Cramer Remix: This company’s earnings could signal a weakening economy

Investing

Trade talks and the latest data on U.S. employment will color the week ahead for the stock market, CNBC’s Jim Cramer said Friday as stocks rallied on high hopes for a U.S.-China trade deal at the weekend’s G-20 summit.

President Donald Trump is planning to meet with Chinese President Xi Jinping at the Buenos Aires, Argentina gathering on Saturday to discuss what has amounted to an ever-escalating trade war between the two nations. Next Friday, a Labor Department report on U.S. job creation will bookend what Cramer expects to be an “exciting” week for stocks.

“Between Trump’s meeting with President Xi over the weekend and the employment number on Friday, there’s a whole lot going on next week. Let’s just hope it’s not too exciting,” the “Mad Money” host said.

With Saturday’s market-defining meeting in mind, Cramer turned to his game plan for the week ahead, which includes a key earnings report from Toll Brothers.

Cramer said the high-performing homebuilder’s results would speak to the state of the U.S. economy as told by housing, which is slowing on many measures. As such, Toll Brothers’ earnings report would likely “tell a tale of both strength and weakness,” he said.

“Remember, I’m not saying the economy overall is weak, I’m saying it’s weaker than it’s been, and one of the reasons is the slowing housing market,” Cramer explained. “I bet Toll confirms my view, particularly on the coasts.”

Click here for Cramer’s full game plan.

President Trump’s meeting with Xi at this weekend’s G-20 summit will be a defining moment for the U.S. economy and the stock market, so investors have to be prepared, Cramer said.

Leaders of the world’s top 20 economically developed nations, known collectively as the Group of 20 or G-20, are meeting at the Buenos Aires, Argentina gathering to discuss topics of global significance such as the future of work.

Trump is expected to sit down with Xi to address U.S.-China trade relations, which have soured this year as the Trump administration took a hard line on China’s trading practices and the nations exchanged tariffs on each others’ goods.

Many on Wall Street expect a positive result from the meeting. On Thursday, Trump told reporters he was “very close” to striking a deal, but remained unsure if he would follow through.

Cramer saw five possible outcomes. Click here for his full analysis.

Snap Inc.’s stock price may have fallen to just over $6 a share — down about 70 percent from where the stock started publicly trading — but even this low price shouldn’t fool investors, Cramer said Friday.

“Do not be tempted by Snap’s $6-and-change share price. It’s not a bargain,” he warned. “At more than five times next year’s sales [estimates], you could argue it’s actually fairly expensive. And, of course, there are some alarming long-term trends here.”

For Cramer, the most worrisome thing about the Snapchat parent is its cash generation. When Snap went public in early 2017 with nearly $1 billion on its balance sheet, that was the last thing investors were worried about, but lately, “Snap’s cash hoard has been slowly dwindling,” he said.

Click here for more on why Cramer wouldn’t buy the stock.

With auto sales under pressure and the Trump administration’s tariff plans in flux, Cramer wanted to check in with Jim Hallett, the chairman and CEO of Kar Auction Services, for a closer look at the used-car space.

Kar Auction Services, which Hallett characterized as “the New York Stock Exchange” for buying and selling used and damaged vehicles, is a business-to-business provider of in-person and online services for everything related to used car transactions.

Hallett, whose company sells 5.5 million cars each year, confirmed in an exclusive “Mad Money” interview that people are turning to used cars as an alternative to new cars as prices for the latter climb.

As for tariffs, the CEO told Cramer that it could be a boon for Kar if U.S. trade authorities place duties on new car imports.

“I think that used cars could actually rise in value if tariffs were to come in place,” Hallett said.

Click here to watch his full interview.

In Cramer’s lightning round, he zipped through his answers to callers’ stock questions:

Chico’s FAS Inc.: “No. Don’t ask me about Chico’s. That was a horrible quarter, frankly. I mean, that may have been the worst of the mall-based stores. No, well, obviously there’s Sears and J.C. Penney, but it was a bad call. I don’t want you in that, OK?”

The Kraft Heinz Co.: “[What’s not to love?] Well, the fact that it has no growth whatsoever. But I’ll do this for you: I’ll say that if you want to hope that they somehow manage to get some growth, then you can buy it. But if I want no growth, I want safety and I want a bond.”

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