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tsa . Friends, I'm just trying to save you a little money. My job on days like these . Tweet me at @Cramer. Maybe we didn't deserve the growth after the July lows. This is what I start to think about negative days like today. The Dow Jones Industrial Average lost 419 points. The S&P fell 0.1%. The Nasdaq fell 1.03%.
Sour, unpleasant. I say this reluctantly, because there is a lot of good to be found on any given day. Some of the individual stock stories are simply wonderful. New drugs from Novartis for the treatment of multiple sclerosis. Sempra is recovering from negative news from the California legislature. Hal Mett is growing after it became clear that Elon Musk would not hurt their aviation business.
Health insurance companies demonstrate stability. Dollar stores remain strong . Apple's new CEO, John Turner, was met with great enthusiasm—shares rose 2.6%. But there is a simple fact about what happened today. We have entered an episode that we have become accustomed to over the past 6 months . Tensions surrounding Iran escalated overnight.
The president responds with missile launches and harsh statements. The price of oil is soaring by over 5%, causing interest rates to skyrocket to levels we have n't seen in a long time. Sell, sell, sell! And the stock market is retreating. Regardless of how the vast majority of companies operate, they operate very well.
Of course, there are exceptions. Dell reported such a strong quarter today that it should change people's minds at least about Dell, and perhaps about the tech sector as well. One of the best neighborhoods I've ever seen. But it can't ignite the entire market and may not even boost the AI sector, because the list of problems I listed is not correct?
This is a very important question because you have to ask yourself: can this happen again and again? Can the president continue to launch missiles at Iran in an attempt to stop the Iranians from mining or bombing the Strait of Hormuz, which always raises the price of oil, which then always raises the price of money, i.e.
interest rates, and causes a market sell-off? The short answer is yes. This could last for days, I do n't know, maybe weeks, months. This is easy to change. What was the Finance Minister trying to stop by buying up long-term bonds? But the bond market isn't taking it seriously, partly because high oil prices are incredibly inflationary , and also because new Fed Chairman Kevin Warsh seems intent on eradicating inflation, even if it means raising short-term rates.
So, interesting thing: when he spoke on Friday, this Fed chairman sounded a little more like the venerable Paul Volcker, the Fed chairman who raised rates to 20% in the early 80s. Volcker was willing to cause a devastating recession just to get inflation under control. This man was serious. He was a tough player in this game.
I feel like Warsh wouldn't hesitate to do the same if needed. Remember, at one time Walker was considered the most hated man in America, but at the time of his death he was considered a hero. However, the important thing is that while this war with Iran continues, which sometimes subsides, sometimes flares up again, it can disrupt the rally at any moment.
Now I could argue that we deserve exactly what we got today. Oil is returning to almost the values it was at at the beginning of the war. This makes sense, as the world's strategic oil reserves are now being depleted after months of conflict. Oil refineries have been operating at full capacity for months, much longer than they should have been closed for preventive maintenance.
Most of what we buy in stores is transported by trucks using very expensive diesel fuel. Diesel, gasoline—oh. Carriers pass these costs on to others. Supermarkets then pass these costs on to you. Grocery stores have become really expensive, which is why dollar stores are thriving. The high price of oil is like a tax on the entire system.
This increases the cost of your commute. This affects vacations. This raises ticket prices. This seeps into construction costs. It's insidious and pervasive, and it's only getting worse. And that matters . So when you see a day that starts out well and then turns into hell, a wave of red numbers covers almost the entire market.
What can you do to protect yourself until this cyclical process with Iran is over? Okay, let me tell you what I do for the investment club . Any participant knows this, because these are quite draconian measures. First, we increased our cash position for the Charitable Fund to over 15%, which is an extremely high figure in its 25 years of existence.
We wanted this maximum because without a real end to the war, you don't know when the Iranians will provoke the president by launching missiles at oil tankers, allies in the region, or perhaps our bases there. We don't know when the Iranians will mine the ports . Iranians want higher oil prices. They became very skilled at this.
At the same time, we don't know when our president will publish something provocative that amounts to about a 1% movement in the price of oil or a few basis points in interest rates, and the market will fall by a quarter of a percent. When the president responds politely, you get about a 2 % rise in oil, many more basis points in Treasury yields, and a half- percentage point drop in the major indexes, especially the Nasdaq.
Today we had over a 5% move in the price of oil, rates rose worldwide, and our markets took a devastating hit. Oh, if only everything weren't so clear-cut. But we're just not in the environment that's conducive to big capital investments, especially in September, which is historically the weakest month of the year.
Secondly, we want to reduce our share of data centers and replace it with more healthcare services. Data centers have become a major battleground, and they will remain so, you know, until the election is over. Fair or not, these things are very unpopular. If the anti-data- centric coalition wins in November, we will be glad we reduced our positions.
We can always buy them back in November, but we don't want to lose our profit right now. That would be a sin. We are also keen to see if there will be a positive reaction to Dell that will continue throughout the day. What a wonderful neighborhood they had. But if we get another presidential attack , it might not last long.
Today we sold one of our favorite AI infrastructure stocks because I suspect we can buy it back cheaper, and I don't want to let the profit turn into a loss. We still have some semiconductors, we own rather than trade Nvidia and Apple, but we're not stupid. We can read the screen. These stocks are “heavy,” meaning there are sellers at every turn, especially semiconductors, as opposed to, say, healthcare, which seems to soar no matter what happens.
AI trading is very complex because of the macro, not the micro, i.e. any company-specific factors. The microphone is still strong. But it does n't matter now. Third, we understand that we need to be more flexible. When we feel that everyone thinks the same way we do, and there are significantly more pessimists around than there are now, we will be happy to put some of these trust funds into action.
But the main takeaway is: when oil is volatile, the president is inherently volatile, and interest rates are jumping, you should be more concerned about that volatility. As this market moves from euphoria to pessimism, buyers on drawdowns, especially those associated with artificial intelligence, are left with nothing.
Let's move on to Gary from Illinois. Please, Gary. Hello, Jimbo. I'm calling from Bloomington, Illinois, but I grew up in Philly. Instead of "boo-ya" I'll tell you "go ahead, birds." Does that suit you? I like " go ahead, birds." Yes, we actually play with " Commanders" first. It will be like a preseason game.
How are you doing? Yes. Yes. Hey, let's get to the point. My father and I grew up watching your programs since the days of "Kudlow and Cramer," and we thought it would be nice to thank you. My question is about Caterpillar. I don't quite understand how to evaluate it with all this noise around AI, I would like to get some information.
Well, Gary, it's interesting that you say that, because by repeating what you just said, aren't you pointing out the problem itself? Since you don't know how to value a company, what do investment managers do? They sell. Here's what's happening. They look at it and say, "Oh , that's 28 earnings per share.
I'm used to Cat trading at 16 earnings." I don't know if that's right. Why do n't we sell it? We can buy it back. And that's exactly what you're facing. I want to go to Jim from my home state of Pennsylvania. Jim. YouTube. Hello. Congratulations, Jim. How are you? I'm fine, Jim. How are you? I'm doing great.
Thank you for taking my call, and I appreciate you and your team for all that you do. The team is very good. I...I love this team. To work. Jim, I want to ask you about Marvell Technology. Is it worth buying now? Okay, this is another example that proves my point. Marvell had an amazing quarter. They reported, and then they said, " Listen, maybe our big breakthrough will only be in 2029, or maybe it will be delayed ." They have a meeting in October, early October, that will be their meeting with analysts.
This will tell us what will happen next . I don't feel confident until I hear them before taking any steps. OK. In a situation with such volatility on all sides, expectations should be tempered. Those who buy during the dip are no longer rewarded as they used to be. It's just... It's normal. In today's "Mad Money": Palo Alto rises after reporting.
I'll meet with the CEO to find out what the quarter says about the state of cybersecurity. Next: Dell just released its latest results. So, can the AI server boom continue to push stocks higher? I have an exclusive. And also CrowdStrike, Nvidia, Intel, OpenAI. What do they have in common? Their top executives took the stage at CrowdStrike's Falcon conference today.
I'm heading straight to the conference to get the latest news from CrowdStrike CEO George Kurtz. ". Got .
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