Transcripts For CNBC Mad Money 20130925 : vimarsana.com

CNBC Mad Money September 25, 2013

Up 0. 08 . Any explanation for the underlying strength is pure supposition. We should be going down hard right now. Right here. As we did right about now, for every single federal level imbroglio since weve had so far. In other words this was the day they started versus the event. The october 1st date for when a Government Shutdown is supposed to be begin, it looms so large. There isnt a single sign that there will be a deal. None. We could be in for a prolonged period of rancor and indecision, both of which are bad for business. So how can we think this time will be different . Why arent we down, 4 , 5 , 6 , instead of a measly couple of down days . Let me give it a try. First, maybe the market is saying, there wont be a showdown. Maybe there are forces at work that we dont know about which will make the whole episode more benign than skeptics including me realize. Hard to believe anythings happened behind the scenes. But we never know with washington. Put that in. I dont know, 20 chance. Second, even if there isnt a deal immediately, well, people are expecting there will be one down the road. As much as we hate our political system, we do end up paying the bills. Thats been the lesson from the other times when they were done, we caught a big rally. Perhaps the market going to the troubled moment Portfolio Managers are using whatever weakness they can get including intraday including the last three days to put money to work. Maybe thats whats going on. Third the fed has managed to keep rates down. See them today really, really low. So maybe we shouldnt worry if we get a Government Shutdown because low waits buttress the valuations of so many stocks. Particularly the bond market equivalent stocks we talk about all the time on the show. 3 plus yielders weve got a positive onetwo punch from the fed no larry summers. Rightly or wrongly to be antiaccommodating as well as the surprise nontaper. Interest rates have been going down ever since then. The market gave up these instant gains since the selloff. Everything we got that wednesday is now gone. But todays reversal seems to me signal kind of a, i dont know, pretty benign close. I mean ugly but it did say to me that youre not, that you can pick. You should never, ever fight the fed even when you think its out of bullets. Fourth reason our stocks arent getting annihilated, the market sees lower Interest Rates reinvigorating the housing business. One element of the earnings released was a clear miss more on that later but you know obviously people looking through the valley. The markets willingness to overlook this key orders number for lennar and have the stock go up anyway shows you that perhaps we dont have nearly as much to fear from the weakness in housing as we might have thought. When housing goes higher, it takes a large swath of related stocks, furniture, clients, names, retailers associated with Home Building. Fifth the foreign markets are not taking their cue from washington. No, they are incredibly robust. The baltic drive freight index which i always say to keep your eye on is getting stronger and stronger almost doubled. From the low it has doubled signaling that chinas starting to order Raw Materials again. Part and parcel of that is turnaround in europe. Spain just declared end to its hideous recession yesterday. Greece tells us now budget surplus. Remember when we were worried about italian bonds . Should have bought them. Meanwhile the European Central bankers are saying theyll remain accommodative because the market is so fragile. Sixth reason, Merger Acquisition and breakup pressures continue. It makes it an environment for short sellers. You never know when lightning could strike. Greenway medical technologies fairly recent ipo launches a 9 billion takeover for crossborder rival tokyo electron. A 5 stake in Bob Evans Farms wants to break the company in two and another value move. This stuff happens every day. It acts like a trampoline under the market. Were up these activist related moves later. Oil is coming down given that iran is acting nice with the united nations. I dont trust iran. You dont trust iran. Im sure you dont but regardless of trust, any suspension of tensions, prices lower. Gasoline of course. Retail possible weakness in the economy, going to the holidays could get a boost from lower gas prices. Remember were just trying to come up with some suppositions why this market isnt down five, eight, ten percent, eight possible reason, autos. Car max, gigantic used car retailer, reported outstanding sales and earnings today. Auto market has been a huge engine in the economy. Car max, fantastic news. I dont know. I kind of hoping for a chrysler ipo. Ninth explanation, president obama was forced well this is a political statement but he was forced to make a Foreign Policy speech today. The market likes resolve and dislikes indecision. There was nothing indecisive about obama at the n. U. N. Tenth reason, Growth Stocks are thriving in a lower growth environment and that is incredibly bullish. Facebook is leading the parade going to an alltime high on one more upgrade. The high growth rally across the board. Weve got a cluster note from jpmorgan about starbucks. Stock rallied up 1. 19. Thats strength. Chipotles been a strength. Netflix back on track, amazon yelp, tesla, lincoln roared. 6. 24. For the long only momentum managers nothing gets the juices flowing like these kinds of rallies. They always change the tone of the tape and make short selling downright dangerous. Eleventh explanation for why we havent been hammered, hedge funds are negative. So many funds are betting a shutdown will be terrible that they keep shorting the market endlessly. You can feel their brooding ommy presence. The short Washington Play has been terrific during the manufacturing crises i have to believe many hedge funds are reading from the same playbook that worked when we were going to the debt ceiling debacle, the fiscal cliff debacle and the sequester. Each time short sellers got Good Opportunity to cover positions. Perhaps the short side has become too crowded. Short sellers tend not to make money when everyone is expecting the same bad circumstances. Were only a few days away from a good quarter. The hedge funds have to show they werent totally out of it. The longs might be bidding up stocks to boost their performance underneath. Dow has now components, a little more wild. Finally, remarkable run in the transports which has been the lovey blanket of the market. They finished up today. You cant have them advance without believing that commerce is picking up. If you have commerce picking up and rates going down we should be in good shape. When the transports rally, it lists boeing and all suppliers and airbus things are looking better than ever they got a 20 year plan, too. Im sticking with the gal that brought us here. Heres the bottom line we cant be sure why the markets holding its own against pending washington meltdown of epic proportions. Maybe the markets dead wrong and its just a matter of time before the stocks collapse. Maybe the last 20 minutes of trading were not so hot. But given that the cataclysmic washington event is only five sessions away, youve got to believe some of these positives are playing out making sailing a lot smoother than youd expect. Except for the short sellers. Mike in illinois. Mike. Caller booyah from chicago. Home of the 30 Chicago Bears the monsters of the midway. Rub it in. You think were all from chicago here or something . Is that what you think . Caller yes, i do. All right. Caller my, my, my company is gse capital corporation, symbol gsec it was up 6. 25 today and hit a 52week high is this the best way to play the upcoming twitter ipo . When i saw that, i said geez this is the way. Im going to tell you that i dont know Everything Else that it owns. But i think the twitter ipo is going to be gigantic. I hear numbers and theyre way too low. Ive been sticking by my prediction that youre going to get 18 to 20 billion in value, which should send up gsc capital to a higher level. Ive always been a bears fan. We dont play them that often. We being the eagles. Kurt in colorado with peyton manning, with the winning winning orange kurt. Caller booyah, jim, how are you . All right. Glad to go to denver next week. Caller good, good, just calling in regards to wendys and how do you see longterm growth and also how do you see it competing against the larger fortune 500 Food Companies like mcdonalds, chipotle and burger king . We talk about moving the needle. Believe it or not this bacon pretzel roll cheeseburger is actually working. Although my friend last week didnt like it. Now heres what you need to know. Wendys is on a major roll. Management is terrific. That stock can go to 10 without hurting mcdonalds, without hurting burger king. I like the fries at burger king but its not enough to move the needle. Jimmy in california. Caller booyah, cramer, how are you . Real good. How about you, jimmy . Caller good thanks. I want to talk to you about a company that youve been behind for for a good reason for the last six months. It just hit a 52week high, 14 days ago before reported earnings. Since then, its gone through 78 down to 61. Today the stock went from 61 back up to 64. 5, and i want to know whats youre position on Restoration Hardware holdings. Okay. I went through this quarter with a fine tooth comb but it happened to come when Interest Rates are going higher. Now, Interest Rates are coming back down. The stock is recovering. Reminds me the way coors recovered. Even fossil reported. This is not in that league. It is better than those. Im sticking with Restoration Hardware. I think its a buy. Against all odds the market is hanging tough. Yes we had an ugly close. The fact is there was no cataclysmic selling yet. Your Survival Guide which says i have your back is telling me maybe we wont have that monster selloff before the shutdown. Coming up, Stable Foundation . This mornings headlines show home prices are continuing to rise across the country. But steadily rising Interest Rates have made wall street worried about the future of the mortgage market. Cramer gets an inside look in his earnings exclusive when home builder lennar. And later cash connection . When verizons 130 billion buy to sprints acquisition of clearwire. Wireless deals are aplenty. Is it time to make a connection of your own . Cramer speaks with ceo dan hesse for the First Time Since the deal to find out what it means for the future. Plus, berry good . Pack it, wrap it, contain it and cap it. Theres one company that does it all. Berry plastics is the household name youve never heard of. But you might not want to forget it. Is it time to fill up your cup . All coming up on mad money. Dont miss a second of mad money follow jimcramer on twitter. Have a question . Tweet cramer, madtweets. Send jim an email to madmoney. Cnbc. Com. Or give us a call at 1800743cnbc. Miss something . Head to madmoney. Cnbc. Com. Are you sure we should take this billboard down . People find out state farm does car loans as well as they do insurance, our bank is through. Good point. Grab an edge. Look theres two guys on the state farm borrow Better Banking sign. Nope for real theres two dudes on the state farm borrow Better Banking sign. [ reporter ] breaking news from the state farm borrow Better Banking sign. Were seeing two men that have climbed the borrow Better Banking sign gentlemen please get down from the state farm borrow Better Banking sign. Phil get the hose. Okay hes getting the hose. Alright, lets go. [ male announcer ] talk to a state farm agent about car loans that can save you hundreds. Thats borrowing better. Ever since Interest Rates sky rocketed over the summer everybodys been wondering what kind of damage it would do to the Home Building business. We know home build being stocks were hurting but was it warranted based on whats happening to the underlying companies. Today we heard from two Home Builders who said it is more like hitting a speed bump than crashing full force into a retaining wall. Kb homes. Jumped 4. 9 . And lennar had a terrific quarter and nine cent earnings beat off of 45 cent basis with higher than expected revenues that rose 45. 7 year over year. This wasnt a perfect quarter. Lennars new orders were up expectations. And ever since the fed announced it wasnt going to taper the Bond Buying Program Interest Rates have been crawling back down. Something that could make the next quarter even better than this one. No wonder the stock was up today. Housing is a very important for economies. Lets take a closer look with the ceo of lennar. Welcome to mad money. Good afternoon, jim. Happy to be here. Stewart, congratulations, first of all. This was one of the best quarters ive ever seen lennar have. While everyones worried about the granularity august was actually the strongest month. Whatever anybody was thinking it didnt play a role with you. Well, listen, i think that were particularly well positioned, but as we noted on our call today, june was a pretty strong month. July tapered way back. And then august was a strong month again. So we saw some strength out in the field. We saw some strength both in our customers and in traffic. So it was a its been an interesting ride. And maybe you sent some great charts over that some of this what people are missing, is the limited amount of inventory, because of the actual incredible, almost depressionlike lack of building of homes during the last part of the cycle. Thats exactly right. And i think the dominant theme for housing over the next few years is filling the hole of production that has not been filled over the past years. If you look at the average during the downturn, we were delivering about 7,000 homes 700,000 homes. Per year. Both multifamily and single family. The need in the country just by population and household formation alone is a million two to a million five. That underproduction is going to is going to define where we go over the next few years. There will be speed bumps, as you noted before. That derive from Interest Rates, public policy, international events. But the trajectory in our view over the next three to five years is generally positive. One of the things i dont like about your group is because of the power of the real of the actual etfs, the good and the bad are amalgamated and homogenized. You were doing a huge number of things away from just Home Building including rialto, including apartment literally renting that perhaps youre not getting enough credit. What can you do and you hint upon it in your Conference Call to bring up that value because youre not just another home builder. Well, happy that youre noting that. Look, we think that the primary driver of our shortterm earnings quarterly performance is going to be driver be in the near term by our housing and Financial Services businesses, which are our core. And we think were extremely well positioned in those two areas. Our ancillary businesses of rialto, our multifamily Communities Division, and our fivepoint largescale Communities Division are longerterm shareholder Value Creation machines that are going to realize their maturity over the next few years. We keep the investor focused on our core business, but we keep them apprised of what were doing to create longterm shareholder value, and i think weve got a great balance. I follow the Apartment Real Estate Investment trust. None of them has the growth of your apartment unit. Why not give that to the public so that i can push it really hard because its got growth and would have great yield . Over time. Right now we are maturing a a brandnew business. As youve noted, our pipeline has been growing steadily. We have built a national franchise, and weve left ourselves by segmenting this business, giving it complete visibility to the street, as we grow it, weve left ourselves maximum flexibility, and over time, we think that the optionality embedded in that business is going to give us a lot of opportunity to create value, depending on where the market is at a given moment in time. The ability to build, produce, and stabilize brand new Apartment Units in this environment where we have a shortage of inventory, both on the apartment side and the for sale side we think gives us a great position. Fed last week takes basically literally takes rates people think theyre going to ten year going to three, maybe three and a quarter right down, right down in the face of the short takes them to what now is 2. 6. Is that meaningful for september traffic to your homes . Well, listen, Interest Rates are fluctuating and im not even sure that we can tell whats driving the fed decisions. Is it really derived from a question as to whats going to happen relative to the debt ceiling discussions . Or are there some other factors involved that relate to the Macro Economy . I think that as things stand right now, lower Interest Rates are bringing customers and traffic back to the field. Well see how this plays out over the short term. But, again, our focus is not so much on whats happening with shortterm fluctuations. Over the longterm, we think that were in for a steady rebound in housing, over years. And t

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