Stocks discussed on the in-depth session of Jim Cramer's Mad Money TV Program, Friday June 28.
It has been a strong year for stocks so far; the S&P 500 has risen 13%, its highest gain for the first half of the year since 1999. Although last month, the averages fell, it was the only down month for the year so far. There are few earnings in the week ahead, but certain reports may move the markets.
Manufacturing PMI Data from China: The Chinese economy seems to be slowing, but the government may step in and do something. This number needs to be at least 50. If it is lower, expect pressure on commodities and minerals.
Japan Tankan Survey: Japan has been blasting its own currency to improve business. This number should be strong, and Cramer thinks Japan is going higher.
U.S. Auto Sales may suffer some softness because of higher interest rates.
U.S. Factory Orders: Cyclicals, including industrials, are usually stocks to buy after interest rates rise and bond equivalents fall out of favor. Among the cyclicals, Cramer's pick is Boeing (BA).
Eurozone Retail Sales: German retail sales were better than expected, and the rest of Europe might see a surprise to the upside.
Non-farm Payroll Employment Number might be greeted with an overreaction in either direction, since not much else will be happening after the July 4th holiday on Thursday. If the number is 125,000 or fewer new jobs, expect a rally in housing stocks, because people will anticipate lower interest rates.
Cramer took some calls:
Royal Bank of Scotland (RBS) is a good stock that has been punished by recent headlines. The valuation is too low. Cramer would buy RBS, but would wait until it raises capital; "This is a very inexpensive situation."
Where Is Gold Going?
Gold has seen dramatic declines of 30% this year, but it may be on its way back up. Carley Garner, author of A Trader's First Book on Commodities and technical analyst at RealMoney.com thinks there soon may be a bottom in gold, at which point the precious metal should rally and rally hard. With inflation fears, gold tends to go higher, but there is no need to wait for inflation; just the perception that there may be inflation is enough to cause people to buy gold. On the a chart of Gold Futures, the COT (or Commitment of Traders) line indicates that larger investors are holding the smallest long positions on gold since 2009. Smaller speculative traders have given up on gold, too. It seems that those who wanted to sell gold have already sold it, and the washout may reverse.
The monthly chart shows the seasonal low for gold, which often happens in July, could come early and be dramatic. The Relative Strength Indicator [RSI] is now below 30, its lowest level in 13 years. The Williams %R indicator, which measures whether a security is overbought or oversold has hit 30 for only the third time in 13 years, showing that gold is very oversold. The last time this happened, gold snapped back to higher highs. Garner recommends buying gold on any weakness, especially to $1,150, which is a crucial floor. Cramer agrees and would play gold with buying physical gold coins.
Cramer met with a panel of U.S. CEOs and asked to what they attributed their successes. "I start with the team," said Terry Lundgren of Macy's (M). Lundgren emphasizes training and has recently hired a total of 1,000 college graduates, because it is essential to get younger people excited about the business.
Starbuck's (SBUX) CEO Howard Schultz said it is essential "to surround yourself with people who have like-minded values ... we always push on self-renewal and re-invention."
Ford CEO Alan Mulally (F) said the most important way to achieve goals is to "follow your heart and contribute to where you can make a difference ... we always aim to use more alternative fuels, improve fuel efficiency and reduce emissions."
Cramer dedicated the week to discussing great American companies and CEOs. After interviewing Terry Lundgren of Macy's, Alan Mulally of Ford and Howard Schultz of Starbucks, he added his own comments about these CEOs and discussed a few others. Lundgren's strategy of making stores serve as warehouses for other locations has solved inventory buildup, and the company's use of the internet has enabled it to thrive in an e-commerce environment. Ford's brands have the highest sales since 2006, and Mulally sees Europe bottoming. Schultz also sees green shoots in Europe, and Cramer regrets selling Starbucks for his charitable trust, because the stock "won't quit."
DuPont (DD) CEO Ellen Kullman has transformed the company from commoditized chemicals to proprietary innovation in the areas of renewable energy, agriculture, enzymes and scientific research. Cramer's charitable trust owns Dupont, and he thinks the recent pullback is a buying opportunity. Jim McNerney, CEO of Boeing (BA) has mapped out a 20 year aerospace plan, and the sector is in a long-term bull market, according to Cramer. The negative headlines about Dreamliner delays and battery problems did not hold back Boeing, which has seen a significant rally, a generous backlog and high demand for its products.
Cramer took some calls:
Facebook (FB) maybe be worth owning as a spec. The company has good earnings prospects, but they "have to get it together and tell their story better," says Cramer.
Icahn Enterprises (IEP) is a stock worth owning because of the Chairman, Carl Icahn.
The Paychex (PAYX) earnings call was a "gut puncher," not due to a major fault on the part of PAYX's management, but because the main driver of PAYX, small business growth has been so slow. Management said, "There is no growth whatsoever in business formation." Some blame government regulations, others blame the fact that the existence of so many huge companies makes it almost impossible, in certain sectors, for the little guys to compete. Regardless if whether there is one cause or a combination of causes, the lack of growth in small businesses is not likely to change soon and is likely the "new normal."
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