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tv   Mad Money  CNBC  May 23, 2016 6:00pm-7:01pm EDT

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>> tribune. don't buy it. >> xon. >> i'm melissa lee. see you back here tomorrow at 5:00. "mad money" starts right now.. 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 finds it. "mad money" starts now. hey, i'm cramer! welcome to "mad money." welcome to cramerica. my job is not just to entertain but to teach and coach. so call me. 1-80 1-800-7 1-800-743 cnbc.
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>> something to ponder. this morning usa today led its money section with a stunning story about how one-third of the cash is that the balance sheets of american businesses is held by just five companies. five companies. that's incredible. what i think is even more amazing is that the stocks of those five companies are doing quite poorly. down almost 3% on average. not only that but the quoims the ten largest aren't beating on average either. why is this? first generally speaking, for the most part, the cash heavy company are beating the slower value place. second, it can't be repatriated without paying big federal taxes. there is good news believing they would final it. third. there are companies specific issues with each of these stocks so we have to address them one by one. let me name the five kings of
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cash explaining the sub optimal performance. first is apple. down 8% year to date. despite having more than $233 billion in cash. apple used to be a great growth stock but the market has decided that its growth is a thing of the past. even without backing out the cash, it has 11 times earnings. the average stock on the s&p is 19 times. that's an incredible comedown for the largest company on earth. it tells you exactly how little people think of its cash position. let me say from the outset i think the market is valuing the company incorrectly. market doesn't care that spam a service business growing by leaps and bounds. i'll bet the service revenue stream which includes the place you store your pictures could take on a much more pronounced role if the company used its money to boost the service. right now, it seems like an
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affirmation of the judgment that apple is a no growth company. that doesn't endear itself to the big growth companies. more important, there is a commonly held belief the forth coming iphone 7 will be dead on arrival. that's what we're hearing. no one has even seen it. the reason is the impressive reports the company is gearing up to make between $72 and 78 million iphone 7s. that could be the largest in the two years. if the stories are true i think this is one more reason to own it. not trade it. that's been my posture for ages. next up is microsoft. it is a company in transition moving toward cloud based software away from personal computer software. it is a gigantic challenge that happened quickly. in the last quarter, it hit a
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wall. with both the cloud revenue going more slowly than wall street was expecting, it devastated the stock. while it sells for 17 times earnings, it is stuck in the 50 range wefl no idea whether the cloud business is accelerated or not. microsoft is neither a value stock florinor a growth stock u we final out if it is on board. the company formerly known as goolg. it is down almost 8%. alphabet missed the quarter. i believe it has more control of its own destiny. i think alphabet should put its money to work. they should preemptively bid for nfl's international rights.
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number four. cisco. up 3% for the year. it showed an acceleration in revenue. it sells at 3.7% yield. that tells never market had no growth. my travel trust owns cisco because i think it is underestimating the growth. what it can do with its cash as well as continue to purchase unicorns. it is putting its cash to good use. buy this stock aggressively. finally, $50 billion in cash. up 7% for 2016. not bad, right? but it's down 12% from where it was. it is becoming less of an on premises i.t. plan.
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i think so many company are competing against them in this space. especially the much beloved sales force which is better growth and reported huge upsides. oracle is cheap. lots of catalysts. this market is making a severe judgment. companies with lots of cash don't have much growth and the cash is being held against them. thes company have few opportunities to grow. i think that's nonsense of i think the market's judgment is too severe but we're stuck with it until these guilty cash heavy tech companies are otherwise proven innocent. >> rick? >> i heard potential buyout rumors. it was around 17.5%. what kind of company would want to buy them when they're traded -- >> we don't recommend companies
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on a takeover basis when the kroim in decline. >> curtis. >> caller: thanks for taking my call. >> of course. >> kroger, doing the things they need to do to stay competitive. do you think they will continue to be competitive in this sector? >> i am concerned about walmart's cush side. i think they're going to do perishables at a much lower price and i think whole foods is being reinvigorated. i think kroeger is a hold. let's to go stewart in my home state of new jersey. how are you? >> caller: i'm doing great. you're much better looking and a better dancer than george clooney. >> you know, i can say the same thing. i didn't tell my wife that but we went to see captain america any way. >> caller: my question is about expedia. you recommended it. i think it is a great stock.
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it popped one the earnings that came out. over the last three, four months, it's been sfwag 105, 115. a buyout, to 180. >> i like that. i would have stikd with it. i think the business looked a lot like air b & b which is a fabulous business and i think is doing fabulous. whoever said cash is king must have missed usa today. the market is making its judgment. i think it is nonsense. right now, it is a reality you have to invest in. i'm going to give you five companies bucking the bear. then biotech has to stay healthy but unsexy place. i'll reveal the stocks in vogue.
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and mcdonald's has been eating up pepsi. should you be concerned? i'll let you know. you can judge. stay with cramer.
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when someone who isn't all that fond of the market come up with five names in the s&p that he actually likes, you have to sit up and take notice. that's why when the cracker jack technician, my colleague, produced five stocks with fabulous charts. five stocks he likes. i would investigate. what drives these charts?
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what lets them buck the trend? is it something we can detect from the homework? or is it a mystery? maybe a potential takeout. some self-help on the way. or an improvement in the macro environment. yep, he's been right. so when he's bullish on, right these down. flow surf, fmc. frank, mary, charlie. franklin resources, energy, energy, i had to dig deeper. fascinating to me. a mystery. put our sherlock holmes hat on. where's my -- my findings. let's start with flow surf. mostly for oil, gas, refining kept markets. this industrial seems like a total loser because it's been going down from pretty much
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everything. nothing to like here. however when you dig deeper you get another view. things are stabilizing. not getting worse. which while at the same time, no serve is selling 13 plants, reducing its global work force 15 to 20%. meanwhile, their bookings in march at the end of the last quarter were getting better and better. there's been a time deferred maintenance. and the destocking of valve inventory, there is no more excess inventory. it has become a tail wind. sometimes you can tell when a story is bottomed by the tone of the questioners on the conference call. that's the way i felt about flow service call. when nathan jones asked, wpd, he saidtion and i quote, this is about as bullish as i've heard you in a couple of years. end quote. voila! flow serve is a buy.
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next. fmc. holy cow! the old food machinery corporation. when i did my homework, i was stunned by how compelling this is and was remiss that i didn't brought i to you earlier. it is a company transformed. it has gotten out of its business. it has become the eighth largest crop company. the service pretty much paid for the $1.8 acquisition. it gets better. fmc has always been a major producer of lithium which is used to make batteries. but is just now coming into its own with the advent of the electric car. a tesla needs more than 100 pounds of this stuff. now fmc makes lithium for
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panasonic which makes cars better for tesla. we learned today that it man's to triple its capacity. plus the growing has health and wellness business. a big player in omega 3 vitamin production. now, given the incredible grab in agriculture, the buyer trying to buy monsanto. the eighth largest company in the space, fmc, maybe worth speculating on. particularly isn't it has a market cap of just $6 billion. psych the new ag company spun out of dupont. i can see them picking it up in a heartbeat. it could dove tail. lithium business, a home run. call me a fan. fmc. it's a buy!
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the next pick, frankly, resources. ben. ben franklin. odd duck. totally odd duck. why is franklin's chart turned up? the business has. it is another of these situations where business turned up intraquarter. they're getting better and better as it goes along as opposed to vice versa. those, these companies like franklin resources that saw it improve while the quarter went on. in these cases, they improved from the 500 basis points. they've seen the stocks go continually higher. those that deteriorated ended up getting slammed. after being in the dog house for ages, these caught fire and that got the stock moving. with about half in cash and a monster buyback could be the time financial that someone who believes in e-merlinging markets can get behind. i prefer the index creator.
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it may have in some of these emerging markets really hurt people. if you're more bullish, it is for you with a tendency to takeovers. franklin resources, kind of a buy. the fourth pick is a tough one. this is painful this is house of pain. and this is the most drilling company. get this. 347 rigs. right? 263 of them are bad. day rates are dropping. somehow they beat the estimates. that's amazing. i think oil can trade at $50 but not much beyond that. and sure, it has a bount i yield. i would rather see you in.
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i think it is a takeover for halliburton after it was nixed by anti-trust. i think it is safe to say it is in decline. the oil has to go to 60 to 70 for this to prosper. pass. like bridge. pass. finally, energy. first, it was a traditional utility. one of the most diverse assets in the country. the ceo david crane, former ceo, old law school classmate of mine, tried to have the solar wind energy company. he also created a company. he came on this show many times. he always positioned it as the leader in solar, wind, like alternative power. the efforts didn't resonate with the shareholders. fell from 37. down to just below $9 at the
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lowest in february. guess what happened? right here. crane resigned. what happened ever since? the stock on fire. it climbed to $15. in other words, crane's resignation caused the bottom. he had lefvered it up. the energy has become a plain old utility again with a decent set of assets. i think it can work higher now that crane is no longer in charge. bye! of the five stocks, bruce from real money likes, i like four of them. homework in pain?
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sorry. can't pull the trigger. it is still a nonstarter where these oil prices could be with us for some time. pretty interesting. i would say stay away from it. while this up and down market puts hearts through the ringer, medical device players have been pumping out steady gains. i'm giving them a check-up. then it's homework time. and one stock must be avoided at all time. make sure this stock isn't harbor in the your portfolio. and while the market doesn't want to join it. i'll tell you what is behind this action of pepsico and mcdonald's.
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this market has been pretty darn bearish with the pharmaceutical sectorsful pretty much since hillary clinton was mere inches away from becoming the democratic nominee started attacking grow companies for what she called price gouging. skraunld the same time the failed hedge manager turned disgraced ceo, bragged about jacking up prices by ludicrous amounts. and valeant without any improvement became pharma public enemy number one. these stocks have indeed been in the dog house. another one has been getting a huge amount of love. i'm talking about the medical device companies which are in bull market mode. that begs the question.
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how is it possible that this market adores the medical device place even as it loathes more biotech names? the answer may seem counter intuitive. money managers are pouring cash into the medical device segment because pharma and biotech have gone out of style on the wall street fashion. what do i mean by? okay. most portfolio managers feel the need to own some kind of stock. they will mirror the s&p 500. that way if a given sector takes off, and they didn't see it coming, they'll still participate in the upside. if a sector breaks down, the bench mark will go down too which means it won't be blamed for the weaknes not. right now the s&p is 15% health care which means a huge number of funds are desperate to have
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some health care exposure. but remember, everybody knows that pharmaand biotech. so these managers don't have a lot of options. they need to invest in health care. they want to put that money in safer health care stocks that are not in the cross hairs of the federal government. that's one big reason they've been buying the stocks hand over fist. hower, to catheters that reduce the ifks are infections ask ports that deliver chemotherapy drugs without the need for frequent injections. they blew the numbers away. delivering a big top line. they're also launching lots of new products including a high-tech self-catheterization platform. eight products in the biopsy business and a new extent graft. and while it is only 2 points off its highs, it is not pricey. about the same as any stock in
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the s&p. next up is another one that's red hot. boston scientific. 21% since the start of 2016. it is the leading maker of cardiovascular products. they shot the lights out. juicy top guidance. that's how it shot up 11%. boston scientific has been rolling out a bunch of new products. including advance pacemaker leads. the part that delivers the electric jolt to your heart. not to mention a pacemaker that is safe to use inside an mri. when you're on the outside, it says don't use if you have a pacemaker? a bunch of enhancements.
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plus they have an implantable stroke prevention device. and it trays 18 times. much more movement. this is up an stounling 27% year to date. we've been championing this one forever. a company that makes the world's most comfortable heart valve as well as less invasive products meaning they don't have to open the chest cave. the quarter at the end of april. see a pattern here? last summer they approved the company's catheter based aortic heart valve. they can insert without open heart surgery. and we got some very positive date. a it soared almost 17%. it isn't cheap. they're all going to have to use
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this. you're in the hospital a long time if they crack that chest cavity. if you can get in and out, they'll love that. zimmer biomed and striker. up 16 per and 19%. this is such a bull market. it reported a little less than a month ago. a more natural feeling. great for babyboomers. a nice beat quarter. it is expanding into the robotic arm assisted service. stryker with the 2017 story and they plan to launch their total knee system. the company acquired mako. surgical a few years ago. still, even though these two stocks have run, both are darn
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cheap. we know the medical device name have been roaring. in search for a safe place to invest in health care. but i bet this group can continue climbing. based on the strength of the fundamentals and all the consolidation. the abbott takeover. when it document medical devices, i say take your pick. >> josh, i got my voice back. >> open wounds here. we'll get them next year. >> aid quick question for you. i bought it before christmas. i bought my first third in the mid 50s. january happened and it is coming back. i picked up a second third. and the first quarter happened. it has been a house of pain for me. i thought they had a decent pipe
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line. i know they had one on pinnacle hold. >> okay. >> caller: my question is, since it is underperforming the better part of year, do i hang on? >> here's the problem. this morning, i saw they had a pack. i got excited. don't get too excited about this. this is part of a cohort. this used to be isis, that is strictly out of favor. the bioteches. it doesn't which one you name. that's why we like the medical device stocks. they're more exciting to the wall street fashion show. medical device stocks should continue to rally. do your homework. see which of these fabulous companies could be right for your portfolio. what does janet yellen have to do with burgers and soft drinks? you stumped me but i'm back from doing my homework. tonight's edition of the lightning round. can a toothpaste do everything well?
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whenever you call about a
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stock, i try to an your questions. every now and then i don't know a stock. why? there are thousands of publicly traded company including many new once in the last few years. if i tried to keep them all in my head, i'd be even crazier than i am already. whenever i can't give you an answer immediately i make a point of getting back to you. "mad money" is the most interactive show on television so let's get down to business on. i am a 25th, we let the homework accumulate. jesse in california called in about handler armstrong sustainable casual. hasi. a real estate investment trust. it has a very straightforward thesis. given that climate change is a serious long-term problem they believe they can make a killing in investing in company is that project that's are part of
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solutio solution. in short a specialty financial play on the growth of energy efficiency and renewables. since 2013, hannon armstrong has passed over 400% since then. the stock gives a juicy 6% yield. the fed raises interest rates two or three time, that will increase the capital. still, i think it is a good story. they might be worth buying. maybe into the next market wide, maybe somebody says something, some governor makes a comment and they pull the trigger. i suggest maybe wait until the next fed meeting or at least listen to what janet yellen says. but i like it. next up. gabe asked me about slm.
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a stunt loan company. i had to brush up on this because there is so much changing. it is the largest purveyor of student loans. the ones that are not blocked. the colonel was kree wlatd the old sallie mae spun off. they kept the private banking business called slm. there's no doubt student loan business is booming. there's more student loan debt than credit card debt. 70 gs. a the love places are 70 gs. i don't know. it doesn't seem like a bargain to me. that doesn't mean the stock isn't worth buying here. or it is. let me give you the problems ask the opportunities. first the competition. more and more company are trying to get a piece of the student loan pie. the second is politics. hillary clinton the democratic nominee is all but in name. she has a $350 billion plan to provide more needed, more
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needs-based government loans for higher education. also helping people with existing student loan debt to refinance at lower rates. if that happens, that's bad news for slm. it is already down 40% because people are worried about it. personally i think a lot of these election year worries may be overblown. the most likely will be more grid lock. given that the stock has become a political football, unless you believe that donald trump is going to win. he hand been addressing this head on. so let's call this a trump stock. if you think trump will win, i think this is a winner. what next? a company called md. it is a nationwide medical group of more than 3,200 affiliated doctors. a focus on bheebs are born prematurely. the idea is that med nax works
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with these physicians to provide costly effective care with better patient outcome. it also helps ease the burden with billing. they could the same for hospitals. this is an incredibly inquisitive company. i don't know. they have a healthy balance sheet. they can do more. where do i come down md? the stock has been hammered. down 7% year to date despite the reason quarter was pretty compelling. this is a story where politics could be a problem. next up. tim in north carolina. he asked about ship finance international.
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sfi. it owns all kinds of vessels. container shipments, car carriers, drilling rigs. this stock may seem attractive because it is 6 times earnings. when i see that? do you know what i do? i throw the red flag. oh! that was bad. you probably couldn't see it. because it was camera man that i hit in the head. no dividend yield gets that high unless people were worried the payout will be cut. and look, that's way too. oil exposure for comfort. especially since i don't see crude rallying past 50. at the same time, 17% of the sale. you know, i look it a all the time. very low levels.
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off the bottom for a few months. at the end of the day, it is the global economy. if things keep improving, they can pay the dividend. if it flat lines and gets worse, i'll pass. we got a call from wisconsin about la jolla pharmaceutical. ljpc. this is a tiny speculative biotech that treats with orphan drugs. it is a life threatening condition where your blood pressure drops to dangerously low levels. it is enrolling patients in a phase iii trial. everything else is phase 1 or pre clinical. the whole biotech cohort has been crushed but la jolla has been anile '80. down 65%.
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with the stocks under 16. barely more than $3 above the lows. however, while i don't see it going that much lower, i don't see much in the way of catalyst that's make me want to buy it. i told you to avoid this last august. you side stepped a 40% decline. even here it seems too risky. especially since i see no improvement. once again, a big theme. an election year. that does it for my homework. more proof i have the smartest audience around. you are really smart. stick with cramer.
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it is time! time for the lightning round! are you ready, skee-daddy! chris! >> caller: recently rite-aid has had a bit of a sellout. >> by the way, i think it is more of a problem. i'm a buyer of walgreen and i
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don't want the rite-aid. let's go to jeff in new york. >> caller: boo-ya, jim of i thank you from ten years ago. i would do the same again today. beacon moving supplies. >> a irnl with he! lowe's or home depot! people are buying roofing supplies. that one i like very much. let's to go jack in texas. >> caller: boo-ya, jim! >> good growth. what's not to like. it is good to go. nick in ohio. >> caller: hey, how do we feel about the long term buy? >> i don't know. the stock is coming back. we don't need them of let's go to steve in new york. steve. >> caller: boo-ya. i would look for a square long term investment. >> i don't know. they have that credit risk
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problem so i want nothing to do with it. no how no way. >> caller: hi, jim. how are you? >> i am very. >> my voice is back and i am ready for action. >> caller: very good. 15% down from the high. what do you think? china, india and italy? >> the research director. we both think it is right to pull the trigger right in here. starbucks has been hated for too long. we've been waiting for 54. maybe we're too greedy. you like starbucks. how about jerry? >> caller: good evening, mr. cramer. i have a question on cvs stock. it has been tregd down. do you have a reason for it. >> walgreens has been going down too. i think cvs is a buy.
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he's doing a fabulous job but retail has been weak. joyce in new york. >> caller: so great to talk to you. >> same. >> caller: i was wondering if you could give me your opinion on the apple reach? >> hotel. no. we're not -- that group has been too hard. i'm going to have to say no to that. that's the conclusion of the lightning round! >> the line round. sponsored by td ameritrade. working 24/7 on mobile trader, rated #1 trading app on the app store. it lets you trade stocks, options, futures... even advanced orders. and it offers more charts than a lot of other competitors do on desktop. you work so late. i guess you don't see your family very much? i see them all the time. did you finish your derivatives pricing model, honey? td ameritrade.
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you may be bored with hearing about the fed. you may we did notion and have to factor their actions into the stockton view. something happened around may 10 in terms of the market's collectiveness. the dollar has steadily gotten stronger again virtually all other currencies. the result, underperformance from the stocks of u.s. based international companies that benefit from a weaker dollar and are doing quite well on a fundamental basis. two obvious ones. mcdonald's has since plummeted back to earth. and pepsico which had pulled back from 106 over 100.
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let me start by saying both these stocks are buy buy buy! mcdonald's is doing the best it's done in years. i know many of the critics saying the all day breakfast is a one trick pony that has run its course. i disagree. this has been discounted again and again by people but it still has legs. secondly, it barely started kooching and they are beginning to staff the stores as they accept there's something big in the air. and they are buying into it. go do some homework. oh. but the fact is, mcdonald's in the end, it is a gigantic international presence. the stock has been pummeled since the narrative changed. how about pepsico? while the company has been dinged for the 3 central soda. at a in the city of brotherly love, 45% of sale are from overseas. and it had such a great quarter.
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it doesn't matter. both have battled for dividends and it is worth pointing out the weaker dollar is crucial and critical to going higher in the second half of the year. who else has been hurt for the need for higher rates? how about 3m. fantastic quarter. the stock took off. we heard about the june and then it fell to 166. at one point it was even lower. it makes sense. it gets more than 30% of sale from overseas. and it is not just that. kimberly clark, 129 to 106. este lauder. it has gone from 95 to 81. the parent of google.
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nothing new except the strong dollar. now we know that a rate hike would be good for the banks. in fact they need multiple rate hikes. but it hand budged at all. so in other words, the stocks of the international company are getting hurt even as the supposed beneficiaries from the rate likes get nog lift. that's why this market has become so darn hard. it inspired a stronger dollar. even the natural winners seem to gauge nothing. that's why these fed officials with the endless talks, they matter how. they're driving the dollar higher. exactly the opposite of what our international companies need to see the stocks rally in the second half of the year. stick with cramer. smart devices are up. cloud is up. analytics is up. seems like everything is up except your budget. introducing comcast business enterprise solutions.
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to help companies be... local & global. open & secure. because no one knows & like at&t. i want to go back over apple again. these are press reports that said the apple iphone 7 could be
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bigger than people realize but they're only press reports. you won't get any confirmation out of apple. if you want to own the stock of apple, just trade it. i'll see you tomorrow. male announcer: america is struggling to shake off the recession. public distrust of wealthy ceos remains high. but more and more bosses are looking for radical ways to reconnect with their workforce in order to find out what's really going on in their companies. each week, we follow the boss of a major corporation going undercover in their own company.
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this week, the president and ceo of choice hotels, one of america's largest hotel chains, poses as a trainee competing for a job. - hi. i'm jack parker. announcer: the boss will trade in his luxury sedan and country club membership for a housekeeper's cart and a plunger.


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