Part of Tuesday’s stock market plunge may have stemmed from money managers giving up on getting clarity from President Donald Trump and his administration on their policies, CNBC’s Jim Cramer said as stocks settled.
“We have maximum uncertainty. That makes people want to sell. That’s how money managers view the situation,” the “Mad Money” host said after the Dow Jones Industrial Average ended the day nearly 800 points lower.
Over the weekend, Trump struck a cease-fire on trade with President Xi Jinping of China at the G-20 summit in Argentina. But while top economic advisor Larry Kudlow and Treasury Secretary Steven Mnuchin seem optimistic about the prospect of a deal, U.S. Trade Representative and known China hawk Robert Lighthizer has emerged as a leading candidate for running the negotiations.
That sets up a battle between those who want a deal and those who would rather see China shed the title of global superpower, Cramer said.
To make matters worse, Cramer worried that the Federal Reserve was back on autopilot, content with ignoring slowdown indicators and talking up the job market so it could push through its widely expected December interest rate hike.
But with the bond market doing what it tends to do before recessions, another rate hike could “push us over the edge,” he warned, saying that the Fed’s more optimistic members “sound like they’ve lost their minds.”
“I’m concerned that the Fed just doesn’t get how important its words are. All of these Federal Reserve officials should simply hush up and let the chairman do the talking,” Cramer said. “They are sowing a lot of uncertainty, too. Talk about your region, maybe. Talk about business conditions in your states. Don’t make sweeping declarations that only confuse people.”
Click here for more of his analysis.
As Cramer watched stocks nosedive in Tuesday’s trading session, one thing became abundantly clear to the longtime market-watcher: it “was all about the rise of the machines.”
The major averages all fell more than 2 percent as a possible slowdown signal in the bond market and lingering trade fears rattled investors. The Dow Jones Industrial Average fell more than 800 points intraday.
Some attributed the dramatic declines to a lack of buyers, but Cramer already knew the culprits: complex algorithmic programs set up by professional money managers to sell when the odds of future market losses increase.
In other words, when an event that often precedes a recession occurs — in Tuesday’s case, short-term interest rates trading above long-term rates in a so-called yield curve inversion — some trading algorithms will automatically begin selling securities because the chances of an economic slowdown just got higher.
Click here for his full take.
“When I look at the president’s theme to begin with and the beginning of his administration, he wanted to have energy dominance in the U.S. and I believe that we are well on our way,” Heminger told Cramer in an exclusive “Mad Money” interview. “We’re the largest producer in the world today.”
Recent declines in oil prices haven’t stopped U.S. producers from pumping more oil ahead of OPEC’s meetings later this week, at which the group of oil-exporting countries are expected to cut production.
That puts the United States in a league above its competitors, said the Marathon chief, whose Ohio-based company specializes in petroleum refining, marketing and transportation.
Click here to watch and read more about Heminger’s interview.
Cloud player Coupa Software‘s business is firing on all cylinders as more enterprises become aware of its money-saving technologies, the company’s Chairman and CEO, Robert Bernshteyn, told Cramer in a Tuesday interview.
“We’re seeing gross margin expansion, we’re seeing subscription margin expansion, we’re seeing scale to the business, and we’re now managing nearly $1 trillion of spending and management for companies around the world,” the CEO said after his company reported third-quarter earnings.
In addition to its new customer acquisitions, which include the high-profile United Airlines, Coupa has also begun leveraging artificial intelligence to better serve its corporate clients, the CEO said.
“Enterprise software hasn’t ever been able to bring this much community intelligence to bear for helping individual customers make decisions” by using A.I., Bernshteyn told Cramer.
As a veteran of Red Hat, Cisco and Adobe’s upper ranks — to name a few — Frank Calderoni says his latest venture as president and CEO of Anaplan can eventually help make his former employers more efficient.
“The key thing here is having information — it’s the connection of data people and plans — to really project the future, [to] forecast, so that you can react based on the markets,” Calderoni said in an exclusive interview with Cramer. “All [those] companies, … many of them are customers or will be customers of Anaplan.”
Anaplan, which went public in October, uses a custom type of blockchain technology called HyperBlock as a “calculation engine” to forecast future events more accurately and efficiently for companies that need instant predictions, the CEO said.
“Think about this like algorithms that allow you to use those calculations to predict based on information, data that you have in your organization that allows you to be more accurate in your forecasting,” he told Cramer. “Many people think about planning as financial planning. We sell it as enterprise planning. It’s planning that’s used in finance, in sales, in supply chain, in HR.”
Click here to watch Calderoni’s full interview.
In Cramer’s lightning round, he tore through his responses to callers’ stock questions:
Adobe Inc.: “I cannot recommend this stock on a short-term basis because … I recommended it at $50. It’s at $250. I think you buy some and then you wait for it to come down because we’re not going to play the quarterly game. The quarter’s going to be good, but stocks aren’t reacting to the quarter. They’re reacting to the Fed. They’re reacting to the president. That’s not certain enough for me.”
Disclosure: Cramer’s charitable trust owns shares of Cisco.
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