CNBC’s Jim Cramer said as stocks recovered from a multi-day selling streak.
“That’s the only one you can really own and you’ve got to sell the rest. Why? Because it’s got that big position with Constellation [Brands],” the “Mad Money” host told a caller on Thursday.
Cramer was referring to Constellation Brands’ $4 billion stake in Canopy Growth, a vote of confidence by the alcohol maker that the cannabis industry’s growth is still in its early innings.
“If you believe, over the long term, that cannabis is going to be good, I think Constellation’s good and I think Canopy’s good. It’s got the best balance sheet. That matters a great deal to me,” Cramer said.
With a month left until the Federal Reserve’s next widely expected interest rate hike, Fed Chair Jerome Powell is facing a critical juncture that could determine the trajectory of the U.S. economy, Cramer said Thursday.
After hearing Powell’s remarks in a Wednesday interview with Dallas Fed President Robert Kaplan, Cramer felt that for the first time, Powell was growing cautious about the pace at which the Fed is raising rates. The central bank has said it plans to raise rates once more in December and three times in 2019.
In a question-and-answer session during the interview in Dallas, Powell acknowledged that the pace of global economic growth was slowing, but said it was “not a terrible slowdown.” Earlier this year, Powell said the Fed was “a long way” from neutral interest rates, signaling more hikes to come.
“Kaplan’s questions allowed Powell to walk back his sadly intemperate comments from October, comments that seemed to be almost blithely oblivious to some of the more worrisome data out there,” Cramer reflected.
Now, the central bank chief is realizing that “there’s another side” to the U.S. economy that is splintering under the dual pressures of higher rates and higher tariffs, he said.
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Company leaders across industries are telling Cramer — off the record — that they’re worried about a slowdown in the U.S. economy.
“So many CEOs have told me about how quickly things have cooled,” the “Mad Money” host said. “So many of them are baffled that we could find ourselves in this late-cycle dilemma that wasn’t supposed to occur so soon.”
Cramer has been warning investors for weeks about a manmade slowdown in the U.S. economy, fueled by the two-pronged pressures of the Federal Reserve’s interest rate hikes and the Trump administration’s tariffs. Now, high-profile CEOs are worried about growth slowing so drastically that it could actually hurt the economy, he said.
“There are degrees of slowdowns that, nonetheless, can cause an awful lot of havoc and cost a lot of jobs, and that’s what we’re on the verge of here,” he said. “That’s what the markets are saying. That’s what the CEOs are worried about offline.”
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General Electric’s troubles have been followed by many, but two Wall Street analysts have correctly called the industrial’s prolonged downfall every step of the way, Cramer said Thursday.
Stephen Tusa, an analyst at J.P. Morgan, and John Inch, a Gordon Haskett analysts formerly of Deutche Bank, “have been negative on GE for ages now, and they have been relentlessly and painfully right,” Cramer said.
“They nailed this story every step of the way, even when the company itself seemed to be totally clueless — or perhaps something even worse — about its own prospects,” he said. “Which is why you do need to take your cue from these two gentlemen and wait until the real problems they say are solved before you get bullish. And they sure aren’t there yet.”
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Hot off his companies’ merger, MJardin Chairman and CEO and GrowForce CEO Rishi Gautam checked in with Cramer on the state of his cannabis producer and distributor, and the outlook seems bright.
Gautam, whose company began trading on the Canadian Stock Exchange on Thursday, said the merger created the “largest operator in the global cannabis space” in the exclusive interview.
“We produce and sell more legal cannabis than Tilray and Canopy combined,” Gautam said, calling out two of the top U.S.-listed cannabis companies. “We’re very excited with this opportunity.”
Click here to watch his full interview.
In Cramer’s lightning round, he rattled off his take on callers’ favorite stocks:
Encana Corp.: “We’ve got to buy the highest-quality oils now because the patch is so dicey. Encana is not one of those.”
BP PLC: “BP? Absolutely. They just raised the dividend. The cash flow’s amazing. They’re doing a lot of things right. It’s absurdly valued, which is why the charitable trust is buying it right here.”
Disclosure: Cramer’s charitable trust owns shares of J.P. Morgan and BP.
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