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tv   Mad Money  NBC  January 9, 2016 3:00am-4:00am EST

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"mad money" starts now. hey, i'm cramer, welcome to "mad money," welcome to cramerica, my job is to educate you and treat you. tweet me at jimcramer. only on, we know it, nasty wig. thank heavens it is over. fortunately, i guess, it ended with a pathetic whimpering sell off and not a bang of a selloff, and as i told you all week, do not expect anything good from this market, not now, no way. dow seeking today, 168 points, nasdaq climbed .98%. you want an impressing stat? dow's lost more than 1,000 points this week, the s&p more
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cap has been wiped out. sobering and i need you to think about that because that's what we're dealing with right now. you think that this market would have been able to go higher with china being able to mount a pretty big -- bountiful job gains this month. but if you thoughts that, you would be wrong. first the chinese government propped up to the market last night with all sorts of buying, it wasn't real people. terrific that it didn't go down. we all know the drill, the communist party is making it up as you go along. the massive rally in 2014, when the shanghai was at 2100. in may of last year when it climbed to 5200. made no sense whatsoever, it was just people throwing money at it, and while the chinese market has managed to come down from
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level. the sheer number of people who wanted out when the government instituted circuit breakers earlier this week while devaluing its currency, it got rid of the circuit breakers because it has no idea what it's doing. i think the shanghai market would is have at least started the process of roundtriping back to where the bubble started. we should be facing another 30% drop. which is exactly what we used to do when the government encouraged opening accounts and people opened five accounts and borrowed money to put in the accounts. specifically, it's a phony market. we have lost all confidence in the chinese economy's ability to run either their stock exchanges or for that matter, their economy. and that loss of faith is
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some sort of systemic crisis that could hurt worldwide growth. there will be fed officials galore talking up the need for rate hikes later this year given the strong employment numbers. if they look for raw material inflation, the longer oil situation has kept them at bay. but any good news in the employment front is bad news for the consumer, who will have to get used to paying higher interest rates. it's no wonder that so people believe that autos are peaking, that's the sector that leads in rates. don't forget about the housing stocks again, something that is again directly related to the coming rise in mortgage rates, it all makes sense when you hear about the fed's hawkishness. these are governors, they come on tv, they love to talk. i wouldn't let any of them talk
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yelling, the chinese stock market because it's propped up by the government and the u.s. economy that hums without inflation is one the feds feel should be slowed by higher rates. are they against the working person making a little bit of money here? who in their right mind wants to buy stocks on those two meeses of news. but one things that's been totally lost in the shuffle is earnings. specifically the ones that we got from constellation, and from walgreens boots aleans. the market simply wasn't focused on how individual companies were doing, just companies. that could change when earnings season begins, but china and the fed, and the endlessly declining price approximate in oil, more on that later in the show, and control, all three are negatives that could trump anything i'm
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the gate, as always, it's alcoa, the company is splitting itself up into two entities, a pure play on the making of aluminum, and a company that modernizes the making of aluminum for a variety of industries like aerospace, gas turbines. in order to create a new commodity company that represents a basket breed energy in the sector. a close win in indiana yesterday, but it's the other site of the business, the high-tech one that i'm interested in. this is only the real look at the company since the breakup proposal. and klein is going to have to trim expectations for limited use, because of a faltering china and weakness in the emeshlging markets. i think alcoa stock all the way down to 8 as gotten a little lower versus some of the parts here. and tuesday, we hear from csx. this is another company that can give us a read on everything
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parts, agriculture, oil. the railroad stocks have been nothing short of hideous, union pacific, not a great stock. the rail business has been so dismal. one of my favorite names one monster beverage, the energies drink company, it's also a favorite of the coca-cola company, and also opened this business, distribution network. it's going to be pretty darn good. they had a nice story about european sales. not to mention now sales of convenience ststes, worth your speculatininon, one of the last bastions of domestic stocks that has held up well. but don't tell that to the people who own supervalue, which is a month ago, i mean about a year ago, it was at 12, it's at 6 now.
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but all a in all, if they say bad things, go by kroger or maybe even whole foods. thursday we hear from jpmorgan and i got the tell you, the banks have been roaring going into the new year, investors kpt the fed to continue raising the rates which boosts how much money they can make on your money. but many feds say they can't keep raising the rates because the economy can't bear it. jpmorgan has been -- so are these bank stocks going to tank as they did this past week? i would say yeah, all right? they go lower. why didn't they get into too much negativity. after the close, we'll get the skinny from intel. i'll point that out because for so long it was a negative. for all the semiconductor properties that sell into the market. i bet they tell a good story
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they're will help intel diversify, hey, 3% kbreeld, that's already. wells fargo, citigroup, pnc or u.s. one. the charts are broken down, the sectors become hated as it was once loved when the fed was expected to be tightening. like i told you, the market has turned on to the financials. citigroup stock for example has broken down to levels not seen since early 2014. morgan stanley, they didn't talk about it. but its stock has given up all its gains since 2014. these people are at standing declines, and i don't think they're done.. so to the bottom line is, with china's -- strong employment like we got this morning, we are fighting both the fed and world events, if we just sit there and buy stocks without waiting for further weakness. i was hoping for a worse bottom today, we didn't get it.
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capitulation, i say we have to be willing to take some pain now to get some gain. if you can't take the gain, and you got some profits, i don't mind you taking them at all. >> a shoultout to your colleagues, the brilliant market analyst lenore hawkins. despite the fed raising rates, but with a rising dividend rate up to 3.4%, should i defend lazar at 16% down? >> i do not like the financials. i have had to take that stance because we're now in the position where the fed may not be able to raise rates and the economy may be softening, and that's not good for any bank, including an investment bank. how about nick in ohio? nick?
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and manny mo. they sent a tender offer for my stock but then they changed or withdrew it. >> i want you just to sell pep boys. it's a at $18, it was at 9 before that. here's what you do, sell, sell, sell. we ended one of the worst weeks in history with just a pathetic parody of what a market should look like, that last hour was awful, but remember, why is this? we're fighting world events and the fed. so wait for more weakness before you pull the trigger. that's the profit? the market might have lost more than 1,000 point this is week, but the dow has always been closely followed. so when an index kicks a stock to the can curb, is it time to sell?
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surprise, if you think the biggest problem with china is its stock market, you're dead wrong. i'm explaining. and there's one guy who called the decline the oil the whole way, you're not going to want to miss that. so stick with cramer. >> don't miss a second of "mad money." follow @jimcramer. send jim an e-mail to madmoney
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they performed much better as they performed much better as
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of the index. newer and better companies. last year, exiled was att. back in 2013, alcoa was tossed out. the year before that, the dow kicked out the old craft in order to make room for united health. in twooirn, citigroup was replaced basis coe, while general motors -- right when the financial crisis started to go crazy in 2008, the dow jones average decided to cult aig loose, replaced by kraft. and honey well got booted so the dow could bring in chevron. you might think that a stock would get crushed after forcibly
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joneneindustrial average. let's go through the ten to bes that dnlts even make the cut. the dogs of the dow, more like the stray dogs of the dow. and see what has been released into the wild. it's pretty instructive. certainly not what i thought of when we started going this piece. att was up 3.5%, in the year leading up to its rule. while it's essentially flat in the ten months since being cut loose, when you consider that the dow's come down more than 9% over the same period, att's flat performance starts to look pretty good. alcoa fell nearly 11% the year before it got removed from the index, and it's down 2% since being kicked out in 2013. bank of america got kicked out statement and it's suddenly up 6%. when you look at the value of the components, it's up nearly 14% since being kicked to the curb.
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expelled. heinz a monster 9.85% total after getting the boot. general motors aig are special situations since the former actually went bankrupt and the latter received the most bail in history. these two were terminated with cause. finally the last two dow jones expatriots, honeywell who were tossed out in 2008, they have rallied 99% and 74% respectively. you got to buy them when they get the boot. with the exception of aig the last companies gotten thrown out of the dow jones industrial average, have actually done quite well. the new additions to the dow have naturally outperformed
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kicked out, that have tended to give you a better return. that's insane. you would expect the new additions to trounce the removals since the gate keepers in the dow are trying to bring the best to high cap companies they can find. on average, three years after being expelled, they're outperforming those who replaced them. maybe you should buy them. how could a removal from the most watched index in the world could be a blessing more than a curse? once a stock gets kicked out of the dow jones industrials, it's no longer going to be a victim of dow futures, dow futures trader who is don't care about individual companies and just want to o t on the direction of the index. once you're free of the dow, you're no longer going to be affected by waves of index sun selling which can overwhelm an
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the index fund factor is huge, while i would never recommend a dow jones industrial index fund, remember, you want the broader diversification that comes from there the -- we did a lot of wok on this, how important is the index fund factor? roughly a year ago, indexed funds have managed more than $2.1 trillion. even if you just don't have enough money to go and buy a diversified portfolio of your own. when there's this much cash in indexed funds, that means the whole -- if a stock is on both the dow and the s&p 500, it's fate is very much in the hands of the futures traders. so being kicked out of the dow is kind of a liberating experirice.
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actual fundamentals. generay speaking if you wait a few days after a stock gets kick out of the dow, generally you would have made money if you buy that stock and hold on to it for the next 12 months. despite what you might think, getting expelled from the dow jones industrial average is no longer a market -- there are real benefits to no longer being part of the most visible index on earth. so the next time the dow's gate keepers decide to adjust this index, watch who gets kicked out to see if you might have a terrific buying opportunity. more "mad money" ahead, i'm taking stocks and markets out of the equation. we're looking at the actual slowing impact of a chinese economy to the rest of the world.
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i've got one of the only guys who called this whole decline from the start. you're not going to want to miss what he tells me next. and it was one of the only companies in the green this week, it helps turn ideas into life saving drugs, i got an exclusive with to the ceo. why don't you stick with cramer.y, you forgot the milk! that's lactaid. right. 100% real milk, just without the lactose. so you can drink a a you want... ...with no discomfort? exactly. here, try some... mmm, it is real milk. see? delicious. hoof bump! oh. right here girl, boom lactaid . 100% real milk. no discomfort
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(politely) wait, wait, wait! you can't put it in like that... ... you have to rinse it first. what's that, alfredo? no, that can go in. no it can't! what are you, nuts? that's baked-on alfredo. baked-on? it's never gonna work. dish issues? trust your dishwasher with cascade platinum. it powers... through... your toughest stuck-on food. better than finish. (to the hostess) see, told you it would work... (turns to girl 2) you heard me say that, right? cascade. the tougher tough-food cleaner. there's a more enjoyable way to get your fiber. try phillips' fiber good gummies plus energy support. it's a new fiber supplement that helps support regularity and includes b vitamins to helppconvert food to energy. mmmmm, these are good! nice work, phillips! the tasty side of fiber,
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we want too much from china. we get a gang that couldn't shoot straight or trade straight when it comes to putting money to work. they aren't as clueless as our authorities were in 1929. before we realized that portfolio insurers could drive an entire market out. that was the actual cause of the '87 crash. at the same time, to the chinese government is exhibiting fear and loathing in dealing with the bubble of their own creation. similar to the investment bank bomb, which sucked in as many investors per capita as china has. this is when we realized that
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what they're doing, and they're just making it up as they go along. the party's perceived invincibility took a big hit this week. but that's only china's stock market we're talking about. it's the real economy in china that's taking it's toll globally and has more of a chance of hurting us here. i watched the baltic trading index. it eshows endlessly declining demand. 's repeated rumbling that the government is doing some kind of stimulus. i should rent one of those ships and throw a wedding party or something on them. if the communist party is really stimulating, they're doing a terrible job of it. and that's the real rub. in a world of marginal growth, now they seem to have turned seller, dumping everything from
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markets, the problem here is that unlike the u.s., china has been a place for e erging markets to sell goods, particularly natural resources. without that chinese demand, we have too much of everything involved in the basic building blocks of consumer construction, namely the metals and mining equipment that drives consumption. you lose china, that means you've lost global growth and emerging growth. that's the real impacts on the world's economy and the ripple effects are indeed being felt in the u.s., particularly u.s. companies that export goods overseas. is caterpillar really crushed by china? as my friend alex blanton points out to me. cat pillar -- china's lack of demand reverberates to it's mineral and mining business
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right now, not only are capital goods acting as a depress sant, but basicallied on to the announcement last night from sirius logic, it's good the analyst made it for cell phones has peaked too. that could be from china, or it could be from people whohoell goods into china, but you're now being crushed by the lack of chinese demand. forbes used reliance on -- can again be traced right back to the capital goods market in china. i'm not saying we have lost china. i am saying that the real worries about china don't have as purchase to do with the stocks market as you might think, which is not particularly tied to the commodity markets. it's heavily weighted towards financials, not cappal tall goods or consumer -- the weakness of the stock market is less about the real economy and more about a reflection of the government's lack of
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so here's the bottom line, the chinese economy might be growing, but it's no longer responsible for the demand needed to gobble up the goods of other countries which have historically relied on china's endalless growth for years, and that, not the ridiculous, immature and embarrassing handling of the stock market is the real problem, in a world yes there's just not enough growth, china is a massive problem, and it's one that seems to be getting worse not better, as the months drag on. let's speak to jeddah in illinois. jeddah. >> i love you and i agree with larry can kudlow that you are the smartest man on wall street. >> thank you. >> i'm calling to ask for clarity on ge stock trades. i was thinking of buying more because of the recent $1 billion turbine sale to saudi arabia,
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liquidation of many of their capital reserve assets. however -- >> one thing, there's no hurry to buy anything. i don't really care for the market. i'm constructively negative, as i tell my staff. meaning that let the stocks come n we a a feel the pain, we're all resigned to it. if i thought i could get you in and out of ge 28 to 26, or 28.5, but that's not what my viewers want, that's not what you want. i think you have to hold off until the stock goes lower. i think it probably stops at 23, 25. but i don't want you to put risk capital at work. let stocks come this, it's okay, it's not a sin. ed in michigan? >> i have got 1,000 shares --
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fiat is down to 8 today, i was wondering if i s suld buy, sell, hold or restock. >> i don't like the auto stocks, the ones that i do like, i do like fiat. i didn't when the ferrari deal, i didn't want anyone in that, i thought that was a really bad deal. all that said, i think it goes lower. will it go from 7 to 5? if it does, i would hold on to it. it might come back from there. it's down, it's cut this half, less risk than if it hadn't been. anyway, china is the stock marnlt, that isn't the real problem. to the real problem is their economy. it's not what it used to be. it's not sucking up all those goods from around the world and sadly, it's getting worse not better. much more "mad money" ahead. he's one of the only guys that got energy right and he's joining me tonight. you're not going to want to miss
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i'll see if he can can keep the games alive in an uncertain market. it's one of the few stocks that's rallying here. and a friday edition of the lightning round, stick with cramer. so how ya doing? enough pressure in here for ya? ugh. my sinuses are killing me. yeah...just wait 'til we hit ten thousand feet. i'm gonntake mucinex sinus-max. too late, we're about to take off. these dissolve fast. they're new liquid gels. and you're coming with me... wait, what?! you realize i have gold status? do i still get the miles? new mucinex sinus-max liquid gels. dissolves fast to unleash max strength medicine. start the relief. ditch the misery. let's end this. (cell phone rings) where are you? well the squirrels are back in the attic. mom? your dad won't call an exterminator... can i call you back, mom? he says it's personal this time...
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i'm talking about one of the most respected authorities in the energy space, who's the president in principal emergency markets consultant which i devour every morning, it serves as the best one stop shop for energy data and market analysis that there is. also author of domino effect, transforming markets, energies and economics. do you know how important the -- i think it's crucial to get a reality check on the oil patch. because according to rusty, this could be another tough week for the industry. check out the man who totally nailed it all the way. the only guy that i deal with. rusty, thank you so much for coming on. i'm going to ask you point blank, why did you know. every time i would e-mail you in the morning, this guy says it's at the bottom. you said you don't know that, jim, you don't know that. how did you know not toe call
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at 60, 50, and now 40, and never once you said there wasn't a reason that it could stop. >> it's oversupply, right? the only thing that can fix oversupply is demand, we look at demand, demand just couldn't react fast enough to happen. then we have to look at supply, there was only two supply things that could fix the market. number one, it would either be the u.s., because prices got so low, or it would be the saudis. we look at a the u.s. side and we look at the economics, and at 50 and 40 and to some extent even 40. there's parts of these plays that can can make money. there's parts of these plays where the economics of producing are still okay. it's the sweet spots, assuming that producers reduce their costs. that's one thing. >> now you also said, it's not in the saudi's interest to do what everybody thinks they want to do. >> absolutely. the saudis are not going to save u.s. producers from themselves. they're not going to do it.
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production? the price goes up. then the saudi producers are going to jump in and produce more, and if they do, prices are going to go back down. now the saudis have got less market share and less price. it would just be nuts. >> could we see oil at 20 bucks? >> right now the market is trading emotionally. there is no natural floor in a short-term crude oil market. there's nothing that's going to stop it at $25 or $20. all that's going to happen is the market is going to react to whatever sort of stimuli comes in, like does china melt down, does iran crank up production, whatever it is, whatever happens to affect the market, you talk about market psychology all the time in terms of stocks, it's the same with crude oil traders, maybe even a little more
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>> you have worked from everybody from chevron to -- is natural gas different from oil? >> natural gas is different from oil. natural gas production has stayed up there, and even with prices as low as it is. natural gas demand is going to kick in over the next few years. >> we read a great piece the other day, we were this genuine increase in natural gas in this country. >> absolutely. >> and it uses up. >> it uses up and surprisingly so. demand is good for producers, so that is going to be a good thing for producers, demand is going to be up. my guess is natural gas is going to be up a little bit. but crude oil, mass oil producer es are going to jump in there with both feet, start producing more natural gas, so ultimately this is good for consumers, cheap energy is going to be good for consumers, right? >> why were the financial
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these guys to get the credit. even though you and i know this is a tough time for them. >> remember all those analysts say that we were going to hit a bottom, there was going to be a w or a v or a u. >> we immediate to stop using those terms. >> stop using those terms because it's not going to happen that way. everybody else bought into that. >> exporting, i thought it might mean something, you told me, jim, huh-uh. >> if it had happened two years ago, that would have been great. we had too much in crude. prices were way down here because of that and that was two years ago. what did we do? we spent a lot of money on refinery modifications, we built splitters, and the debt of commerce allowed exports of processed con den sates. so now prices in the united states, prices in the rest of the world are about the same, so it doesn't make a lot of sense
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if the price is the same. although there's sill some situations where it does make sense to export. if i'm in corpus and my alternative is going on an expensive vessel to somewhere else in the united states. yeah, i could probably go to europe or go somewhere else and make it better. prices are going to be low, production is going to come down. because production is going to come can down, there's a reasonable chance that prices could creep back up again. i do not believe that the $70 is going to happen. but, you know, i think where we are is we're trading in a range, and you know what that looks like in the stock market. we're trading in a range.
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prices of crude oil dropped down from $50 down to 10 bucks, they went back up from 10 bucks up to 15. then they traded at 22 for the next 14 years. there's an exception. desert storm, prices swrumped way up. but the rest of the time, prices were within that $7 range for the entire 14-year period. i'm not saying that that's going to happen this time around, but i'm saying we are in a range, get that r word recovery, out of your vocabulary, it's not going to happen. >> thank you to our bn president. a great book. i a read this guy every morning. he's kept me from calling a bottom. thank you so much. (politely) wait, wait, wait! you can't put it in like that... ... you have to rinse it first. what's that, alfredo? no, that can go in. no it can't! what are you, nuts? that's baked-on alfredo.
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it is time for the lightning round. and then the lightning round is over. are you ready skee-daddy? it's time for lightning round after a real tough week on cramer's "mad money." why don't we start with lee in new york. lee? >> how you doing, cramer, boo-yah. tired and i'm can kicking it into high gear, how about you? >> doing well. tesla buy or sell? >> it's a very, very tough market. there's speculation that people want to be in it, i don't want to with be in it.
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>> hi, first-time caller, long time listener, my question is agrim. >> way too hard. i think you can't wait to get out of agrim. let's go to california, charles. >> thanks for taking my call, jim. i've got some r.r. donnelly. >> i believe the 8% yield is good. the breakup is happening and i think tom quinlan is doing a good job. stick with it. scott in california, scott. boo-yah, cramer, frfr the capital valley of the united states. a symbol aos. 36%. at another point before i saw housing peak, which is what it did in the fourth quarter, i would say buy this, but we have to pull back with the fed raising rates, it's another sector that's not that exciting. >> and the conclusion of t t
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>> the lightning round is sponsored by t.g. ameritrade. >> it is time, after the lightning round. what is that? why don't we start with michael in missouri. michael? boom boom, michael. okay. no michael right now. >> you have to have a photographic memory to with be able to relate events to what's going on. >> it is an oddity that both as a curse if you live with me and a blessing if you're watching me. go ahead, i'm sorry. >> uh-oh. >> happy new year, do. >> happy new year, what did you do? >> dried out, ten days. >> on to the new year? >> what can i etell you, i'm on
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in this extremely difficult environment that we saw today, you want to circle the wagons around the stocks of high quality companies that have strong positive catalyst and don't have tough economic exposure in a weakening economy. the contract research organization that provides universities and biofarmer businesses with everything they need to discover new drugs, i always tell you to think of charles river as an arms dealer to the pharma and biotech industries. regardless of the fed or china, you know those are my two biggest worries, those companies will still be spending money to discover break through drugs. yesterday morning, the company announced that it's competitor
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in cash, it's a deal that was immediately applauded by the analyst community with the news actually sending the stock gravitational pull of the average yesterday. this is the booster scale and allows the company to diversifif in a niche and high-so can charles river, one of our stalwarts which was up about 25% last year continue to climb? the chairman and ceo of charles rivers laboratories to hear more about this deal and where this company is headed.
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>> nice to be here, jim. europe, who i think will have great longngity, have great pnls, expanding -- classic safe eity side but also in the environmental testing as well. >> there's a g gat quote where you said, it's actually quite astonishing, it said many of the
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the fda in the past few years are the product of large -- we're very proud of the fact that charles rivers worked on 55% of the drugs that were approved in 2014. 55%? >> yeah, we're obviously extraordinarily proud of that statistic, jim. i don't think there's another company in the world that could say that, makes us very proud to get up there every day and make a contribution like that and, yeah, we're working with all the major pharma companies and biocompanies throughout the world and helping them accelerate the development of the drugs and getting them to market. so it's a lofty goal that we have had and one that we have been able to achieve. >> in the last few months, they have shut out the biotech market, the ipo market for biotechs, is that something we need to be concerned about. does charles river have to worry
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of liquidity of late? >> more money went into the buy owe tech market in '15 than any other year before that. we think that there's is several years of money they have available to invest in current pipelines, new pipelines, more importantly, most of the innovation, or much of the innovation is coming directly from biotech to pharma. >> right. >> we showed yesterday that about 42% of all the drugs that pharma has coming from biotech companies, so biotech companies have become the discovery engine for big pharma and even if the capital markets were to slow down a little bit in terms of their availability to biotech companies, big pharma will continue to fund the biotech companies because they have to because they really need to and pharma companies have become less interested in who actually discovers the drug, as long as they can get access to a drug
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needs, they're happy to get it from biotech companies, so we're actually not concerned about that. >> the market actually reacted correctly. that's jim forester, chairman and ceo of charles river labs. >> we like this stock, it doesn't have a lot of competition, makes it easier for biotech and pharma to develop new drugs, noneconomically sensitive. that's the kind of thing you got to be looking for. phil! oh no... (under his breath) hey man! hey peter. (unenthusiastic) oh... ha ha ha! joanne? is that you? it's me... you don't look a day over 70. am i right? jingle jingle. if you're peter pan, you stay young forever. it's what you do. if you want to save fifteen percent or more on car insurance, you switch to geico. you make me feel so young...
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you make me feel so spring has sprung. [coughing] [coughing] [coughing] [coughing] [coughing] coughing disrupts everyone's life. that's why so many people are turning to delsym for longer lasting cough relief. delsym has an advanced time release formula that helps silence coughs for a full 12 hours. that's three times longer than the leading cough liquid. all night...
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i'm jim cramer, see you monday. cat greenleaf (voiceover): i'm cat greenleaf. and tonight on a special "1st look," i'm exploring the many faces of korea.
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it's hard work.
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