Mad Money w/ Jim Cramer 10/2/26

Mad Money w/ Jim Cramer

Jim Cramer outlines a quiet but consequential week ahead, focusing on earnings reports from Constellation Brands, Levi Strauss, PepsiCo, and Delta while highlighting the ongoing AI data center boom

Key takeaways

• Cramer expects Marvell Technology CEO Matt Murphy to deliver a strong analyst meeting highlighting the company's integral role in AI data center build-outs.
• Constellation Brands faces headwinds from weight-loss drugs and shifting drinking habits among younger generations, dragging down liquor sales.

Main topics

• AI data center infrastructure & industrial adaptation
• Consumer discretionary earnings & alcohol/spirits decline

Notable quotes

Live by junk food, die by junk food.

Conclusion

Cramer emphasizes navigating a tougher earnings backdrop with selective

Transcript preview

Speaker 5 (0:00) AI is here, transforming how we work, live, and lead. And the women I talk to aren't waiting for the future, they're shaping it. I'm Julia Boorstin, Senior Media and Tech Correspondent at CNBC. This is CNBC Changemakers, where I talk with the female leaders transforming business as AI reshapes the world. Follow and listen to CNBC Changemakers, Women Leading in the Age of AI, wherever you get your podcasts. Speaker 1 (0:29) My mission is simple, to make you money. I'm here to level the playing field for all investors. There's always a bull market somewhere, and I promise to help you find it. Mad Money starts now. Speaker 1 (0:47) Hey, I'm Kramer. Welcome to Mad Money. Welcome to Kramer. I'm trying to make friends. I'm just trying to make a little bit of money here. My job, some teaching, some entertaining. Call me at 1-800-743-CBC or tweet me at Jim Kramer. Today, the Bulls got a nice reprieve with this softer than expected labor report. Just 29,000 new jobs in September. Whenever the Federal Reserve's tightening, we actually have to root for weaker economic data because it can prevent or at least postpone. an interest rate hike. At the same time, our government and the rest of the G7 agreed to release 100 million barrels of emergency oil and diesel from the strategic reserves over the next four months. That led to a slight dip in oil, which made it possible for the stock market to rally. Dow gaining 250 points, S &P advancing 0.73%, Nasdaq jumping 1.19%. Although the market was much stronger earlier in the day when interest rates dropped dramatically off the week on employment data. They subsequently reversed. and rates edged higher, blunting the rally. All right, with that in mind, what do we have for next week? Let's take a look at the game plan. All right. First of all, when we come in on Monday, what are we always being looked at? We're looking to see about oil and a reset, perhaps because of the European Union releases of both diesel and oil. The world's short diesel. It's really a very difficult situation for truckers. We need oil in the 80s to see a change in psychology here. Until then, rallies like the one earlier this morning are going to be met by selling. Keep that in mind. Tuesday. starts with a 905 speech by John Williams, the head of the New York Fed, who will no doubt comment about the slowing growth and cooling wage inflation that we just got from this morning's number. This past Tuesday, Williams staunched a lot of stock and bond bleeding when he said that there was, quote, no need for urgency when it comes to the next rate hikes. I'd like him to repeat that, but I'm a bull. Remember, rate hikes are the bane of the shareholders' existence, at least short term. So his comments ignited a brief rally. Will he do it again after the week of the expected non-farm labor report? Wouldn't surprise me, as we've seen a dramatic drop in the percentage of investors who are now expecting a near-term rate hike. What else? Tuesday may be one of the most consequential days for semiconductors. Why? Because Matt Murphy, CEO of the red-hot Marvell Technology, holds an analyst meeting. These can be electric. I expect Murphy to lay out a long-term game plan while showing how integral his company has become to the great data center build-out. He has created a genuine powerhouse here at Marvell. And he's now... Even though he's a young person, he's an elder statesman in the industry. I bet his presentation will be very strong with big reverberations throughout the hyperscaler world. After the close Tuesday, we get results from Constellation Brands. Now, this is a totally different situation. STZ is the beer, wine, and liquor company best known for Corona and Modela. But I have to stress that this group has been nothing short of horrendous. We're watching an amazing thing occur in this country. It's not talked about enough. A genuine contraction in certain liquors and steep slowdown in beer sales. Even Constellation's popular Mexican imports. This stock is now down 19 % for the year. Worse, two years ago it was at $255, and now it's just under $113. What's behind the decline? GOP just won weight loss drugs are part of the equation, but so are the habits of the younger generation who simply haven't been converted into heavy beer drinkers like their parents. I think it's a belief that any kind of alcohol is just bad for your health. I'm an everything in moderation kind of guy, but my generation simply drinks more than the younger folk. And you know what it is? I think that alcohol is truly aging out in this country. Wednesday night, we hear from Levi Strauss, a terrific denim company. The stock has fallen from $25 in July to less than $20 today. This decline is typical of what happens in this particular tough market. Because of higher gasoline and higher interest rates, people expect a big slowdown in discretionary spending. They're not going to buy any more jeans. I have no real answer for this kind of situation other than to say that Levi's has to continually, endlessly execute with a high bar. Speaking of burdens, on Thursday morning, we have... One of the most problematic earnings reports imaginable, that of PepsiCo. For years, this company was running circles around our tribal Coca-Cola, thanks to the strength of its snack food business, not its soft drink. This year, things are upside down. Coca-Cola stock is up 22.5 percent, leading the packaged food industry, while PepsiCo's stock is down 12 percent. What explains the disparity? Simple. Live by junk food, die by junk food. PepsiCo crushed Coca-Cola back in the days when Frito-Lay's snacks business was much stronger than carbonated water or soda. But now Frito-Lay is uniquely in the crosshairs of the GOP-desk ones and the health-conscious younger consumers. Now, of course, PepsiCo sports a 4.7 % yield, which is terrific. But when the 10-year Treasury yields 5.28%, you know that risk-free bond competition looks a lot better by comparison. I want so badly to say to you that this could be the quarter when PepsiCo turns things around. But even if I believe that, all you get is a short-term bounce. So the risk-reward is just simply not compelling. Is that too harsh? I don't think so. Campbell's recently had to cut its dividend. General Mills and ConAgra missed their quarters. And yesterday, we got a really problematic quarter from former growth gold standard McCormick, the spice company. I can't recommend something if it comes from a packaged food milieu and it's just going to bounce. We're not traders on this show. Friday. We get numbers from one of the best-run airlines, Delta. The CEO, Ed Bastian, has been in the news because he chose Amazon's in-flight Wi-Fi over Starlink. Elon Musk, who runs Starlink through SpaceX, has said that Bastian could end up losing his job for picking Amazon over Starlink. Speaker 1 (6:27) I wouldn't go that far. But I do know the Kramer-faced SpaceX has broken out to the upside. CNBC investing club members know that I really like SpaceX, even if I think it's maybe too speculative for the trust. It does have a huge amount of compute through its agglomeration of NVIDIA chips. And by the way, it finally broke out. Then it came back, so the chart is probably going to hate it again. But anyway, NVIDIA could bring in lots of profits, given that there's a real shortage of computing power. So if you bought their chips. Like Musk did, he's making a ton of money with SpaceX by leasing them out, by basically selling the compute power. Also on Friday, we have the University of Michigan Consumer Sentiment. Now, I usually don't care about this one, but, you know, we're getting closer and closer to the election. Obviously, people have turned really negative. about the economy because inflation doesn't bode well for the incumbent party. In fact, midterms are almost always bad news for the party in power. Then again, we're told that the market produces the best returns when there's gridlock in Washington. I say stay tuned. Bottom line, we're headed for a quiet week. Don't get used to it. We're on the verge of the earnings deluge, and this time I don't think we'll be getting the kind of strong numbers that we've become accustomed to. Thanks to rising rates from the Federal Reserve, it's determined to bring down inflation. We've got a much more difficult backdrop coming up for earnings season. I'm not saying it's impossible to make money on stocks in this environment, but it's certainly a lot harder than it used to be. How about we go to Roger in Florida to start. Roger. Hi, Jim. How are you doing? Speaker 6 (7:55) I Speaker 1 (7:55) am doing good. Thank you. Thank you. Speaker 6 (7:58) Thank you for what you're doing. Thank you. I would like your opinion on applied materials, please, for the next 12 months or so. I'm very much in the money. I just want to know. Should I hang on, take my profits, or, you know? Speaker 1 (8:13) It's Gary Dickerson. The earnings look like the P.E. looks like it's expensive. That's because it's probably going to blow away the earnings. I want you to stay with applied materials. By the way, Micron was up big at one point today. You need, in order to be able to try to get out of the shortage situation that we're in, you need a lot of applied materials machines at a place like Micron or anywhere else, too. I want to go to Michael in West Virginia. Michael. Speaker 6 (8:38) Yes, Jim, I'm a first-time caller, but I remember seeing you on Kudlow and Kramer, then your first Mad Money show years ago. Well, I thought about that Speaker 1 (8:47) today, so Carl Banks was on that program. But go ahead, what's up? Speaker 6 (8:50) Okay, I've got a very small position that I've held for a long time. I've got 149 % gain in it. I've held it for so long. I never did get to add shares to it. I'm thinking about adding shares to my Simon Property Group position. I would like to know your thoughts. I think you're absolutely right, Speaker 1 (9:07) Roger. I want you to add to the Simon Property Group. You know, I was in Italy. And I went to this incredible outlet mall, and I said, this place is like the greatest place. I can't believe my wife and I were shopping there. It was a Simon Property outlet. And I know that the late David Simon told me one day I should visit it. There it was. What a great man he was. And he built a fabulous company, and you should buy more of it. Let's go to Ann in Indiana. Ann. Speaker 5 (9:30) Hey, Jim, I'm a club member. So thanks for your help as we enter this rate tightening cycle. Thank you. Kind Speaker 3 (9:36) of Speaker 5 (9:36) looking at my financial. Yeah, thanks. Just looking at my financial stocks. I just started adding to my Goldman Sachs position a little bit. What do you think? I Speaker 1 (9:47) think that's the right idea. It sells now 13 times earnings, a premier franchise in the industry at only 13 times earnings. That's wrong. A lot of the charts look the same. People think that all these stocks are rolling over. You have to pick up these stocks on the way down. No one knows exactly where to go to bottom. I think you're doing the right thing. All right, look, next week is quiet, and it means you have to pay more attention and do your homework. You want to make some money in this market, it's going to get much tougher. Now, on Mad Money Today, how is SLB leveraging its energy knowledge to help with the data center build-out? Who knew they were involved? Don't miss my sit-down with company's top brands. Then you called in about an ag name that's in the midst of a breakup. I'm looking at the wheat being separated from the chaff and giving you my take. It is pretty exciting. Of course, there's also a sentiment around AI and data centers shifting daily. How I'm getting a read on what America's really feeling about the AI movement, the consumer data for 100x. So stay with Kramer. Speaker 8 (10:45) Don't miss a second of