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ma Rocca does people t's not just to entertain but to educate teach you put in context call me 1-800 several three CBC or tweet me at Jim Cramer when the global economy is slowing what do you do it's easy if your portfolio manager you know exactly what you do you go by the cloud stock you pick up some software as the service companies and then yes sell everything else this was a good day for the averages with the Dow gaining 174 points SME vanishing point 7 3 percent that's that climbing 1 point 1 3 percent but it was the surging cloud stocks that led the market higher I move like this doesn't start with people waking up this morning and saying you know what I feel like buying some growth today it's our money managers are stuck by the lack of worldwide growth and they default the growth in this case the culprit is the corona virus outbreak which is slam the brakes on China the most important growth economy on earth President Trump has worked hard to get American companies to stop sourcing their products from China and he's have some success nevertheless we still rely on China for all sorts of goods from rare earth minerals medicines to things like buttons trim for clothing the Chinese have spent the last 40 years taking share in manufacturing or some people say wiping out or manufacturing so now that huge chunks of People's Republic are locked down I think there's going to be some real shortages more important China is Europe's largest trading partner tons of European exports end up in the Chinese market and and suddenly that's a big vulnerability while China's growth has been slowing for years it was slowing very gradually they had 6.1 percent GDP growth last year which is the kind of number that developed countries would kill for with the coronavirus China's GDP growth is about to hit a wall he's betting their factories are still offline after extended post Chinese New Year vacation most companies that import from China tend to take down a lot of inventory ahead of their new year so they don't run out of stuff and that's why I don't expect them to be hurt immediately we won't know how bad things are for maybe another week or two or maybe not until the month of March but I do think we'll have real sourcing problems and that could drive up if this pandemic hasn't stopped the next clue to by ultra growth oil the price of crude is very sensitive to worldwide demand especially Chinese 2min if China's economy grinds to a halt you'd expect oil to be down and sure enough there's West Texas crude plunging below $50 a barrel plus the longer term demand for oil often driven by the way by Airlines locking in prices that is slacking too now most money managers don't spend as much time talking to industrialists and retailers and oil people as I do but they don't have to you know why because these money managers can take their cue from the bond market and when they look at the bond market the relentless decline in interest rates tells them they need to worry about a slowdown and that's why the swishing of stocks of you put up terrific numbers even in a weaker worldwide economy how do we find them but at this point we've just gotten through the bulk of earnings season so portfolio managers can take stock in the fastest growth trends that they saw to raise earning season incredibly you know what there's only one only one theme that's resonating one and that's the cloud okay makes sense this offers the service companies had a bathroom quarter and this is a uniquely American industry very little lost almost no exposure to China they are born in the USA although it's hard to imagine Bruce Springsteen Cruden about him anytime soon what makes this group so enticing first we actually saw an acceleration in the cloud this quarter not many companies saw it an acceleration in the revenues now admission I didn't believe it so when Microsoft reported incredibly strong number for a sure their cloud division was an acceleration to 62% many hedge funds well they figured they were simply taking share from Amazon Web Services which is number one nope not at all Amazon Web Services blew away Wall Street's estimates - and the mark has expanded even if their growth slowed slightly but that was really to select odd the law of large numbers speaking you don't see margin expansion when there's fierce competition though and that's why Amazon stock has caught fire since they reported I've just seen that stock I mean honestly since they reported have you seen it now I know the output quarter was created like a bomb went off but it turns out their Google cloud business generated some excellent numbers that's why the stocks come all the way back up go published a terrific piece terrific piece where they estimate that Google cloud grew at a 67% clipless faster nazzer making it the fastest-growing of the big three cloud infrastructure providers new leadership in the form of an old Oracle star the dazzling Thomas carrion has brought in a huge number of 50 million dollar deals doubling year over here that's impressive aapke points out that Amazon Microsoft and Alpen aren't really competing on price because they each have different strengths Amazon's competing with depth the product Microsoft with hybrid Google with artificial intelligence and machine learning in fact what the really competing one is capacity because the demand for data centers keeps exceeding the supplied and that's why portfolio managers put up the two companies that make the nuts and bolts of the data center AMD and NVIDIA now remember how AMD squirter was supposedly disappointing I told you to buy it well guess what now the stocks above where it was trading before it reported too simple bad quarter as for Nvidia what can I say they report this week and their whole product line isn't strong demand now when it comes to the cloud and AMD Nvidia well those two are vicious competitors well this kind of the man who cares there's enough business to go around meanwhile the cloud theme is so strong that is totally overshadowed Amazon's retail business alphabets search business and Microsoft Windows business now you might think that's the tail wagging the dog but you'd be wrong I think it's the future dog wagging the past tail because eventually these legacy business will be eclipsed by cloud infrastructure all three Titans who else wins when we think of the cloud we think of software as a service that means we think of service now oh man did you see that that's booming Thurman's coming adobe shots in an orion i mean its own from workday and you know butchery vmware we always have Sanjay Putin on Twilio okay not that great a quarter but the sauce going back up Splunk salesforce our cloud kings not to mention the cloud princesses there's koopa HubSpot prima family fave octa and Atlassian symbol team our only dud from that group was New Relic which has experience and meaningful slowdown so I'm stripping you wrong out of its princely title handover to alter X yeah one of our favorites is taking from Microsoft Excel a YX but that that that's don't look at that stock a blonde your eyes of course we don't know how long this newfound love will last if China managed to contain the corona virus you can expect money to rotate right back out of these names and more cyclical stocks including the semiconductor names with major China exposure they're bombs today we could also see some weakness if the investment banks start pumping up more cloud stocks there are always more waiting in the wings but we got some good news there I think the stink of Casper the unfriendly IPO download was two bucks went down two months from where it came up last week could keep a lid or new deals for the moment even if I know that's a mattress company by the way that's been a terrible industry you know it's not very firm mattress firm the bottom line sometimes stocks fit a theme so perfectly that they can ignite the averages without any other companies really doing interview at all and that's what happened today if you own them don't get too greedy you might want to ring the register a wee bit but you definitely got a hold onto something I want to go to Marvin in New York Marvin yeah good evening Jim a bit I've been washing shows about ten years my question is on CBS Viacom to me seems like is very undervalue I mean because there are in 7076 cents and the PE and the P is four thousand four and the P is 447 and they pay a dividend at 277 and the market cap is 21 billion Nestle X is going to spend 18 billion on content on their bed was just buying that argument I talk a lot about my winners Nash Alerts and we have no Microsoft we haven't owned Amazon we have known alphabet one of my biggest losers is Viacom and I pile that I want to describe what I said last week on my conference call gets me so angry I screwed up on this I believed in the company it is too cheap to sell it sells at the lowest multiple any stock that following the SPO 500 but I was wrong I got it wrong I believe that I'm wrong and that's wrong wrong wrong not only wrong so I've got to tell you all the things you said are true it's what drew me to it but I am wearing the Viacom posting and if we had gaffer tape I put it on right now vi8 see right here a lot of real estate there ran in Missouri ran hey Jim happy Medicare age birthday well thank you is different from Part D I've been working on that they got where's Part C and I guess I get a and I give up my good but anyway yeah I mean it's a mixed blessing this Medicare I'm working on it though what's up it's good to see you got your sleeves rolled up ready to go to work for the little guy Thank You Man I'm calling about a security that should not be affected by the coronavirus their last report beat earnings and sales estimates they also continuously raised their dividend but the stock has been on a tear lately market excess mkp x what do you think well as my friend Michael Haley would say winner winner chicken dinner you want on that stop believe me I think it is definitely a winner alright the cloud stocks are winning but don't be greedy if you own some you may want to ring the register on part not all but part of your position but please hold on to something there now does that tell you the truth about fire come my crack staff and those exactly how to make me look good on man money tonight there's take-two Interactive's still up game in this market I'm sitting down with the CEO after earnings to see what's ahead for the company and ubers on the road to profitability so could this be your ticket to ride online the couple's recent rally and what should your next move be when it comes to the fossil fuels in this market I'm giving my take you know what you're never too old to eat your words Gary looks pretty ne cnbc.com you
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