Skip to main content

tv   Mad Money  NBC  June 6, 2012 3:00am-4:00am EDT

3:00 am
i'm jim cramer. welcome to my world. >> you need to get in the game! >> he's nuts! they're nuts! they know nothing! >> there's a bull market somewhere. >> "mad money." you can't afford to miss it. hey, i'm cramer. welcome to "mad money." welcome to cramerica. i'm not here to make friends. i'm glad the four-day losing streak broke. my job is not just to entertain but to teach, educate. so call me at 800-743-cnbc. the worst case for this scenario now it's making the rounds and it really hits home given how weak the global economy's getting. but you mind if we don't lose sight of the best case? on a decent day when the dow gained 26 points, streak broke, s & p rallies 4.57%, nasdaq advanced 4.66%, perhaps it's worth pondering what happens if things go right.
3:01 am
if they break the bull's way. believe it or not, stranger things have happened. remember, i got in this business, dow 1100 and at that time, every time since, we've been living with worst case scenarios writ large yet it's obvious from the math given our current dow 12,000 level that we've had more best case than worst case. if the best case plays out this time, you'll look back at dow 12,000 and marvel that you didn't buy stocks hand over fist. so what is the best case? what could go right? first, we need a compromise between the two punitive big guns, one, say one big one and one weak one. spain and germany. i can't stress enough how much more important spain is than italy or greece or anyone. spain's got a huge deficit and gigantic banks, including bbva. which both look a lot like fannie mae and freddie mac did before they collapsed. right now spanish banks are facing daily runs, in part
3:02 am
because while their deposits are guaranteed, they may not be guaranteed in euros so if spain falls apart, it's more likely these depositors will get a different much less valuable currency if the banks go under. it's vital that spanish depositors be given a reason not to pull out of spanish banks because right now, it's the only rational thing to do. in return for more control over spanish finances and unified central authority germany which pretty much stands alone in europe and the world, for that matter, must accede to some sort of deposit insurance that allows guarantees in euros. how important is this? listen, i got to put this in english and make it so you understand it because everyone talks around it, they don't explain it. imagine if our nation were a confederation of states with a weak federal government, subject to booting out states that don't adhere to federal fiscal discipline. meaning they don't play well with washington. each state would then have its own fdic, right? would you put your money in a
3:03 am
california bank, for example, if you knew california was in big trouble and might issue its own california coins as part of the california fdic and not a federal one? wouldn't you put your money in a bank far away from california? wouldn't that make sense? that's what's happening in europe. it's pretty outrageous that german iron chancellor angela merkel, the keeper of the federation purse strings, doesn't see it this way. spain's california in that example. if we get that insurance, it would be possible for europe to actually kick out member states without wiping out individual savings. yes, it's possible that a new currency would lead to rapid sovereign defaults but if the countries accede to more central control there's no need for that and germany can create a pool of bad sovereign loans that can be traded together while poorer countries fix up their finances and accept euro wide discipline. here's what happens if we get this. lots of good things. it's what i call a circle, not a vicious cycle down. the first thing that happens is then, then the chinese would
3:04 am
embark on what we have been waiting for, a major stimulus plan with lots of rate cutting. i think the chinese are simply waiting until something good happens in europe before they waste their money, which is what would happen if there's no euro wide agreement. if china starts growing again we finally have enough strong growth to pull countries like india and brazil back from the brink, where they are right now. obviously the chinese could also be in a position to help europe, as we could be, too, although i doubt we'll get more than just an ecb loan guarantee from ben bernanke given the political situation here. we're helping the europeans overtly in a marshall plan like move might be politically unpalatable. not for the chinese. 20% of their goods are sold there. stabilization would lead to a boost in confidence for international companies based here that could then commit some of the two trillion smackers they have on the sidelines to expansion. hiring. third, we could get away from mergers and acquisitions. assets were so much less than they should be valued because of the euro induced paralysis. you'll see those values come back.
3:05 am
fourth, depression would be off on our banks that would be interconnected with europe. we could also expect new confidence around the world would allow our companies to start hiring. sure, there would be a spike in commodities but they've come down enough to allow that to happen without much worry it would spur inflation. fifth, the earnings of our companies would not longer be in danger of faltering. right now without a resolution i believe the earnings of many of our international companies are at risk. if we don't get some deals soon, when this quarter winds down, how about like in a couple weeks, we will see big disappointments. you will see preannouncements to the down side. you get a resolution, you will hear about a strong second half, a great outlook which will cause stocks to rip up and rip up huge. in particular, the u.s. based companies that have endured pricing pressure from europe, starbucks, mcdonald's, sisco, they would have estimate increases for the back half of the year, pressure would be off the vf corps and ralph laurens and we would look at europe on the mend. i cannot imagine how high ford and gm would go given how robust their sales are here.
3:06 am
the entire best case scenario revolves around one thing that hasn't been in the equation at all with the germans, and it's why i have come to dislike their leadership with such a passion. growth. the germans have put no premium on growth whatsoever, and i doubt that they will until their own growth falters. i hate to say this, but fortunately that's what's exactly happening right now. why should the best case occur? because without it you have a whole lot of european currencies and many will be much weaker than the deutschmark, the heir apparent for the german currency if things implode. the german consist not afford to have the deutschmark return because other countries' wares would be priced competitively and it would kill their imports. i think they're paper tigers. in short, it's in angela merkel's self-interest to favor the pan-european solution but until we get the sequence, we'll have big down days because currently our earnings estimates are too high. coupled with days where we genuinely believe germany is in accord, secret accord, with the rest of the continent. we get giant short squeezes. today was one of those days.
3:07 am
unfortunately, it's entirely possible merkel is so afraid of hyper inflation that she doesn't care about how germany's real self-interests will be served by helping spain. in that case we'll most likely see more and more bank runs and disorderly union that could lead us to the worst case scenarios i traced out last night. here's the bottom line. europe is difficult. it's convoluted but a resolution of merit could be created if germany would compromise. which is why you can't make a huge bet against good news. i put the possibility of resolution around 50/50 simply because we may very well need a lehman-like event to get the compromise to happen but if it does it wouldn't shock me to see a 10% value in week's time before it does happen. it's enough to stay the course and not head for the hills even if the pain could be great before the resolution happens. carlos in washington. carlos. >> caller: how you doing? >> all right, how about you? >> caller: good, good. listen, on your advice i bought 1,000 shares of westpoint a couple months ago at 40, and now
3:08 am
i got maybe the beta engine. >> that's a very big deal because it's offroad vehicles. westpoint hit a high and they announced a competitive plan. we thought they were partners. that pulled the plug. they have never been the same again. this is new life with caterpillar but don't be greedy. i don't think it's going back to 40. i don't. let's go to gus in arizona. >> caller: big boo-yah from the university of arizona. how you doing? >> wildcat. what's up? >> caller: nothing. hey, i'm a young investor trying to start up a long-term portfolio with a little of my graduation money. i was on the show a couple months ago asking about marriott international. i know that on thursday, the company announced the acquisition of gaylord entertainment for $210 million. the stock price basically went up about 27%, then on friday, there was a huge sell-off and
3:09 am
the stock dropped 6%. since then it's been hovering around 36.50. i know marriott's fundamentals are relatively average compared to the industry, but there are a few key things that stand out to me. with marriott's recent acquisition of gaylord hotels, current pull-backs in the market, is now a good time to get in for the long haul? >> i was worried you wouldn't give me a shot there. i really wanted a shot. it's my show. okay. anyway, here's what we do. it's a very important question but i will turn the tables entirely on you. do a lazy susan. i think you should buy windham worldwide. wyn. that's a better stock. that's why i want you to pull the trigger. no marriott. go windham and go wildcats. we need a compromise. it's in merkel's interests. listen to me, iron chancellor, to be able to create that euro-wide fdic. if we get that to happen, it's to the moon, alice. but if we don't, well, let's
3:10 am
just say, abort, abort. be right back. >> coming up, two-faced? think you know the whole story about facebook's botched ipo? think again. new details are emerging and cramer's updating your news beat. and later, could this market have finally found a floor? or is there a trap door still lurking? cramer's putting the technicals to the test when he goes off the charts. plus, good medicine? medical innovations are helping us fight chronic diseases and live longer lives. could seattle genetics product pipeline of tumor terminating technology help curb cancer? cramer gets the details from its ceo. all coming up on "mad money." lysol knows a real clean isn't just something you see.
3:11 am
it's something you smell. lysol no mess automatic toilet bowl cleaner not only cleans your toilet with every flush,
3:12 am
but also freshens your entire bathroom. so even in between deep cleans, it's as fresh as any room in your home. available in spring waterfall™, citrus, and lavender fields™ scents. for tips on a healthy home, visit ♪ ♪ [ female announcer ] don't lose girls to dandruff. use axe anti-dandruff shampoo. ♪ lose the flakes. get the girls. only three girls in towels? amateur. yeah so uh, watch ted. ted rated r. another cup of coffee? how long is this one going to last? forty-five minutes? an hour? well... listen. 5-hour energy lasts a whole lot of hours. take one in the afternoon, and you'll feel alert and energized 'til the cows come home.
3:13 am
it's packed with b-vitamins and nutrients to make it last. so what's it going to be, partner? 5-hour energy. wise choice. 5-hour energy. hours and hours of energy. [ girl voice ] i dunno. hey chief, did you take my sub? [ boy voice ] no. this one's got avocado on it. oh, mine had avocado on it! wow, how bout that? well, i don't. i'll help you find yours when i'm done. thanks. wow... [ male announcer ] get your own subway chipotle steak and cheese with avocado. the rich, superfood! or add it to your favorite sub. it's avocado season at subway.
3:14 am
wow! that's all i can say about facebook moving in on that key 13 and under demo. i mean, business must really be smoking. they're now going after children, right? all right. speaking of taking candy from a baby, i don't know about you but i've still got a real sour taste to that facebook ipo stuck in my mouth. not just because it ended up at a 52 week low at $25.86, down another buck and change today. nasty. if you go back just a couple weeks to when the deal happened, we were at a crucial moment. the individual investor had been crushed for so long it was almost impossible to even imagine what could bring them back to the stock market. the lies, the disasters, the broken promises, the unreliability of the system, the inability to prosecute the bad actors who almost brought down
3:15 am
the western financial world. i could go on and on. all this made it so the retail investor would have to be nuts, just crazy, to keep money in the stock market. as crazy as a depositor would be to stay in a spanish bank. it was simply not rational to take a beating like this one, meat grinder. to make matters worse, neither the financial services industry, nor its regulators have shown an ounce of remorse. the industry caters to the big bill payer, not to small guys. even as the small ones collectively constitute what was considered to be the backbone of the markets, and are needed to keep them deep and liquid, not the high frequency traders who suck it away. the truth is, the financial industry itself, very little self awareness. virtually incapable of self-examination. you almost never hear anyone say we got to start worrying about that regular investor because the regular investor as an individual doesn't pay the bills. if you're a giant mutual fund, they'll cater to your every whim but the buyer of 100 shares of this or 50 shares of that, seen as a waste of time.
3:16 am
too expensive to help. i've seen the memos, get rid of those people. yeah. junk them. the financial industry has become just like any other business. many firms believe you can't make money servicing smaller clients with humans, just like banks want their smaller clients to use atms and not real live tellers. just the fact of life to these big financial outfits although some of them, obviously some firms do cater to these people. no wonder the individual investor was so soured on stocks. they feel left out. they feel deliberately left out in a lot of cases and along comes facebook. ah. perfect chance to entice regular people back into the game. big visible offering, 900 million users. if there was even the slightest tradition of fairness, then everyone would have been allowed to win. think about it. the insiders offered very low basis, right? they would have won if the deal was priced at 20. the individuals who know facebook would have loved to get in there. more important, they would have felt like it's worth it to buy stocks again. it was up to the banks and execs at facebook to figure out a
3:17 am
price where everyone can win. that's the tradition. because believe me, it doesn't do any good for the issuer to have the deal flop the way it did, especially because a lot of buyers were presumably users of facebook and now those users feel like, well, they've been used and they are less likely to be on facebook. what do the bankers do? they succumb to greed, favor the issuer at the expense of the clients. then at the last minute, they favor the big clients over the smaller buyers by telling the big boys that as the documents say, facebook's not doing as well as we thought. believe me, although the brokers aren't supposed to differ from anything written about how the business is doing, they can certainly tell prospective buyers how the deal's shaping up. from everything i'm hearing, at the last minute, the word was that it wasn't shaping up well at all, but they spilled too much ink and had taken too much pride in the darned thing to start walking the deal back. that would have been a disaster. can you imagine bumping the price range to the 30s, then bumping it back to the 20s? might as well kill the deal, for heaven's sake. the result, i'm calling it a disgrace of a lifetime.
3:18 am
one that was compounded by morgan stanley's james gorman who had an interview basically said shame on you, the buyers, for thinking you can make a quick buck. take a look. >> the group of people who thought they were buying the stock so they could get an enormous pop were both naive and bordered under the wrong pretenses. >> now, bozos. talk about caveat emptor. shame on morgan stanley for saying that. everyone in the business knows the game. here's the way it works. everyone is supposed to win on an ipo, especially a big popular deal where it would have been easy to let everyone win and facebook was the antetheosis of that kind of deal. i had also gone too far to pull back at the last minute. when it knew it had no control of the opening, whatsoever, and the systems were too backward to hit on the influx, amazing when you consider how they paraded around telling us how well it will go. maybe they will show a little
3:19 am
remorse when they speak tomorrow about compensating brokers for losses on the deal. you got to own up, everybody. people own up when they do mistakes. the essence of what really went wrong here was that morgan stanley favored the sellers over the buyers more than it should have. why that was, we don't know. was it because at the last minute, things had gotten so bad at facebook, maybe may was so bad they had to put on a big show and tell only the big boys how bad things really were? rely on over the transom retail nods the high 30s? it seems like they were in a hurry to get the deal done before the slowdown in business became apparent. maybe they wanted to squeeze every penny out of buyers. i don't know. facebook certainly doesn't have much respect for its users given their constant privacy policy hijinx. why should we expect them to respect the interest of the little guy buyers? even as many retail offices in the morgan stanley network indicate they were overwhelmed with stock at the last minute. i find it hard to believe the syndicate didn't know how bad
3:20 am
the deal was and how bad it would fare given some branches were given allocations well in excess of demand, a sure sign they knew things had gotten out of hand. remember how the process works. you should only get a fraction of what you put in for. if you put in for 10,000 shares, you are hoping to get 1,000. you get 2500, that's a huge win. if you get 5,000, you begin to get nervous because that means there might not be oversubscription, meaning demand, as you thought. if you put in for 10,000 and got 10,000, you know you're a dead man. however, in the facebook deal, i know brokers who got well in excess of their 10,000. sometimes two or three times what was requested, with the idea that somehow, they could give their clients a real break by getting in. they didn't get friended. they got faced. allocations like that indicate pure greed, typically on the part of facebook because morgan stanley makes the same amount of money either way. doesn't really help them with the next client, but it also could be that morgan stanley totally botched the deal, as they knew the fundamentals, and they winked and nodded to the
3:21 am
biggest clients and very legal, very legal. horrible to me, but legal. wow. hey, isn't the constitution great? how about the s.e.c.? all legal. either way, greed on the part of facebook or stupidity on the part of morgan stanley, the individual investor, you would be the loser. and you stay the biggest loser. maybe the 13-year-old and under crowd will help amelorate the downturn but it's too little, too late to help the individual investor, who is supposed to be the lifeblood of our market. just a shameful exercise all the way around, including morgan stanley's admonishing of the buyers who believe the bankers had it right when they most certainly had it wrong. >> coming up, bottoms up. could this market have finally found a floor? or is there a trap door still lurking? cramer's putting the technicals to the test when he goes off the charts.
3:22 am
and later, good medicine? medical innovations are helping us fight chronic diseases and live longer lives. could seattle genetics product pipeline of tumor terminating technology help curb cancer? cramer gets the details from its ceo. all coming up on "mad money." is! hey, i got a leak ! yoo hoo ! wait a minute, come back ! um, miss ? up here! right. like 85% of us, you have hard water stains and that cleaner's not gonna cut it. truth is, you need something powerful. you need lime-a-way. it's 4 times more effective at removing limescale than the leading bathroom cleaner. because lime-a-way is specially formulated to conquer hard water stains. for lime, calcium and rust... lime-a-way is a must.
3:23 am
how long since you worried about flakes? since before jeans were this skinny. not since us three got a haircut. ♪ not since my first twenty-ninth birthday. [ female announcer ] head & shoulders. clinically proven to improve scalp health. with seven benefits, there's no worries from flakes, itch or breakage. i haven't worried about flakes since my grunge days. remember them? trying not to. [ female announcer ] head & shoulders. scalp and hair beyond compare.
3:24 am
3:25 am
there's not a lot to like about this market that once again is almost entirely hostage to europe and the bumbling and selfish people who run that place. china followed along with the rest of the developing world. no doubt about it. hiring situation in america we know from friday a lot worse. not a lot to like. one of the most frightening changes over the past few days is that the charts seem to have turned against us, too, and they have turned with a vengeance, given that the s & p 500 dropped below its 200 day moving average last weekend, a classic sign that things are going wrong. in a market this volatile i believe in using every tool at our disposal to figure out which direction the averages are headed. that's part of the reason i think it's so important to note what the technicals are saying. the other reason is there are a ton of players out there who take their cue from the technicals even though few would admit it. so when the charts say things are getting worse, it can also become a self-fulfilling prophesy. that's why tonight we are going off the charts, using tim collins, brilliant technician, part of the paid site. he nailed this decline on the show a couple weeks ago, thanks to his read on the vicks. he said the vicks spike would lead the market down.
3:26 am
we have to get a sense of where the s & p 500 is going now and he believes it's near very important levels and there's a lot riding on which way it breaks in the future. above all, collins stresses the need to be flexible. the options market is pricing in at 14% move for the s & p, that's the s & p 500 spf. that could mean it's headed to 1100 or 1460. not both of them is going to happen, one or the other. he sees a number of reasons to be worried about the s & p but get this, he says the index is holding the line above some key levels. as long as those levels hold, the possibility of a rebound is still on the table despite the 200 day moving average breakdown. take a look at this daily chart of the s & p 500, see what he means. for collins, all right, look, it's not a pretty picture. the s & p has made this rounding top pattern, not good, and to make matters worse, it had a little rebound, what's known as a bears flag formation before plummeting back down last week. what's so bad about that?
3:27 am
because it forms the dreaded cup and handle pattern. we talked about this one before. looks like an upside down cup with a little handle, one of the most reliably bears patterns around. take a look at this. here's a chart of the daily from 2007-2009. it made a cup and handle at the end of 2007, when the market peaked, and we got another one in august of 2008, shortly before lehman brothers went under and the whole market collapsed. two cup and handles, two disasters. you can see why chartists dread the thing. based on the current cup and handle, collins thinks the s & p could fall as low as 1140, an 11% declined. that lines up with the worst case scenario i talked about. however, there are mitigating factors. the s & p has been holding above a pretty solid floor of support at 1255 to 1262, levels we challenged sunday night and monday morning and both held and shorts were starting to freak out. very valuable piece of info for traders, one of the reasons we acted so well today. remember i told you at the top, we're holding technically.
3:28 am
as long as we continue to hang on above these levels, collins believes the decline can be avoided but if the s & p falls through the floor it has a long way to drop. the more time we spend more the more it changes the charts for the better. check out this. i like this one. a ten-minute candlestick chart. meaning each little candlestick represents a ten minute interval. it's not a candlestick in "clue." it's an actual candlestick chart and yes, chartists break the action down minute to minute using these kinds of measures. this gives you a sense of what a battleground we've got here. over the last few days, the s & p has been bouncing between a floor of support at 1264, okay, there we go, and a ceiling of resistance at 1280. we actually broke through that ceiling today. look at this. we broke through it. closing at 1285, a fact which makes collins think we might be out of death watch mode in the near term and the s & p could possibly rally to 1310 before
3:29 am
encountering serious resistance, a move he considers will bounce back but it's not investable. that doesn't mean we're out of the woods although it does give us breathing room. right now we're in breathing room mode because of this last couple days. what about long term? let's go to the weekly chart. all right. this is not so hot. here we see that same rounding pattern i'm talking about that was in the daily, but fortunately there is no handle yet to the cup. collins says that's a real good thing. there's a floor of support just above 1260, we see that, again, very similar to the daily. however, the s & p has fallen below its 50 week moving average, a long-term measure of the trajectory and many chartists see that as a kiss of death. the day moving average, i'm sorry. here's the real issue. even if the floor holds and the s & p doesn't collapse, collins doesn't think it will rebound any time soon. why not? take a look at the bottom. this is an indicator that shows
3:30 am
you whether a security is overbought or oversold. right now, the s & p is in severely oversold territory, meaning it's come down too hard, too fast. normally when we're this oversold, we can catch a nice rebound rally. that's no longer the pattern. when it's gotten this oversold in recent past, they tend to stay there for months before we get any kind of lift. it's a new pattern. that happened both last year in 2010, so just because we're oversold, it doesn't mean it's safe to buy, unfortunately. just hasn't worked out. it's not all doom and gloom, though. we look at the very long term monthly chart of the spy, the s & p 500 etf, collins thinks things are a bit more bullish. you can see the stepping stone pattern, okay, of higher highs and higher lows has been going on since 2009. then in 2010, the s & p begins to sort of kind of leapfrog with big pull-backs followed by even bigger rallies. right now these bullish patterns are still intact. that said, collins also sees dark clouds in this chart, too.
3:31 am
the spy seems to have formed a double top at around 140. we're getting dangerously close to a bearish crossover, where the 13-month moving average drops below the 21-month moving average. the good news is this crossover has not yet occurred. and collins says it probably won't happen if the spy can stay above 125 which the equivalent of about 1250 in the s & p 500. same crucial support level we saw in all the other charts. here's the bottom line. all these charts are basically telling collins the same thing. if the s & p 500 can stabilize at these levels and based on today's action that's what it seems to be, then there's still hope it can stage a comeback. i think that's coincident with what germany does. if we have a floor of support around 1260, all bets are off. that's germany not cooperating. i'm a fundamentalist which means i don't necessarily buy into this chart stuff but it's clear things will get much harder if the s & p breaks down below that level only because so many chartists will jump ship, creating a self-fulfilling prophesy of selling.
3:32 am
bad enough that we're hostage to europe. we don't want to be hostage to the technicals, too. paul in nebraska, please. paul. >> caller: jim, a big warm buffett boo-yah from omaha. >> i like that. nice thought. what's up? >> caller: jim, my question's about a company gordman's, a discount apparel and home goods retailer, entirely domestic. they went public about two years ago. with the recent downturn in the markets and the rise of discount company stocks like walmart, what are your thoughts on this? >> wow. i'm stumped. i got to do work. i do not know gordman's. that's my bad. let me do some work. i will come back. might even do a whole segment, sounded attractive enough. thank you for the call. how about scott in minnesota, please. scott? >> caller: boo-yah from minneapolis. >> like that. >> caller: hey, first let me say thanks for everything you do.
3:33 am
>> thank you. >> caller: okay. here's my question. with the price of oil bottoming and energy stocks well off their highs, what do you like better, apache or schlumberger. >> it's a technology company first. i would rather do schlumberger than apache. that thing is too hard to trade. i got a teeshirt, i didn't want to put it on. too wild. tonight's chartist does see a comeback. collins is saying listen, it could go either way but the last few days are something to build on. stay with cramer. >> coming up, can you handle the heat? cramer gets you fired up for a searing hot lightning round. and later, good medicine? medical innovations are helping us fight chronic diseases and live longer lives. could seattle genetics' product pipeline of tumor terminating technology help curb cancer? cramer gets the details from its ceo.
3:34 am
all coming up on "mad money." every year we pick a new city to explore. but thanks to hotwire, this year we got to take an extra trip. because they get us ridiculously low prices on really nice hotels and car rentals. so we hit boston in the spring-- even caught a game. and with the money we saved, we took a trip to san francisco. you see, hotwire checks the competitions' rates every day so they can guarantee their low prices. so, where to next? how about there? ♪ h-o-t-w-i-r-e... ♪ those spots are actually leftover food and detergent residue that can redeposit on your dishware during the rinse cycle. gross. jet-dry rinse agent helps wash them away so the only thing left behind is the shine. jet-dry rinses away residues for a sparkling shine. how much coffee are you fellows going to need today? three...four cups? [dumbfounded] well, we... doesn't last long does it? listen. 5-hour energy lasts a whole lot of hours. so you can get a lot done without refills.
3:35 am
it's packed with b-vitamins and nutrients to make it last. so don't just stand there holding your lattes, boys. make your move. we'll take the 5-hour energy. smart move. 5-hour energy. hours and hours of energy. so we've developed styles of beer to accompany that. we brew octoberfest, winter lager, alpine spring and right now, there's summer ale. [ bob cannon ] samuel adams summer ale is a flavorful wheat beer. it has a very nice spice note. [ jim koch ] it has a little lemon zest and a historic brewing spice called grains of paradise. it's citrusy. -lemony. -flavorful. -refreshing. -wow.
3:36 am
[ man ] sam adams summer ale, there's just something about it. it's like, totally reminds you of summer, you know? it is time. time for the lightning round. are you ready, skee-daddy for the lightning round? we'll start with charles in florida. >> caller: this is charles in palm beach. >> hit me! >> caller: i like the l.e.d.
3:37 am
lighting story. i like cree -- >> no! no! creedence clearwater, no revival. i want out of that stock tomorrow morning. steve in new york. >> caller: hey, jimbo. >> what's shaking? >> caller: i picked up some stocks on the pull-back. last weekend, on monday. what do you think of the stock? >> you know what, i like floor very much but it's really connected with oil and if oil goes down, you'll have another downturn. i will urge you to wait until it's 50, then ixnay. get out. johan in new york. johan! >> caller: hey, big tribeca boo-yah! thanks for a phenomenal show and all the great advice. >> what's up? >> caller: i want to make a play in nearfield communications. i would like to know what you think of nxp semiconductors? >> you're taking on too much. see you in september.
3:38 am
i don't want you to start buying semiconductor stocks right here. they're good for like two days but they're still hostage to europe. i need to go to dana in indiana. >> caller: jim cramer, boo-yah! >> sweet. sweet boo-yah back. >> caller: hey, i want to say thank you for all your hard work. >> doing my best. >> caller: my stock is getting pole-axed since its high in march. my stock is clean energy. >> this is completely speculative. it's a speculative stock. you're betting on natural gas being the post office switches and military switches and major truck company switch. they haven't done it yet. until they do, you're stuck. let's go to russell in virginia. russell. >> caller: yes. >> go ahead, what's up? >> caller: thanks for taking my call. i'm calling to ask you about bbus? >> i like it as a speculation. they don't need the money. i think it's a good one. i need to go to kevin in new jersey. kevin? >> caller: hi, how are you, jim?
3:39 am
>> real good, partner. >> caller: a shout-out from new jersey, hometown summit. >> what's up? >> caller: i am looking at thompson reuters with a terrific -- >> keep looking, don't touch. keep looking, don't touch. they got no growth. we like growth on "mad money." we do not want to touch no growth situations even if we like the management. and that, ladies and gentlemen, is the conclusion of the "lightning round." >> the lightning round is sponsored by td ameritrade. have you ever partaken in a car insurance taste test before? by taste? yes,
3:40 am
never heard of it. well, that's what we're doing today. car insurance x has been perfected over the past 75 years. it's tasty. our second car insurance... they've not been around very long. mmmm... no good! no good? no good! so you chose geico over the other. whatever this insurance is, it's no good. ok so you... veet wax strips have a hair coating technology that leaves skin smooth for up to 28 days. try getting that with a razor. veet. what beauty feels like.
3:41 am
3:42 am
3:43 am
on june 15th we're >> check it out. >> want to join cramer in studio are slowing we circle the wagon around recession resistant companies that can grow even when the economy's terrible, here and abroad. that's why i have been focused on this american society of oncology meeting. it's been going on the last few days. it's an event where all sorts of small speculative biotech and i don't want you to think this is bristol meyers, releasing data about cancer-killing drugs. seattle genetics is right in the sweet spot, $2.4 billion market cap, another one of these innovative bioteches that uses engineered antibodies to locate and kill cancer cells while sparing healthy ones, technology
3:44 am
licensed to a number of big pharma players, genentech, pfizer among others. the company isn't yet profitable although it should start making money in 2014 and it does already have one very big drug on the market, a third line treatment for hodgkin's lymphoma and second line treatment for non-hodgkin's lymphoma. they just came out with two positive pieces of data at the oncology conference. we got bullish phase two data about phase two and phase one data a company is working on with castration resistant prostate cancer. let's check in with dr. siegel, the president and ceo of seattle genetics to find out more about these drugs and where this company is headed. sir, welcome to the show. >> thanks. >> all right. now, we had an opportunity here,
3:45 am
because so often, clay, what i struggle with, we know that you're targeting non-hodgkin's lymphoma and hodgkin's. you're offering the kind of drug that doesn't bombard or carpet bomb the body but goes right after and i think you got something that's going to show us. >> i do. exactly. we target something called cd-30. that's found on lymphomas, certain types of lymphomas. we target it with an antibody depicted in this leggo model in the green. that antibody finds the tumor cell and docks right on the tumor cell. what it does is it then delivers what's here in black, four molecules of a drug that go into the tumor cell and kill the tumor cell. >> but not to the rest of the body. so, what, the patient recovers, less nauseous, or is it more effective? >> more effective and less toxic. cd-30 is on tumor cells but not regular cells.
3:46 am
it's a targeted therapy. >> if i were to look at this, is this a pill i take and then goes through my body and finds these bad cells? >> it's a 30-minute infusion. but there's no premedication. patients feel good, it's not like standard chemotherapy. you get really knocked out and exhausted and things happen. not many side effects. >> now, one of the things that's interesting is that the focus obviously was on hodgkin's and non-hodgkin's but then i got a look at the additional trials that you're doing. you've got renal cell carcinoma a, pancreatic, prostate. these are all done in a similar kind of targeted way? >> yeah. we're developing seven different products. this is our lead product, it's on the market, it's approved. we have launched the product last august. it's selling well. but we have a variety of other targeted antibodies to different solid and liquid tumors. >> when you say selling well, one of the things i thought was really interesting, this is always a learning experience when i go through this, is that you talk about two kinds of buyers.
3:47 am
you have the test people but you also have community doctors. tell me what -- why community is so important. >> well, we have the academic sites. they're the ones who test this and they know this product. that's the mayo clinic, memorial sloan-kettering. when you don't feel good and you don't know what's wrong with you, you might have night sweats, fevers, itchy ness, you might have lymphoma. go to your regular doctor, you want to get treated in your community setting. what this drug allows, is this is a 30-minute infusion, simple, easy to administer, it allows you to get treated by your doctor that you know, and not have to go to the major hospitals. >> okay. so it sounds, go through the thing, you say total revenues, $48.2 million just for this first quarter. so this is something obviously many doctors are discovering and i see the progression, it must be month to month, new doctors discover it, is that what's happening?
3:48 am
>> yeah. we're adding new sites each month. now, that 48.2 million you refer to, total revenues for the first quarter in the company. >> but what i'm trying to get at, this is not one of those companies that has no revenues and is just a hope and you're hoping to get other companies to work with you. you've got a product and like cellgene which we talked about, you could have multiple uses and more and more people want to try this product on other kinds of cancers. >> absolutely. even just with this, as we look out a number of years with 10, 15 different trials we're doing, we think it has a chance to be a billion dollar plus product on its own. then we have a host of other products that we're developing and moving forward with our exciting technology. >> you also made a bold statement in the conference call. front line in both hodgkin's lymphoma and immature t-cell lymphomas, where we're really just not adding to standard of care, we are redefining after many decades of no new therapies. you're telling me there hasn't been anything new, then you guys just came along. >> hodgkin's lymphoma, front
3:49 am
line therapy was defined in 1977. >> the therapy we've been using is that old? we have come up with nothing else? >> nothing else. >> why? >> this is the first new drug that's coming in. what we're doing with front line therapy it's involved of four different products that are all tough to take. we're taking out the worst of them and replacing that with this new product. we have already started that trial and will be going into a larger trial for approval. that should happen by late this year. we're really excited with that. the chance to redefine front line therapy, decrease the toxicity associated with it and a lot of young people have hodgkin's lymphoma, and so decrease the toxicity and increase the efficacy, increase the cure rate. that's what we're all about. we're about the patients. >> you're about what nobody else has. it doesn't sound like there are too many guys out there, you alone, which is really terrific for your company and great for patients. >> yes. definitely.
3:50 am
it's not an incremental drug. this is the real deal, life or death with patients. >> thank you. how much is an estimate cup worth to a stock? how much will a stock like caterpillar be hurt if the trends everyone sees around the ♪ [ male announcer ] to perform your best, training's gotta be a lifelong passion... [ debbie ] michael! [ male announcer ] ...fueled by a footlong passion. that's why debbie phelps is always there for her son michael with his favorite flavor-packed, fully-jacked footlong subs. only one? michael... [ male announcer ] dive into michael's fav, the protein-powerhouse subway turkey & bacon avocado. made fresh for this champion with extra jalapeños. subway. the official training restaurant
3:51 am
of the phelps family... and athletes everywhere. oh. let's go. from the crack, off the backboard. [ laughs ] dad! [ laughs ] whoo! oh! you're up! oh! oh! so close! now where were we? ok, this one's good for two. score! [ male announcer ] share what you love with who you love.
3:52 am
kellogg's frosted flakes. they're gr-r-eat! n kelchange your life.akes. my fourth grade teacher mrs. hoffman encouraged me to fulfill my potential. she wrote in my yearbook, "one day you'll be the star of an award-winning show on nbc!" how did she know that? the more you know.
3:53 am
how much is an estimate cup worth to a stock? how much will a stock like caterpillar be hurt if the trends everyone sees around the globe keep up? caterpillar's a perfect model of what can go wrong. first, the earth-moving and generating companies worldwide powerhouse, sales on every continent, big share taker. reliable, superior technology. back in february, caterpillar traded at $116. now it's at $83. staggering pull-back of almost 30%. cat's been a hideous stock to own and emblematic of almost all industrials. they earned $5.60 a share in 2008. the next year they earned $2.16. given that the stock should forecast earnings, how did cat do?
3:54 am
it nosedived 75%, reasonable given the horrendous earnings decline. if you believe a collapse in europe which seems imminent by the day will crush credit and kill construction projects, that need caterpillar tractors and engines, you ain't seen nothing yet. in the worst case which i do not subscribe to but want to point out, caterpillar is headed down to 29 from its high of 116. wow. at that price it would yield 6%. certainly accidentally high but cat has boosted its dividends since 2008-2009. wait a second. if cat's doing that badly, the bears will say the dividend will be sliced. now let's think about the owner of cat shares. it is reasonable to presume the owner might be fearing exactly what happened in 2008-2009 if europe goes kaput. now look at it another way. rather than calculate the loss in stock price in 2008-2009, how about looking at the earnings decline analog. right now analysts say cat will earn $9.74 this year.
3:55 am
give them the same price per share, earnings bottom at around four bucks. what's the appropriate price earnings multiple for a company that can earn four bucks a share? still nothing to write home about from an $83 stock. you can see how these sellers might think they're getting out ahead of a gigantic decline. their are some issues. the price earnings multiple would not contract like that. most likely expand as people recognize that cat could be in a trough earnings phase. in those cases price earnings multiples go up, not down. you can see the expansion to roughly 16 to 17 times earnings. hey, that's what i've seen before. that puts the stock at roughly 70 based on the $4 earnings figure. that's pretty much the level cat traded down to at the bottom of 2011.
3:56 am
traders figured out exactly that kind of earnings decline and that's how they do the analysis. by the way, at that price, cat yields 4% and they're not going to cut the dividend. this company has been able to preserve this. i think we're in worse shape than 2011 because tons of cats are sold into the stalling chinese and latin american markets as well as the european market and u.s. market hasn't picked up. you can see the stock drop another 20 bucks and that i believe is why traders are selling. too bearish? no. if europe collapses, that's a very realistic target. bottom fishers, beware. a european blowup on top of the rest of the world slowing means you might not yet be near terra firma for the stock of caterpillar. [ crack of bat ]
3:57 am
ball. ball. [ crack of bat ] [ male announcer ] hanging out with cal has its benefits... so does taking one a day men's. go to to enter for a chance to meet me and watch the 2013 mlb all star game.
3:58 am
3:59 am
all right. i traced out the worst case scenarios last night, 2008, '09, that's a big decline. i' taken that off the table. 2011, very realistic. we saw from the charts what would happen, easily go down to 2011 if we don't get a resolution. tonight -- resolution in europe. tonight i traced out what could go right, that would be the yes, indeed, rip your face off rally we hear about, if the germans would just agree to help out the spanish banks. i don't think that you would be able to get stocks anywhere near l


info Stream Only

Uploaded by TV Archive on