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n money starts now hey i'm kramer welcome to a special west coast edition of bad money welcome to create america if you want to make ed but to educate put it in context call me at 1-800-7437 or tweet me youtube kramer we don't talk too much about stagflation basically because it's a curse word in this business stagnation means we have an economic slowdown while inflation's still raging oh man the jimmy carter cocktail a combination so toxic for the stock market that people will pretty much sell sell sell sell everything and that's what we saw today is the dow shed 269 points s p lost 1.0 8 and the nasdaq dropped 0.73 now personally personally i don't believe that we're in for a battle stagflation i see an economy that just got too hot and it's now cooling off which is just what the doctor ordered the doctor being fed chief jay pal but today was an out of thesis day for me meaning what i wanted to happen and what actually happened were very much at odds the bears had the firm upper hand and they crushed the market we know that we're in a bad news is good news situation where we want the economy to slow down we're on clockwatch yesterday target told us they had too much inventory and would have to get promotional to unload it textbook deflation we're not sure where they'll sell it but we know it'll be sold at a lower price than they wanted that's fantastic for you and it's one of those things that can reverberate throughout the whole system given the scale of target sure enough this morning we got a number of negative research reports arguing that all retail will suffer because of what we heard from target although target stock itself rallied which tells me that even the most tarnished stocks can bottom in this environment while the consumer benefits from the promotional activity today we got mortgage applications what a number it was spectacular for anyone who's hoping to see a decline in the massively overheated real estate market mortgage demand fell to its lowest level in 22 years the casualty of the gigantic jump in mortgage rates of late while a 5.4 rate is very low by historical standards it's extremely high versus where it was not that long ago when prospective home buyers were locking in two month mortgages at a three percent unchanged rate we know the real estate market is red hot with sky high rents and the shortage of homes but with demand falling off a cliff there could be a housing glut developing and that too is what we want to see it's certainly what the fed wants to see the engineer is soft landing for the economy then there's this thing called the mannheim used car index which measures the price of used cars thanks to the shortage of new cars in a work from home environment where people have migrated away from the cities with public transportation these used cars well they just shot up in price but these new numbers from this mannheim index show that those price increases have decelerated used cars were up about 50 year-over-year not too long ago now they're only up about 10 whatever tightness there may have been is evaporating so let's see what do we got we got household goods going down in price yes traffic for the consumer we have mortgage rates crimping runaway housing prices yes and now we might be tackling the last of the intractables used cars which by the way are a major component of the cpi which is friday three for three all very good news for the inflation peaking thesis there's only one problem and that problem is energy specifically gasoline it refuses to go down prices crude up another 2.5 percent today 122 bucks oil seems to have no ceiling and that's where the stagnation fears come in as long as oil prices keep climbing it's hard to make the case for a soft landing oil is a nightmare for the fit it reverberates throughout the whole economy and there seems to be no stopping it and because oil acts as a tax on the whole system we could indeed have a slowdown coupled with inflation and that is that jimmy carter stagflation remix if oil would just go down i think the fed would be able to declare victory after doing maybe a couple more gentle rate hikes but now the runaway price of crude is going so high that the unthinkables happen even the oil stocks went down and that brings us to another term of arc that we really don't want demand destruction and that's where the price of something goes up so high so fast that it sows the seeds of its own destruction the oil stocks jumped up at first they opened higher today then many dropped because well people are starting to realize demand is going to be curtailed they won't be able to make that much money at those prices but that doesn't necessarily mean the price of crude will stop climbing because it's a lack of supply problem oh it's not just the oils we saw a collapse in the freight companies today that you never want to see the stocks of united barcelona fedex is getting crushed now they can pass on that cut to their customers via fuel surcharge but that won't stop the demand destruction in this important industry plus nobody thinks oil can go in any direction except up the psychology's so bad which is exactly what this oncology was like in the 70s when we first got acquainted with stagflation now this time we're not hostage to opec we're hostage to a domestic oil industry that's afraid to drill because the current white house doesn't really have an oil friendly track record putting it bluntly the democrats are the pro-environment party the republicans of the pro-oil party these guys know where the bread is buttered and it's not buttered by joe biden as a matter of fact we have to believe that maybe the president would rather go to saudi arabia and negotiate with them and then talk to the american ceos who dominate the texan permian basin our biggest basin where all the oil is well it can take a year to site and drill new wells and we're aware of that if the president would encourage them and offer maybe some assistance in building much needed pipelines i'm confident these companies would do it by the way it would also help national security because we get natural gas maybe to europe but to get these executives to trust him but i don't have to cozy up or at least seem like he is to the oil industry and stop talking just about renewable energy something that would infuriate his base like most politicians biden doesn't want to do that he's actually made it more difficult to build new pipelines the stuff that's coming out in the last few weeks is really bad for the pipeline industry i do believe biden could placate the oil industry which has grown more and more responsible by the way about the environment even as they are fossil fuel companies but biden would have to throw many of his core supporters to the wolves to make that happen i think it's a good deal for the president if he can get us lower gas prices by 2024 and he can this is america we sacrificed anything for lower gasoline prices unfortunately biden doesn't seem willing to do it and that's a big reason why energy won't come down of course the other reason is the war in ukraine but that's well beyond our control so why don't we just throw up our hands and admit that oil won't stop going higher which means we're stuck with stagflation sell sell sell sell sell the fact that the oil stocks acted poorly today tells me that demand for crude will slow as prices keep climbing that's why i don't necessarily see stagflation happening but skye oil might translate into a more serious slowdown every time crew goes up so do the odds of a recession now we can even talk ourselves into one looking at the price of crude something seems to be happening everywhere i go in san francisco young and old over a mezcal down the street again i don't believe in the stagflation thesis ideally we can wang our way out of energy inflation with more supply not from the saudis or from electric cars or from windmills or from solar but to u.s u.s producers the bottom line though even if we don't get a lot more supply the price of oil will eventually come down simply from demand destruction but if it's done that way we could be in for a miserable long hot summer i say we take calls let's go to vj in south carolina vijay good evening jim thanks for all your advices over the past several decades i am holding netflix netflix talks since number of years what are your thoughts about streaming services talks and specifically netflix so thanks for your i think and thank you for those kind words for a long time follower i think netflix is fine i'm not crazy about it i don't think it's bad to me the cheaper one is disney because they got disney plus which is another streaming service disney just has to get better at telling its own story i would actually tell you that they're terrible at it all right let's go to pete in illinois p oh yeah jim booyah hey i really need your help here with a stock that you recommended for us for the investment club in early january so it's fallen 20 to 30 percent from its high despite having some positive q1 earnings as well as several upgrades so is this just a wrong stock for this kind of market at a 30 p e and a de minimis dividend or is this the time to buy right now to propel it we need to be ready to propel for when that goes up and what kind of a catalyst would it take to make that happen the stock is danaher okay stock is standing here we've been buying all the way down uh for the chapel trust uh which anyone who follows including this gentleman uh follows in cmc investing club knows we really like it here we know that they're in talks to make an acquisition uh that would be more life science uh it's been kept down because they do have uh pcr testing and people think that's going away i you buy dan or heroin a step that's what you do that's what you've done that's what you must always do i've learned that a long time ago we've done a couple times before the chapel trust we're doing it again i say buy i am not deterred by the by the pe there because the growth rate is so spectacular it's a great stock to buy to slow down and that's why we're doing it i want to know larry in arizona larry jimmy chill larry from whiskey row in prescott arizona there you go has been good to you maybe we'll run into nancy and she can tell you how good things are in her town my call today is on dave and busters tell us your thoughts okay dave and buster's had a remarkably good quarter remember people are going out they want experiences fabulous place for birthday parties that's what i used to do and i think the stock can go higher still because we got a very low multiple and people are going back to dave and all right look even if we don't get a lot more supply the price of oil will eventually come down but it's probably going to come down from demand destruction it'll be better if we came down because we have more supply i'm having tonight snowflake has had a tough run along with the broader tech cohort but could a blizzard be brewing for the cloud stock i'm checking in with the ceo and after forecasting surprisingly revenue decline could cisco's post earnings drop be a sign of what to come or is it a classic buying opportunity i'm talking to companies not brass oakton defends your enterprises with threats but does it have what it takes to defend itself from the bears on wall street i've got the exclusive with the ceo so stay with kramer coming at you from san francisco
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