Transcripts For CNBC Mad Money 20131024 : vimarsana.com

And everything we loved buy, buy, buy. Sell, sell, sell we now hate. Some stocks, the cyclicals and especially the oils were laid to waste while others, the Consumer Product stocks roared higher almost regardless of how theyre doing. All this action is masked by the averages. The dow sank 54 points and the nasdaq declined 5. 47 and underneath the market is seething and roiling and you know what . Its begging for prognostication. So what is going . Why are we tossing out the Natural Resource stocks and embracing stocks that do well in the slowdown . Three reasons, the United States, europe and china. Big reasons. All of the three legs are developing some chinks and theyre showing in a way thats freaking out owners of stocks that we havent seen since Interest Rates started to soar in the spring. First, as has been the case all year, everything comes down to this darn bond market. Interest rates which seemed to be on the brink of busting out of levels we havent seen in ages are on retreat at a pace that we only see when the economy is going into a real slowdown, if not a recession. Let me say immediately, i dont think were going into a recession. We have seen no Earnings Reports that indicate were going into a recession. Other than the disater of the day sell, sell, sell. Caterpillar, no company of any standing has complained with any real weakness of the economy. We keep getting surprised by the strength. When it comes to taking cues you have to understand that gentlemen prefer bonds. They turn heads and heads are being spun by the incredible rally in the bond prices. You can monitor those by how well the tlt is doing because the advance in bond prices with the concomitant decline in yields is saying that demand for money has indeed dropped off a cliff. You simply dont get these gigantic kinds of moves in Interest Rates with the tenyear treasury now under 2. 5 when it was about to break out above 3 not that long ago, unless somethings gone awry, and not just here, but there and everywhere. Lets go over whats hitting it with the three legs. The first, the United States its pretty darn obvious, right . The confidence in our country has been shot by the brouhaha in washington. Theres a tacit recognition that everything is going wrong from the botched Health Insurance website, can you believe that, to the obvious can kicking to the debt ceiling in congress. Investors believe that whatever weve seen and heard from optimistic managements this quarter has to be discounted because nothings been learned in washington and history is going to repeat itself, and they will sink below. They dont want to win us over. Second. Europe has been a terrific boost to Global Growth as of late. The bank has been incredibly easy on the continent. Looking the other way at the neerdowell bank, maybe its time to pay the piper and the central bankers want the banks, many of which would have been shuttered if they were in this country to raise some equity. That will slow things down for certain. Finally china which has been seeing a skein of better than expected orders and Economic Growth has a pushback from its own central bank which didnt inject reserves and the heavy lifting is done and its time for the economy to fend for itself, given that china exports 25 of its goods to europe and europe might be slowing down, that doesnt bode well for global demand. Now the question is demand for what . We know the bonds are saying there is going to be less demand for money, hence the decline in Interest Rates and more important in commodities. The most visible commodity being hit right now . Oil. Thats why we seem to have lost one of the most products to this market, the oil and gas stocks. Weve seen oil go down for days and days, but the stocks werent being clipped and now the decline is striking fear in the stocks that bid the stock up endlessly and oil has further to fall. Commodities are often traded on a technical basis and the chart of oil says its not stopping here. According to the chart, crude goes on 93, and one of the most ebullient parts of the stock market is being torn asunder right in front of us. Too early, people, to step in and buy. What else tells us that demand for commodities could be cooling . How about caterpillar . You dont get such a hideous decline, and it was about how poorly commodities are doing and theyre get worse and not better and thats more fuel to the fire and i dont want to go into how poorly managed cat is right now. I just will say in their defense that their machines are still the best in the world. Theres been a spate of Technology Companies reporting that havent had much good to say and broadcom and altera remind us how fragile theyve been and akamai are further reminders of the fragility of tech and much of the Government Spending component and needless to say, when i mention the word government that means shortfall. Money isnt idle in this market and it always is seeking whats working. Its taking the other side of the trade right now, so if commodities are coming down then the users and the buyers of commodities, how about the makers of consumer goods like hain celestial and cocacola, the spice company, kimberlyclark and kellogg. The stocks are all going up and money also seeks what will be working and not just what is working but what will be working. Houses and loans got too expensive and housing prices seem to have plateaued and Interest Rates have gone down enough to give buys are a Second Chance and Mortgage Rates are cut next week. Those that didnt act can be enticed again and the housing stocks are rallying and d. R. Horton, and home depot are starting to go back up after a reported great quarter and the markets also pull toward safe, nogrowth stocks and secular supergrowth stocks and the barbell that i often talk about and that always happens the moment the economy stalls out. Remember, secular growth keeps going even when general demand goes down, bringing the cyclicals. We know google has it because its figured out how to make money on mobile. I told you the stock isnt done going higher and it still isnt. Apple has secular growth because the tablets look like they will be another hit on top of the iphones and of course, they report next week. There are always guys saying the chart looks bad, this or that. I remain convinced that the stock is cheap and i dont like the stock that is generated by a tweet, though. How about boeing . We know from its Earnings Report and Conference Call that the Airline Super cycle is alive and well and its just killing it. Jim mcnerney, what did i tell you, the ceo, is he bankable or what . And what noGrowth Companies do okay when rates go down . Utilities, and thats why we keep them front and center. American electric power did amazing. Con ed, dont forget duke. Theyve done well since rates peaked and they will continue to do so until rates trough. We have a rotation out of what works when rates are going down and it will most likely continue as long as Interest Rates in oil continue on their downward trajectories. The problem with these rotations, of course, is that we dont know which is the stuff were throwing away or the stuff were taking in and perhaps thats why i always fall back on being diversified. You get less pain, and less pleasure, but sometimes thats the best way to make longterm money. We arent sure when the honeymoon will be over with the newly loved stocks and if theyll be over soon. We do know that the ink is hardly dried on the divorce decree or the marriage certificate and we could be off for a couple of more days until europe and china arent going the way of the u. S. If they arent, and i doubt they are because the communists and socialists arent as dysfunctional as the pseudocapitalists in washington and thats whats tossed today. It will soon be a buy and thats why the bottom line is if you pick stocks based on aerospace and the internet and you match them with companies that thrive in the Slower Economy along with the companies that thrive in a fast one, you hardly notice the turmoil today. If you go toward commodity growth you pay the price. Remember, it is never too late to be more diversified with best of breed stocks that have the commodity winds at their backs and not in their faces. Alex in new york. Alex . Hey, jim, coming to you from syracuse, university. I love that the orangemen orangemen stay focused. Go orange theres been a boom in Oil Production in the United States. Refiners have lagged the general market rally, so is now the time for american refiners to shine and more specifically valero . I think there was the time now. Valero has had a big move up as has holly. There was a moment where that was the right trade and we are no longer in that moment. We have to wait for a pullback. I want to go to don in new york. Don . Hey, jim. The symbol avax and its gone down 35 over the past two quarters, id like to get some insight, basically its short term and longterm outlook and at the current price which was told to accumulate. People did not like the revenue games there. They were pretty slight actually. We can do more work, but remember what we do say is that these Small Companies in that particular segment, we think and its the test analyzer, we think may be under some pressure, we can do more work, but that quarter was not what people liked. What we loved, we hate. When we hated we now love, sister, mother, sister, mother, diversification, once again, is our only free lunch. Mad money will be right back. Coming up, fire extinguisher . Palo Alto Networks had a red hot ipo but this firewall operator has cooled off since its initial spike. Is the decline offering an opportunity to buy into the next generation of Digital Security or will this wall come tumbling down . Find out in cramers exclusive. And later, tea time . This is not your mothers lipton tea. While the Worlds Largest coffee chain stock flirts with alltime high, its adding another flavor to its business. Will starbucks big plans for tea help keep it caffeinated . Dont miss cramers oneonone with Ceo Howard Schultz from its brand new flagship store. Plus, eco impact. Stress in our nations finite resources demands our next generation way to monitor every drop. Cramers finding out how Smart Grid Technology could power the future and which companies are leading the way when he heads off the tape. 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. [ horn honks ] [ passenger ] airport, please. What airline . United. [ indian accent ] which airline, sir . [ passenger ] united. Whoa taxi [ british accent ] what airline, then . [ passenger ] united. All right. [ spanish ] what airline . [ passenger ] united. [ mandarin ] which airline . [ passenger ] united. [ arabic ] which airline . [ passenger ] united. [ italian ] where are we going . [ passenger ] united. [ male announcer ] more destinations than any other airline. [ thai ] which airline do you fly . [ passenger ] united. [ male announcer ] thats great, big world friendly. [ male announcer ] staying warm and dry has never been our priority. Our priority is, was and always will be serving you, the american people. So we improved Priority Mail flat rate to give you a more reliable way to ship. Now with tracking up to eleven scans, specified delivery dates, and free insurance up to 50 all for the same low rate. [ woman ] we are the United States postal service. [ man ] we are the United States postal service. [ male announcer ] and our priority is you. Go to usps. Com® and try it today. Is it time to circle back to palo Alto Networks . Heres the next Generation Network Security Company with proprietary fire wall platform that allows them to have customized control over how their employees access through the internet. It came public at 42 with a bang. It rose over 26 in its first day of trading. The stock soared as high as 62. Since then the highgrowth, highmultiple tech stock has been a house of pain. The company stumbled when it reported in june. The most recent results in september were much stronger, inline earnings and they were up 7 year over year. After the insanity of the last six weeks its gone back to where it was before reporting. Palo alto gives strong guidance and the companys taking share. So what should we do with the stock . I think we need to do more homework. Hes this chairman and president of palo Alto Networks, mr. Mclachlan, welcome to mad money. Hi, jim. Glad to be here. Thanks. You guys are the cutting edge company, and in the most recent Conference Call you talked about replacing checkpoint with the Semiconductor Equipment company and you replaced cisco and a large Insurance Company and you were able to get into a larger european broadcast company. Give me your pitch about why you can topple a company like checkpoint that we regard as premiere and cisco which everyone says its best of breed. We developed the next generation Security Platform and thats the only thing in the market today that can have applications on Enterprise Networks and from a Cyber Security perspective, applications are the main way threats are getting on the networks. We have the next generation platform which is rapidly displacing all the Legacy Technology in cisco, juniper and checkpoint are using an old traditional platform. Do we have to worry about juniper . Jefferies says your litigation with them could be heating up, Summary Judgment in november, and this is something i want our viewers to realize that you could be living with for a long time. The litigation is what it is and we cant talk much about that. We are paying attention to the business which is growing very well because were delivering the best security in the market today. Global protects subscription, when a remote user logs into the device, it has the roaming devices that have a secure connection. How are the bad guys able to get in then because we know bad guys are getting in . They realize that the best way to get into an enterprise is through applications and that can be from a mobile platform and it can be from a desktop. We build as a platform that can cover from the data center to the perimeter and all of the way down to all of the mobile devices as well and were protecting the entire enterprise all of the way from mobile devices and all of the way to the data center against the Application Center and threats. I always thought blackberry had the secure system you didnt have to worry about. If someone has blackberry, they still need palo alto . Yes, you do. Not in necessarily because blackberry may be insecure. One of the more secure systems from the phone perspective and you need palo alto, because theyre coming from all sorts of places and mobile, and just one of those threat factors. Okay, on your Conference Call which was september 9th which was kind of a different world, your cfo, Stefan Tomlinson said with the government year end coinciding with the fiscal q 1, were anticipating to see decent growth in the federal business. Since then the world fell apart in washington. Can you still stick by that statement . Generally, the Public Sector has been a very strong vertical force. No vertical represents 12 of the business and if you look at what we do for a living theres a strong need for that in the Public Sector and the government space and weve done very well there. In other words, i dont need to worry that they shut off the spigot down in washington. Its business as usual when it comes to network security. It never helps anybody in government shutdowns and if you put that aside its a temporary thing. Big picture it was a pressing concern for the government and we have a platform that can really help. The group that youre in. You can say yours isnt and its prone to shortfalls. Given the secular nature of the bad guys always trying to crack in, why is this business so quarter to quarter for so Many Companies in your industry . Well, generally its because theres a cap ex expenditure that goes with buying networking gear, so there are ebbs and flows in capex expenditures as Companies Budget for those things, but as a general matter, cyber securities are a growing concern and the top three priority in the boardroom and i would expect them to increase over time. Thank you so much for coming on to mad money. Thanks for having me. Thats mark mclachlan. The greatest secular trend in the world, bad guys are breaking into your system. Palo alto has a solution. Stay with cramer. Coming up, tea time . This is not your mothers lipton tea. While the Worlds Largest coffee chain stock flirts with alltime highs, its adding another flavor to its business. Will starbucks big plans for tea help keep it caffeinated