Reasons Behind Positive Market – Cramer's Mad Money (9/11/17)
Reasons Behind Positive Market – Cramer's Mad Money (9/11/17)
Stocks discussed on the in-depth session of Jim Cramer’s Mad Money TV Program, Monday, September 11.
The market’s sentiment was positive on Monday despite so many negatives. “In the last 72 hours, we have seen a whole slew of events that might normally give investors pause or make them think, reflect. Instead, this time, these events just gave buyers an opportunity to get in while the getting is still good. At most other moments in history, buyers would be wary of the current setup. Now, though, they’re enthusiastically embracing the future,” said Cramer. He gave five reasons behind the market being positive.
- North Korea: Leader Kim Jong-Un chose not to test another missile on Saturday, which is the 69th anniversary of North Korea’s government. “The fact that hope can spring eternal on the basis of very little; in truth, literally nothing happened and is a sign of exactly the kind of blind faith that’s integral to a bull market’s character,” said Cramer.
- Hurricane Irma: Despite the damage, the destruction was not as bad as many feared. “Irma didn’t live up to the scary hype, so to speak, and that boosted the markets,” he added.
- Storm aftermath: Stocks of Home Depot (NYSE:HD) and Lowe’s (NYSE:LOW) have fallen after big runs but Cramer expects them to bounce back as there will be rebuilding once the storm recedes. When the insurance starts kicking in, it could boost the auto cycle as well.
- iPhone: The market does not seem skeptical about the $1,000 iPhone. “In this country, we know that the phone companies will subsidize the purchase. In other countries, the status of the iPhone could increase sales,” said Cramer.
- Transports: Insurance checks and accelerating global growth will be beneficial for transports along with a weakening dollar.
“There’s something to be said about a market that views things positively, even as it’s no time to celebrate in the real world that is oh-so-different from stocks and bonds,” concluded Cramer.
CEO interview – Procter & Gamble (NYSE:PG)
Procter & Gamble is in a proxy fight with activist investor Nelson Peltz. Cramer interviewed chairman, president and CEO David Taylor to hear his take on the issue.
Taylor said that P&G has undergone a transformation in the last 10 years and they are a different company now. He said that Nelson talks based on data that was given to him by somebody who left the company 8 years ago. They have realigned their portfolio along with cultural changes which can be seen in the last year’s top and bottom-line.
“He’s proposed some things that could be very dangerous to the short term, which is reorganize the company right now, and he’s proposed something very dangerous for the long-term future of this company, and that is eliminating our corporate R&D,” said Taylor. Nelson would like to see a board shake up and split the business into three smaller segments.
Nelson’s suggestion to remove the company’s corporate R&D, which would turn into three separate R&D departments, will lead to P&G missing good opportunities. “I can give you several examples: the sachets that are often used for samples in the U.S. and they’re sold by the hundreds of millions in developing markets; the process to make them faster than anybody can make them commercially, and at a lower cost, was developed using our liquids understanding from our liquids businesses and our converting capability that comes out of our paper businesses. If you had separate businesses with separate R&D, you wouldn’t have made that connection and would have missed the opportunity to take advantage of a real plus,” added Taylor.
“We didn’t ask for the proxy fight, but I’m absolutely committed, as is our board of directors and the people of P&G, to do what’s right for the short, mid and long term for the company. And for that reason, we’re fighting it,” said Taylor. They have been trying to mitigate the billions in foreign exchange impact.
Taylor said that customers decide whether P&G wins or not. “We want the absolute best for our company, whether it’s a member of the board of directors or whether it’s our senior management. The standard is the best. And we’ve done our homework and he’s not the right person for P&G right now. Many people tell me, ‘Why not?’ ‘Why not’ is not the governance standard for our company. We want ‘Why?’ Who are the right people to bring to the company that would add value for the future?” said Taylor.
P&G works for shareholders for the long term and not just activists who are looking for short-term gains.
The merger of Dow Chemical and DuPont is complete. Is this a good time to buy the stock of the new company? Cramer has the answer.
The current setup is temporary and they will be slashing costs over the next 18 months and split themselves into three businesses. Their current combined revenue is $73B which will be split into three; an agriculture play, a specialty chemicals play and a materials science play.
The company plans to slash $3B in costs, the benefit of which will be seen soon. The stock of DowDuPont trades at just 15 times earnings. Cramer trusts CEO Ed Breen who has a good track record with breakups. “DuPont’s stock has slightly underperformed the S&P 500 while Dow has only outperformed it by a hair, meaning the stock could have a lot more room to run as we await Dow-DuPont’s big three-way split. I say trust Ed Breen. He’s the king of value creation via breakup. Long live the king!” said Cramer.
In his final segment, Cramer remembered the tragedy of 9/11 on the 16th anniversary. He spoke about the memorial at the World Trade Center.
“With this landmark, the incredibly difficult-to-fathom events of that terrible day can be given the context they deserve. Go there. Go see it. Remember,” he concluded.
Viewer calls taken by Cramer
Carnival Corp. (NYSE:CCL): Their turnaround after disasters is one of the greatest comebacks of all time.
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