“Mad Money” host Jim Cramer rings the lightning round bell, which means he’s giving his answers to callers’ stock questions at rapid speed.
CNBC’s Jim Cramer on Thursday broke down why Alto Ingredients is a risky buy while Gladstone Land is a complete miss.
“You have my blessing to swing at Alto Ingredients for speculation, but Gladstone Land is coming in way too hot,” the “Mad Money” host said.
Alto Ingredients stock fell 0.15% on Thursday to $6.82, reaching a 52-week high of $7.27 earlier in the day. The company, which makes specialty alcohols and other ingredients derived from crops, has been able to rally recently by focusing on ethanol, Cramer said, adding that ethanol is more competitive nowadays due to high oil prices.
“While I’m wary of anything that’s up more than 40% for the year, Alto’s … a $500 million enterprise with light analyst coverage,” Cramer said. “This could be terrific material for speculation in the right environment,” he added.
However, he cautioned that this doesn’t mean he’s recommending that investors start purchasing the stock in earnest.
“In the end, it’s pure speculation. If you believe oil prices can stay elevated, then I think Alto Ingredients could be worth betting on, but I recommend buying it in gradual small increments and only with money you can afford to lose,” he said.
As for Gladstone, a farmland real estate company, Cramer said its stock price is currently too high to be a buy. The company’s stock dropped 2.72% on Thursday to $36.42.
“Long-term, I believe it’s an excellent business, and I’d be a buyer at the right price. But I don’t think the right price is this price,” Cramer said.
“I can’t countenance buying Gladstone up here. Sometimes, you just have to admit that you’ve missed it,” he added.
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Union supporters at Amazon’s warehouse in Bessemer, Alabama, on Thursday appeared headed toward defeat for a second time. However, with hundreds of contested ballots at play, the election results are still too close to call.
Of the 2,375 ballots cast, there were 993 votes opposing the union and 875 in favor. Approximately 6,153 workers at the Bessemer warehouse were eligible to vote on whether to join the Retail, Wholesale and Department Store Union.
Some 416 ballots remain challenged by Amazon and the RWDSU. Of the ballots submitted, 59 were voided. The election result still needs to be formally certified by the National Labor Relations Board.
The number of challenged ballots is greater than the union’s deficit which means Amazon could still lose its lead. The NLRB will hold a hearing in the coming weeks to decide whether the challenged ballots will be opened and counted.
People hold a banner at the Amazon facility as members of a congressional delegation arrive to show their support for workers who will vote on whether to unionize, in Bessemer, Alabama, U.S. March 5, 2021.
Dustin Chambers | Reuters
RWDSU President Stuart Appelbaum told reporters following the count that Amazon and the union have each challenged more than 100 ballots.
The NLRB last November ordered another election at the facility after it found Amazon improperly interfered in the vote. In that election, which was held last spring, Bessemer employees overwhelmingly rejected unionization by a more than 2-to-1 margin.
The preliminary results this time are much closer.
The RWDSU is likely to contest the election results. It’s already filed objections with the NLRB over Amazon’s conduct during the do-over election, including the company’s use of captive audience meetings. In the lead up to the election, Bessemer employees were required to sit through weekly meetings with anti-union presentations from Amazon.
“We believe that every valid vote must be counted and every objection heard,” Appelbaum said. “Workers here deserve that.”
Representatives from Amazon didn’t immediately respond to a request for comment on the preliminary results.
Activism among Amazon employees has picked up since the beginning of the coronavirus pandemic. Deemed as essential workers, delivery and warehouse employees labored on the front lines while many white-collar employees worked from the comforts of their homes.
As the pandemic dragged on, Amazon workers staged protests and spoke out about workplace safety. The tightening labor market in the U.S. further galvanized support for unionization, and workers have seized the moment to demand higher pay and better benefits from their employers.
More than 130 Starbucks stores in 26 states have petitioned the NLRB to unionize, organizers have said. And earlier this month, workers at an REI store in New York City voted to unionize.
In Bessemer, organizers used different strategies to drum up employee support for the union the second time around. With coronavirus vaccines available, they chose to go knock on doors. Employees have also spoken out more in mandatory meetings to challenge Amazon’s messaging, said Jennifer Bates, a worker who organized during both campaigns.
“We have a large group of employees who have dived in to help with education,” Bates said.
Still, nearly half of all recent re-run elections have fallen short, according to an analysis of NLRB data by Bloomberg.
Meanwhile, a similar vote count is taking place at an Amazon warehouse on New York’s Staten Island. The pro-union side is currently ahead in that election, based on early results released Thursday.
The NLRB is expected to resume tallying the votes Friday morning.
WATCH: Free shipping debunked
CNBC’s Jim Cramer on Thursday said investors who value consistency should buy Dollar General while risk-takers should purchase Dollar Tree.
“If you want a consistent operator that doesn’t need to do anything too crazy to beat the estimates, that’s Dollar General. Even though they’re lowering prices, I think that’s a good long-term strategy to win over customers,” the “Mad Money” host said.
“Dollar Tree is more of a high-risk, high-reward turnaround play, where the stock could have a lot more upside if they pull off the execution. But if they screw up, you can kiss your gains goodbye,” he added.
Cramer said that the two companies’ contrasting pricing strategies has helped Dollar General come out on top. Dollar Tree announced late last year that it was raising the prices of most of its products to $1.25 to help offset pandemic-driven costs.
In contrast, Dollar General said in an analyst call on March 17 that the retailer has “leaned into” its $1 products, including through plans to set up more in-store displays of items at that price point.
“While Dollar General’s pitching this as a move to help their customers, who often struggle to make ends meet, especially if they’re on a fixed income, it has the added advantage of luring away disaffected Dollar Tree customers who don’t like paying an extra quarter,” Cramer said.
Dollar General stock declined 2.13% on Thursday to $222.63. The company reported quarterly earnings in line with forecasts and a miss on revenue earlier this month. Dollar General also forecast better-than-expected full-year sales and raised its dividend by 31%.
Cramer recently highlighted Dollar General as a dividend stock to buy.
Dollar Tree stock fell 0.11% to $160.15 on Thursday, notching a new 52-week high of $162.13 earlier in the day. The company missed Wall Street expectations on revenue in its latest quarterly earnings.
The host said that Dollar Tree stock has gained overall in recent months and highlighted the company’s executive board changes at Dollar Tree as a reason. The retailer named Richard Dreiling, a former Dollar General executive, as Dollar Tree’s executive chair earlier this month due to an activist investor campaign.
Piper Sandler and Loop Capital Market upgraded their positions on Dollar Tree after the move. “Activist pressure can work wonders, especially if it’s a smart activist,” Cramer said.
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CNBC’s Jim Cramer on Thursday predicted that Wall Street will price in a bottom soon and the market will be set for a “tremendous rally.”
“Suddenly, the conventional wisdom says there’s too much of everything, so prices are going to come down. Stock prices are anticipating that. And that’s why the only sectors that sustained rallies in the first quarter were the oils, because they’ve cut back, and the utilities, which really act well only when there’s going to be a heavy recession,” the “Mad Money” host said.
“We price in this negativity far more quickly than you’d think. Maybe it takes a month, maybe only a few weeks. But it will happen and once it does, we’ll be poised for one incredible, tremendous rally,” he later added.
The Dow Jones Industrial Average dropped 1.56% on Thursday, the last trading day of March. The S&P 500 declined 1.57% while the Nasdaq Composite slipped 1.54%. The Dow finished the quarter down 4.6%, the S&P 500 lost 4.9% and the Nasdaq dropped 9%.
“While we still have an inflation problem, today’s action is predicting a crash in sales for pretty much everything. … I say, for now, just let it keep coming down. Accept that there will be plenty of stories about, say, how AMD will have too many chips, or GM too many cars, Lennar too many homes, Home Depot too much inventory,” Cramer said, listing some of the companies whose stocks slid during Thursday’s session.
“The [Federal Reserve] will definitely raise interest rates, maybe many times, declines will accelerate and inflation will definitely be tamed. Most importantly, the market will have anticipated all of this and will bottom well ahead of everything I’ve just described,” he added.
Disclosure: Cramer’s Charitable Trust owns shares of AMD.
Traders work on the floor of the New York Stock Exchange (NYSE) in New York City, U.S., March 29, 2022.
Brendan Mcdermid | Reuters
Stock futures rose early Thursday as investors assessed a new quarter of trading and a troublesome bond market recession indicator.
Investors were also awaiting the official jobs report for March, which the Labor Department will release at 8:30 a.m. ET on Friday.
Dow futures gained 66 points, or 0.2%. S&P 500 futures added 0.2% and Nasdaq 100 futures rose 0.2% to kick off the first trading session of the second quarter.
The Dow Jones Industrial Average slumped on Thursday to close out the first negative quarter for stocks in two years, with losses accelerating in the final hour of trading. The Dow dropped 550.46 points, or 1.56%, to 34,678.35. The S&P 500 slid 1.57% to 4,530.41, and the Nasdaq Composite was down 1.54% to 14,220.52.
All three major averages posted their worst quarter since March 2020. The Dow and S&P 500 declined 4.6% and 4.9% respectively during the period, and the Nasdaq dropped more than 9%. Stocks did stage a late-quarter comeback in March however after sharp declines from rising interest rates and inflation marked the first part of the year.
Stocks for now shook off a recession signal from the bond market that was triggered after the closing bell Thursday. The 2-year and 10-year Treasury yields inverted for the first time since 2019. For some investors, it’s a signal that the economy is headed for a possible recession, though the inverted yield curve does not predict exactly when it will happen and history shows it could be more than a year away or longer.
“I think everybody needs to acknowledge the fact that we are obviously going to be moving into a slower economic environment,” Shannon Saccocia, chief investment officer at Boston Private Wealth, told CNBC’s “Closing Bell.”
“You need to get earnings growth from somewhere, and if it’s not going to be a secular tailwind, like fiscal spend and monetary policy looseness, then you have to look for growth elsewhere. I think we’re going to see some real nuances trading over the course of the next three months or so as people look for that growth against this more challenging economic backdrop.”
A strong jobs report Friday could give the Fed more confidence to keep its aggressive rate-hiking plan in place this year to stifle inflation without fear of slowing the economy too much. Economists expect that about 490,000 jobs were added in March, according to the consensus estimate from Dow Jones, following a 678,000 payrolls addition in February. The unemployment rate is expected to fall to 3.7% from 3.8%, according to Dow Jones.
GameStop rallied more than 10% in extended trading after the video game retailer and meme stock announced its intentions for a stock split.
Energy prices declined on Thursday after the White House said it will release an unprecedented amount of oil from the Strategic Petroleum Reserve. Up to 1 million barrels of oil per day will be released for the next six months.
Other key indicators to watch out for include the ISM manufacturing index and the construction spending report, both of which will be released at 10 a.m. ET on Friday.
U.S. President Joe Biden announces the release of 1 million barrels of oil per day for the next six months from the U.S. Strategic Petroleum Reserve, as part of administration efforts to lower gasoline prices, during remarks in the Eisenhower Executive Office Building’s South Court Auditorium at the White House in Washington, U.S., March 31, 2022.
Kevin Lamarque | Reuters
President Joe Biden will invoke the Defense Production Act to encourage domestic production of minerals required to make batteries for electric vehicles and long-term energy storage. It will also help the U.S. minimize dependence on foreign supply chains.
The president’s order could help companies receive government funding for feasibility studies on projects that extract materials for EV production, including lithium, nickel, cobalt, graphite and manganese.
The Defense Production Act, established by President Harry Truman during the Cold War, allows the president to use emergency authority to prioritize the development of specific materials for national production.
“The President will issue a directive, authorizing the use of the Defense Production Act to secure American production of critical materials to bolster our clean energy economy by reducing our reliance on China and other countries for the minerals and materials that will power our clean energy future,” the White House said in a statement on Thursday.
The Department of Defense will impose the authority using “strong environmental, labor, community, and tribal consultation standards,” the White House said. The administration also said it’s reviewing further uses of the law to “secure safer, cleaner, and more resilient energy for America.”
The transportation sector is one of the largest contributors to U.S. greenhouse gas emissions, representing about one-third of emissions every year. The transition away from gas vehicles to EVs is critical to combating human-caused climate change.
Demand for lithium has also boomed as more auto companies race to develop EVs. Growth in the number and size of batteries for EVs could comprise more than 90% of lithium demand by 2030, according to the firm Benchmark Mineral Intelligence. And about 24% of new vehicles sold globally will likely be fully electric by 2030, according to forecasts from consulting firm AlixPartners.
“We’re looking forward to seeing the specifics of the President’s announcement, but the Biden administration should be commended for their efforts to secure the production of critical minerals like lithium here at home,” Lithium Americas, a resource company focused on lithium development, said in a statement.
The administration in February unveiled a plan to allocate $5 billion to states to fund EV chargers over five years as part of the bipartisan infrastructure package. The U.S. is the world’s third-largest market for EVs behind China and Europe.
Sierra Club President Ramón Cruz said in a statement that the organization “appreciates President Biden taking steps to invest in clean energy and help further lead the world in the transition.”
“However, it’s essential that this be done properly,” Cruz added. “We must ensure that labor and environmental standards are not sidestepped, nor are the crucial consultations with Tribal nations and communities who would be directly affected.”
The White House on Thursday also announced a new release of oil from its strategic reserves to help cut gas prices and fight inflation across the U.S. The announcement comes as the administration seeks to combat a hike in energy prices prompted by Russia’s invasion of Ukraine.
— CNBC’s Cat Clifford contributed reporting.
For investors wondering what the yield curve inversion means for the market, it is not necessarily a death knell for stocks.
Traders work on the floor at the New York Stock Exchange (NYSE) in Manhattan, New York City, U.S., March 7, 2022.
Andrew Kelly | Reuters
The 2-year and 10-year Treasury yields inverted for the first time since 2019 on Thursday, sending a possible warning signal that a recession could be on the horizon.
The bond market phenomenon means the rate of the 2-year note is now higher than the 10-year note yield.
This part of the yield curve is the most closely watched and typically given the most credence by investors that the economy could be heading for a downturn when it inverts. The 2-year to 10-year spread was last in negative territory in 2019, before pandemic lockdowns sent the global economy into a steep recession in early 2020.
The yield on the 10-year Treasury fell to 2.331%, while the yield on the 2-year Treasury was trading at 2.337% in late trading Thursday.
When the curve inverts, “there has been a better than two-thirds chance of a recession at some point in the next year and a greater than 98% chance of a recession at some point in the next two years,” according to Bespoke.
(Click here to monitor the spread in real time.)
Some data providers showed the 2-10 spread technically inverted for a few seconds earlier Tuesday, but CNBC data did not confirm the inversion until now. And to be sure, many economists believe the curve needs to stay inverted for a substantial amount of time before it gives a valid signal.
In general, a simple way to look at the importance of the yield curve is to think about what it means for a bank. The yield curve measures the spread between a bank’s cost of money versus what it will make by lending it out or investing it over a longer period of time. If banks can’t make money, lending slows and so does economic activity.
While the yield curve has sent somewhat reliable signals about pending recessions, there is often a long time lag and analysts say there needs to be corroborating evidence before investors need to fear a recession is around the corner.
Some of those other signals could include a slowdown in hiring and a sudden increase in unemployment, or early warnings in ISM and other data that manufacturing activity could be slowing. Analysts say the yield curve’s inversion could also reverse should there be a resolution to the war in Ukraine or the Federal Reserve pauses in its rate-hiking cycle.
According to MUFG Securities, the yield curve inverted 422 days ahead of the 2001 recession, 571 days ahead of the 2007-to-2009 recession and 163 days before the 2020 recession.
“Most of time, it is a recession harbinger but not all the time,” said Julian Emanuel, head of equity, derivatives and quantitative strategy at Evercore ISI. He noted one time when the curve inverted but the economy avoided a recession was in 1998 during the Russian debt crisis which was followed by the Long Term Capital Management failure.
“The nice thing about the last 30-year history is that there’s been so few recessions that you don’t want to say something is a golden rule, particularly when there are not enough observations and there’s one big standout to that rule,” he said.
Bespoke notes that after six instances where the 2-year and 10-year yields inverted going back to 1978, the stock market continued to perform positively. The S&P 500 was up an average 1.6% a month after the inversions but was up an average 13.3% a year later.
“Basically what tends to happen is over the long haul is that yes in most cases there is a recession, but many times it is six- to 18-months in the distance and the stock market does not tend to peak until between two and 12-months prior to the onset of a recession,” said Emanuel. “Again, while the probability of a recession in Europe has become a base case, that’s not the case for the U.S.”
Evercore sees a 25% chance of a U.S. recession.
Some bond pros do not believe the yield curve inversion is as reliable a recession predictor as it once was because the Federal Reserve has become such a big player in the market. The Fed’s nearly $9 trillion balance sheet holds many Treasurys, and strategists believe it has suppressed interest rates at the long end, meaning the yields of the 10-year note and the 30-year bond should be higher.
In fact, Richard Bernstein Associates notes that if the Fed had never engaged in quantitative easing, the 10-year yield could be closer to 3.7%. Were it not for the central bank’s bond-buying program, the yield curve for the 2-year and the 10-year would then be more like 100 basis points apart, instead of inverted. (1 basis point equals 0.01%.)
Strategists say the 2-year yield has climbed most rapidly since it is the part of the curve most reflective of Fed rate hikes. The 10-year has also moved higher on the Fed, but it has also been held back by flight-to-quality trades as investors keep an eye on the Ukraine war. Yields move opposite price.
Some market pros believe the 3-month yield to the 10-year yield is a more accurate recession forecaster, and that curve has not flattened at all. That spread has been widening, a signal for better economic growth.
A sharp uptick in inflation has so far not caused a slowdown in demand for travel in the spring and summer months, Booking Holdings CEO Glenn Fogel told CNBC on Thursday.
“Not yet. Not yet,” said Fogel, whose company offers online travel services, including flight booking. He cited the Covid pandemic’s disruptions to travel routines.
“When you have two years of people not traveling the way they want to travel and you have a lot of savings built up in that time period, prices can be really high and people are saying, ‘I don’t care. I just want to travel. I want to go somewhere,” the CEO said in an interview on “Closing Bell.”
The Federal Reserve and other central banks around the world have raised interest rates and are expected to issue more hikes in the future. That’s the main lever in the monetary policy toolbox to tamp down on inflation.
But in the near term, Fogel said, he’s expecting the pricing situation to get worse for travel-related services. One reason for that may be fuel prices, which have spiked in response to the disruptions for the Russia-Ukraine war.
“If you’re planning to take a summer trip, right now prices are going up. I don’t think it’s going to turn around at all,” Fogel said.
Premium travelers are generally seen as less sensitive to higher prices because they’re in a position to afford premium amenities in the first place. Airlines are looking to cater to that group of travelers, particularly on international routes as cross-border trips pick up. International travel has been slower to recover from pandemic-related declines than domestic trips.
Fogel said Booking Holdings is “hopeful” there will be strong international travel this summer, but noted there will be regional differences.
“Asia [is] not coming back nearly as fast as, say, Western Europe is, which is something we’ve seen for quite a while. There’s also, of course, the tragedy of the war in Ukraine, which has definitely impacted Eastern Europe somewhat,” Fogel said.