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tv   Mad Money  CNBC  August 15, 2012 6:00pm-7:00pm EDT

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in the meantime don't go anywhere. "mad money" begins right now. i'm jim cramer. welcome to my world. >> you need to get in the game. >> firms are going to go out of business, and he's nuts. they're nuts. they know nothing. >> i always like to say 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. other people want to make friends. i'm just trying to save you a little money. my job isn't just to entertain but i'm teaching tonight. call me at 1-800-743-cnbc. as much as i love twitte twitter @jimcramer, i don't want to take my cues lately from what i have been prodded with on a day like today where the average has bare lly budged.
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11% higher. nasdaq rising.64%. i kept ruminating about a tweet that accused me of leading retail investor lambs to slaughter. because i'm too bullish. [ bull bellowing ] someone said, it's a phenomenal move here. my mantra has been the same which is to stay the course. pick stocks you like. invest, don't trade. this is like an anti-a tra tra show. go for the long run. the market rips up then do selling of the stocks you own that didn't have good quarters. okay? there are a bunch of them out there. then you get ready to recycle into better companies with better quarters. don't go nuts trading. you cannot compete against high frequency bandits. this is you. that's them. don't try to be a hedge fund. you don't have to justify picks to angry clients.
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read confessions of a street addict. you will see what i mean. if your stocks are going down make sure you know why. overall weakness of the market or a bad day in a tough sector. stick with broken stocks damaged by exogenous factors and cull broken companies. especially with a ral aly like the one we have had in recent weeks. that's the mantra of the show. anyone who wants to typify it another way, they haven't seen it. what matters to me about this charge that i'm leading the poor retail investor lambs to slaughter is we have had a hugely important rally. dow gaining more than a thousand point this is july. i think anyone who does what i do, anyone who's trying to be good is to keep people in the game at all costs so they could then take advantage of the rally. and try to make big money in what had been a horrendous market. remember? look, if that's your definition of slaughter i want investors
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slaughtered every day of the week. you know i'm an advocate of investing in stocks with high dividends. not the most aggressive strat gichlt if you reinvest them over time you get more money than from buying stocks that don't have dividends. it's come from reinvested dividends. that's why i believe a diversified portfolio of stocks is as good as it gets. totally cramerica. but tonight i want to talk about the nondividend stocks or slight dividend-paying stocks keeping you in the game if you have been watching show and listening to what i say. because in many ways these stocks have been the backbone of this particular leg of the rally. call them the bait i use to lead retail lambs to slaughter if that means the greatest gains i have seen in my lifetime. in particular, i want to talk
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about apple which does pay a small dividend. i want to talk about google. i'm squawking about amazon. they have been this part of the market's winning leaders. they have been the generals with google being the standard here. google blazing past the old high with a remarkable run since announcing the last quarter. like shermans not the all time but breached the most recent one. this is like sherman's march to the sea but no cities were burned in the making of the rally. out's worth taking note of the high growth tech troika because there is so much attention on stinkers like facebook, groupon, flat liners like yahoo!. not enough attention has been paid to brea, but i hope there is attention on cisco because of
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the positive dividend. first let's talk about what apple, amazon and google have in common, the ability to remain on the cutting edge at all times. hardly a day goes by when one of the companies doesn't roll out a new initiative that makes you stand in awe of them all over again. during the 80s intel didn't roll out things like this. ibm didn't. this is amazing, people. for example, they all embraced the social media i like. from the ease with which you can purchase apps my friends and my kids' friends talk about to how well they work on the road when you're walking around or the way they tap into the cloud for the information you need to grab a flight, book a hotel or buy something you like personally. i see it every day. listen. i'm trying to figure out who sings "titanium." that's a hot song.
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next thing i uh know i'm singing along thanks to sound hound. it tells you the singer and gives you the lyrics in time with the music on the radio. you shoot me down. i'm like titanium. it's genius. pure genius. i've always got the lamentation that i don't have the ability to follow along with my team, wrong. the commissioner. my stage director shows me the app that gets it all, real time, voila! i'm in business? this is on my iphone 4-s. i will cashier it in a second when the 5 comes out. why? because i know i can't live without it. last night i said how i missed the show "newsroom." uh my friend says, do you have an ipad? due. he says, go to hbo and watch them. how can anyone who cannot afford an ipad and iphone be happy?
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i'm about to switch from the closing ceremonies to breaking bad. i forget the channel number. there's a thousand of them like the honey badger i'm getting stung a thousand times while i look for it. the apple itv will allow me to talk to a siri character who told me about a dynamite restaurant in brooklyn and i will never have to deal with the clicker again. how about google? you're on it every second. you click on the ads because they're on target. last night just purely by mistake i got caught using another search engine. it was a nightmare. i will never, never again stray from google. not even by accident. amazon? it pushed me to a book it predicted i would like because of social media data mining. yeah, man, it was spot-on. i can't wait until it comes. i could go on and on. these companies are known by
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everyone and they are used and loved by the same retail i'm leading to slaughter every day. plus they are winning share, kicking butt. they are cheaper than any of the packaged stocks. apple and google are less than pepsico and coca-cola. only reason amazon isn't? they are too busy spending money on new warehouses to be the backbone of internet commerce which depresses their short-term earnings. that's a fair trade. this is why i don't think i'm leading you astray telling you to stay the course. as long as the market is led by amazon, google and apple i'm convinced out's safer than you think. the stocks made you big money and i believe they can keep going higher as people make the mistake of trading them. instead of owning them. who has social, mobile and the cloud? amazon, apple and google do. they've got enough momentum and earnings power to take us higher still. any time they are down they are
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the best stocks money can buy. if that's leading you to slaughter, i say take me to the slaughterhouse stat. ed in maryland. ed. >> caller: how you doing, jimbo? >> not bad, partner. >> caller: i have a couple questions for you real fast. number one, do you think arena is in line to be a takeover target? and go with the tide or do you think they will roll the dice and let the drug go like others have? i have been in the drug business 49 years. uh i know drugs like lipitor and i had the pleasure of working with cipro. what do you think? >> i have had to take all of those at one time or another. [ rim shot ] now here's the deal. i think arna is speculative. i have to throw the red flag when i hear someone mention speculative stock takeover. we don't recommend stocks if the fundamentals are just a-ok.
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i'm not behind arena. on twitter, blast me. fire away, fire away, ricochet, i am titanium. george in florida. >> caller: hey, jim. buy sell or old on jds unifapha. are we ready for a takeover. >> no, no. it used to be just don't sell us and now just don't sue us. the trade has been made. i'm talking about investing not trading. i think it's david gueda. he's a d.j. he gets credit for the song. it's really cia. amazon, google, apple. the titanium trio with breo, little or no dividend, lots of power, inexpensive. "mad money" will be right back.
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>> announcer: coming up, engine of growth? record low prices of our most abundance resource have been driving the adoption of natural gas vehicles. westport innovations has been cranking up supply to meet demand. is it time to hop in the fast lane? don't miss cramer's exclusive with the ceo. and later, pattern in the pipelines. wall street shifts have been unpredictable. but the market's best mind has spotted a potentially profitable pattern in energy. stick around. cramer's revealing a strategy that could tap you into reliant returns. all coming up on "mad money." ♪ >> announcer: don't miss a second of "mad money." follow @jimcramer on twitter. have a question? tweet cramer, #madtweets. send jim an e-mail to madmoney@cnbc.com or give us a call at 1-800-743-cnbc. miss something? head to madmoney.cnbc.com.
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based on the e way the presidential campaign is playing out it seems clear whoever wins
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the government won't throw considerably weight behind natural gas. a game taking technology i talk about because it could help us kick our uh addiction to foreign oil while crushing opec, creating money hundreds of thousands of jobs, not to mention reducing co2 emissions. if uncle sam won't back natural gas vehicles we have to rely on the market to get the job done. believe it or not, once the magic of capitalism is going to get us there, it's just not as fast as i like. take wprt. westport has yet to turn a profit. they are growing revenues like crazy thanks to partnerships with major players like cummins, the world leading engine maker, and caterpillar. private companies are building out the infrastructure needed to support trucks that run on nat gas. this is pure economics at work here.
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not fast enough for me. when westport reported the company knocked it out of the park with a more than expected loss. in response the stock surged up 4 1/2 points to 12.8%. i first got behind it. it's up 23% since last time we spoke with the ceo in june. the stock is still a dozen points off the april high. four of them rated it a buy, three say it's a sell. the skepticism, no champions as big firms is the reason they could have room to run. even without help from uncle sam. let's talk to the founder and ceo to find out more about where westport is headed. mr. demmers, welcome back. >> good to be back. >> this quarter to me seemed like a shift like we have seen with so many other companies where it's really china that will be driving revenues and maybe earnings in the future and
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not america. isn't that a fair and honest statement at this point? >> i think you're right that things are going crazy in china. i have to disagree. i think things are going nuts in north america, too. i'm sad you're disappointed in how well things are going. uh think we are on the verge of a great revolution in north america on transportation. it's exciting. i know you would like it faster, but we're going as fast as we can. >> what bummed me out is we had a good man running a great company continental resources on. took my breath away. romney is against the natural gas act because he doesn't want to subsidize. of course the federal government subsidizes electric cars. natural gas cars sell better than electrical. subsidize solar. to me the chinese have determined this is the fuel of the future and united states hasn't determined that. >> the study that got published by the national petroleum
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council is reassuring. >> i did read it. >> there is data in there because they're trying to be quite even handed and say what are the obstacles to all the different technologies we've got. we need to do something. we need to get off oil. it's not just about getting off oil or off opec. how do we rebuild the economy, build jobs around transport because it's such a great, great driver of the economy. i think that's what people have come to the conclusion. we have lots of opportunity. natural gas has low barriers. the only bare rers are infrastructure, an easy investment for people to get behind and we are seeing that. china got out in front. they like to get out in front. once things are demonstrated and proven we are seeing three times the investment rate in china. they just got going 18 months ago. we're catching up fast. we'll see things double here. things are going well.
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>> my friend rick santelli did a piece about converting a truck to natural gas. turns out there are only two natural gas stations in chicago. i know you said the infrastructure is happening. chicago, real big city. they have two baseball teams and one natural gas station for each one of them. >> that's the bull and the bear story we have heard from analysts that you mentioned. we have people that say, there are only two stations in chicago. others say, geez, there are only two stations in chicago. imagine what happens when it's built out. the second part is true. we see nothing but enthusiasm everywhere we go for this concept. so there is just an immense opportunity. everything from loek motives down to passenger cars. the big news now is consumers and passenger cars. you know, people are buying the ford f 250 pickup trucks we announced. we thought it would be a fleet vehicle. consumers are buying it. >> how is the pull-through for
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ford. have they overwhelmed your ability to make the ford 250, 350? >> no. there's nice pictures on our website. that facility can do 20,000 trucks a year which is not a big number. ford puts out about 300,000 out of the truck plant in louisville. we can do 20,000. we said we would look forward to doing 500 this year. just started in june. uh think we'll do better than that. certainly the goal isn't 500 trucks a year. we can do much better. >> we have a chicken and egg thing. i speak to the ceo of ford and he says if you build out the gas stations we'll do it. the gas station companies are saying, build the trucks and we'll do it. exxon says, we're not going to do it at all. somebody has to say, look, there are enough trucks on the road. i have to build 1,000 gas stations. clean energy doesn't have the
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money to do it. >> no. but clean has done a great job demonstrating that it's easy to do. there is technology and knowledge, but there is no magic here. put a station in, trucks show up. it becomes a utility investment. it's straightforward. we are seeing people like shell. you mentioned china. they are building stations like there's no tomorrow. so this is not a technology barrier. it's a financing barrier and the financing isn't hard. an l & g station for trucks needs probably 30, 40 trucks to milwaukee it economically viable. that's not a big deal. that solves the chicken and egg issue for us. >> last time i got all excited about the locomotives. i speak to railroad guys who say there are specific laws. you cannot put a gas tank behind a lo comotive.
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maybe this is pie in the sky. the csx, union pacific, they can't use it. >> i'm not sure that's quite true. let's leave it at that. >> i heard it from a high level train guy. >> there are no rules about it because nobody's done it. we'll have a loek motive with a car running at cn. it is understood there will be a change but is there a barrier? i don't think so. we have to get through showing people it's safe, realistic. but the economics are overwhelming for the rail industry to go to l & g. there is no way people won't go for it. >> energy transfer partners has been a disaster from my charitable trust. they are buying sunoco. can't someone say, you have the natural gas pipelines. you should put up natural gas
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stores. i'm looking for chevron, sunoco, someone big to say, exxon doesn't want it? we'll take it all. is there one you think is likely to do that? >> i don't know. you called for them to do it. we'll take the call if they need advice. to be serious, people think five, ten years life will be different. you know better than i do that this is a tough time for businesses. out's very, very iffy for anybody to make big capital bets until they see what's coming out. people are waiting on the sidelines, waiting for a signal and they will jump in. the fact that shell has jumped in on l & g has shaken people. that's gotten a lot of people thinking seriously that the time is passed to make the decisions and get going. i think it will come and be a flood of stuff. i don't think we need the first
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mover. we have seen the first movers already. we are seeing the evidence. people can do the math themselves. see that this is not hard and it's a good return on investment. we have happy customers. we'll see investments made. >> you make me feel better. >> we have said it a lot. i'll repeat it. we're just as happy we are not messing around in washington. so we have lots to keep us busy. i think there are many, many people that need to work together to make it happen. the government can be helpful but they can also mess things up. i'm happy the way things are. we'll get it done. >> david demers, westport innovations. thank you. >> good to talk to you again. >> speculative stock. if you believe that you don't need washington to make it happen westport should be bought now. i'll wait for a pull-back. stay with cramer. >> announcer: coming up, the
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market's best mind has spotted a potentially profitable pattern in energy. stick around. cramer is revealing a strategy that could tap you into reliant returns. plus, how do your stocks stack up in a mystifying market? cramer makes sure your portfolio makes the grade on am uh diversified? all coming up on "mad money." ♪
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what's your policy? how do you find terrific buying opportunities in a market that's run as much as this one over the last month or so? remember here on "mad money" we hate, hate, hate the idea of chasing stocks. [ buzzer ] we like to buy them when they're down, not up. that makes it hard to find bargains at a moment like this one where the averages are such elevated levels and the market is steaming hot. so that means we have to look a little harder. we search for stocks that have been knocked down, perhaps from regions that have nothing to do with the fundamentals. then we see if they have what it takes to stage a comeback. bring them on. take mark west energy partners, mwe, the cramer fave natural gas
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gathering master limited partnership with a notoriously big 6.3% yield. we have a deluge of natural gas in this country. mark west is all about processing it, removing contaminants and separating dry gas from the natural gas. butane, ethane, propane, sospory are wanted including new york city. we talked to westport innovations. if their natural gas engines are to be adopted on a national scale we need companies like markwest to build out to dpather and process gas. the reason has nothing to do with my longstanding dream of a future where cars and trucks run on natural gas regularly in this country. it's not even about the gorgeous dividend, as much as i like it. i'm highlighting markwest because yesterday the stark was
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marked down in a major way. right now, i think you are getting a phenomenal deal in the spelling. monday night markwest said it would do a secondary offering. no one expected it. yesterday they priced the merchandise at $50.72. the result, holy cow. the stock just took it on the chin. i mean -- so it bounced back slightly today. but you are still getting markwest for close to the secondary price and a dramatic decline from where it was on monday before they announced the deal. ♪ hallelujah >> buying it has been a hit or miss strategy. most of the secondaries over the last year have not made you money. that's true for markwest, too. a huge issuer of equity. this was the third secondary offering since the beginning of the year. first was in march, then in may.
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they did a deal in december at 54.25. all of those were at higher prices than the stock is now at $50 and change. if you bought the stock the last time you did lose money. i'm fully disclosing that. what the heck am i telling you to buy it now after another secondary. is this a recipe for failure? not so fast. it will be, think, this time different. i will tell you why. they mostly traffic in natural gas liquids. this is generally tied to the price of oil. when the price of crude was crushed as if it were chevron. that's why the earlier secondary offerings haven't taken off. it's at $91 a barrel.
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people thought it would be $75. that means the natural gas liquids have been rebounding along with stocks except for markwest because of the secondary. so how have these pipeline secondaries done when oil was on the rise? that's the real comal ti here. when oil is on the rise, here is what you do with the secondaries. [ buy, buy, buy ] because it's been [ house of pleasure ] . consider kindermorgan. they did one in may of 2010 at 66.25, a third in june of 71.44. now the trok stok is at -- stock is up 16% from 2011. that's without factoring in the outsized dividend. oil went up during that period, you made money. how about the energy product? did a secondary 2011. you made big money if you used
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that one, too. oil was going up. just look at markwest's earlier deals. of the four secondaries the company did last year, three of them, all but the last have made you money. even if the stock goes nowhere uh you reinvest it and end up doubling your money in 11 years. that doesn't assume the company doesn't raise the distribution. markwest should be able to increase the payout for the next several years which is tremendous. the company has been on the show many times and they have never hid the idea that the distribution will be going up. we don't buy stocks because they have been dinged or have fantastic yields. we have to like the fundamentals. let's call them excellent. larges natural gas processor in the mar sells shale. especially in pennsylvania. they are also big in the utica shale, fast growing area in ho hochlt markwest is a major operator in the southwest.
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you know they are oil rich. best of all, markwest is transforming itself into a fee-based business. they get 40% of business. the plan is to take it to 65% by 2015. bottom line. after this run it's hard to find bargains in a market that's had a fantastic move. when a high quality stock like markwest is pounded court so i have a secondary offering then you have to pounce. it gives you a glorious 6.3% yield. worst case, markwest is knocked down again and you get to buy some more with a higher yield. that's what i i call a high quality problem. let's go to kevin in new york, please. kevin? >> caller: hey, jim. how you doing? >> real good. how are you? >> caller: good. i called in about walter energy. stock was at 52. you said dog.
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coal industry, stay away. is this rumor or is there credence to this? >> on jim cramer "mad money" we never recommend a stock where the fundamentals are in decline. maybe they get a takeover bid. i have to miss it. the fundamentals are declining. i'm passing. josh in florida, please. josh. >> caller: jim, i know the shale plays are hot. do you prefer gulf port energy or growth in the utica shale or enbridge energy in the bakkan shale. >> easy one. some people are upset with enbridge because of spills. i'm not happy either. that wrecks it for everybody. that particular piece of paper is a good one. we heard the other day from mr. bakkan they need pipe. enbridge is the way to go. griff in ohio, near the utica shale, no doubt. >> caller: it is a pleasure indeed. i want to check in since the
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sage of omaha has called his, i wonder what you think of phillips 66 since the bifurcation with phillips. >> uh i like the whole group. i have been trying to get together a piece. i can't do it just because the stocks have been moving so quickly. i don't want to get caught near the end of it. you have a winner. phillips 66 rocks. great play. markwest secondary deserves a second chance. i know people are fed up with secondaries. my timing is right here, people. uh you get the big yield, good growth. don't be afraid to pull the trigger. stay with cramer. >> announcer: coming up, the clock is ticking. call cramer at 1-800-743-cnbc to find out how to fire away at cramer on the lightning round. can he with stand your thunderous onslaught of stocks? ♪ this is the sound of my soul ♪
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♪ this is the sound... you feel that? no. the eassist is working. right now. that's spandau ballet, man. you did this all the way to the restaurant. yeah. we were going up a hill. getting extra horsepower. from a battery-powered generator. ♪ ah, ah ah, ah, ah ♪ it's helping us conserve fuel. this is important. [ male announcer ] the all-new, 37 mpg chevy malibu eco. from new technology to old friends. chevy runs deep.
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>> announcer: lightning round is sponsored by td ameritrade. [ bell ringing ] >> holy cow. it is time. it is time for the lightning round. on cramer's "mad money." you say the name of the stock. i don't know the calls or the
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name of the stock ahead of time. i tell you whether to buy or sell. when you hear this sound -- [ buzzer ] -- then the lightning round is over. are you ready, skee-daddy? it's time for the lightning round on cramer's "mad money." i'm going to start with mike in arizona. mike. >> caller: boo-yah from green valley, arizona. >> nice. >> caller: great show. thanks for the help. i have a bunch of directv stock, dtv, that one of my advisers thinks is too aggressive as i approach geezerhood. it's 26% of that fund. >> i would like you to cut back to 20% but it is a terrific stock. i like the cable companies more now. comcast has better growth but directv is a good stock. josh in new york. >> caller: boo-yah, jim. >> boo-yah. >> caller: need to get your opinion on jazz pharmaceuticals. >> out's a great speculative stock. the more i look at it, the more excited i am. i want you to hold on. jim in arizona. jim.
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>> caller: hey, jim. this is jim in phoenix, arizona. >> nice. >> caller: i have a question for you regarding exxon. >> 52-week high. no one has ever gotten in trouble with exxon. it is not my favorite in the group. uh-uh wish e they used natural gas more aggressively. romney is against the natural gas act. not against natural gas. i just like the natural gas act. i want to make it clear. uh i am not accusing them of being against natural gas. i think exxon hasn't delivered on the promise. todd in north carolina. >> caller: a north carolina beer caple tall of america boo-yah. >> i never knew it was the beer capital. i thought it was brooklyn. go ahead. >> caller: i own ston. recently trashed by short sellers claiming it will implode. is this dead or alive? it's a juicy dividend. >> let me look again. i liked it but when uh hear the
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short sellers i will give them their due. if you don't do the homework they say, hey, cramer didn't do the homework. i will come back to you. now to tyler in florida. >> caller: boo-yah, jim. how you doing? >> doing fine. how about you? >> caller: stock in question, hk, halcon resources. after what i i know about floyd wilson and several analysts predicting a forecast with a $12 high at $15 and not even two months ago it was at $11 i buy 10,000 shares at 7.46. >> you're right about the pedigree here. the patch is rough. i have been sticking with the dividend producers. that's a nice spec. that, ladies and gentlemen, is the conclusion of the lightning round. [ buzzer ] >> announcer: the lightning round is sponsored by td ameritrade. evel the playing fie. take the privileged investing tools of wall street and make them simple, intuitive,
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there. call me, tell me your top five and i will tell you if the portfolio is diversified enough. let's start with a tweet from @jimcramer where it's wild. this tweet dallas jnig3 says, wynn resorts, nike, lvs, anf, conco phillips. wynn resorts, not my favorite casino company. las vegas sands, wait a second? come on. those are the two big casino companies. @jimcramer, focus. we'll deal with it. abercrombie and fitch. apparel. nike apparel. we'll keep conco phillips, las
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vegas sands though that guy is in the news a lot lately. that's the fellow involved with the romney campaign now. we'll keep nike. enough already with the teen apparel abercrombie. we'll throw in a health care name. let's do celgene! and wynn resorts? let's do disney. that's a nice mix. there you get -- obviously loves entertainment. then he's diversified. patricia in florida. >> caller: patricia is here in florida. >> man, i love out there. what's up? >> caller: well, let's see. what we have here is apple, macy's, bank of america, aig,
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scott's miracle-gro. am i diversified? [ buzzer ] >> okay. e macy's, terry is doing a great job. m is one of my favorites. i like nordstrom more. action owners plus.com has aig. it's been a major league tear. ♪ hallelujah insurance, apple. come on. what can i say that i haven't said already tonight? bank of america, i'll tell you this. it's a bank. scott's miracle-gro are on my bad list. they came on, blew up, blew uh up, blew up. i may have to switch who i use on my tomato plants. that said, it is a company involved with gardening. gardening, bank, retail, insurance, tech. if someone had another stuff to put on the tomato plants i would take it. that's the problem.
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in the end maybe i'm the only guy still using it. okay, there. we do that, bingo. now to tyson. no relation to tyson foods. tyson! >> caller: boo-yah, jimmy. uh i love you on the morning show "squawk on the street." >> what's not to like? i have pointers, too. that's what i call an ensemble. >> caller: i would love to be on the show someday. i bought your book "getting back to even." the only thing i don't have is a signed copy of the book. my five stocks are google, boeing, starbucks -- i love my lattes -- jpmorgan, and home improvement -- home depot. >> that's the despot. now they call it the cramer
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drink down on the floor. oh, give me a cramer. triple venti cappuccino with skim wet! that's an aside. these are all tv terms like hot on a wide shot. i can teach you everything. aerospace. boeing is aerospace. jpmorgan is a bank. tell jamie dimon it's just a bank, not an aquarium. [ rim shot ] that's a reference to the whale -- google. we'll call it tech. home depot is retail. starbucks -- well, let's say, i mean, hey, come on. even my daughter uses that. we have a restaurant -- i have a guy yawning. we have a restaurant, retailer, a restaurant, aerospace, a bank, tech. that is just rocking!
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♪ hallelujah that's it? oh, man. i have a play action fake i was going to do. anyway, stay with cramer.
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people are unstoppable when it comes to the need to be downbeat about data. i have been talking about how it's clear revenues for the entire retail cohort are going higher. can't have home depot, kbap, tjx, ross and macy's all doing
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well at the same time amazon is doing it unless the consumer is spending money. i hear it's all zero sum because there is not employment growth. these arguments boil down to the idea that the winners in retail are taking share from the losers and that's it. i say, what losers? in order for retail to be zero sum, the winners would have to be balanced out by massive losses of businesses at their faltering competitors. who's faltering? jc penney? sure, there is spillover. macy's is close enough to jc penney to pick up sales but they have only $17 billion in sales left. that could be taken and probably will be. that's not enough to move the needle for anybody. home depot's strength is coming out of true value and lowe's. home depot has always been honest on the conference calls about when it is taking market share from others as an explanation for why it is doing better. this call this time, frank blake said it wasn't about share taking. it was a growing pie when it
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comes to housing related spending and gdp. home depot pointed out that it wasn't zero sum this quarter. there was growth in spending and an increase in the ratio of home spending to the rest of the gross domestic product. you wouldn't know if you didn't do the blocking and tackling. further the suppliers know more than the pessimistic critics. suppliers see flat sales if retail was zero sum. stands to reason. why are ralph lauren, vf corp. saying the opposite, that they are shipping more goods than ever? that's a sure sign that the zero sum story isn't true. could there be a trade up or a frad back as shoppers leave the dollar trees and dollar generals to go to walmart and target? what a great thesis it would be if it were true. you know, like really true because the dollar stores are doing well. they haven't lost market share. people haven't traded up yet for walmart. given what we saw from target it's not possible.
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the numbers are too good. what's going on? something we haven't seen in a while. after a prolonged slump in housing we are noticing general improvement. that's driving a ton of what happened here. household formation means more kids being born after an amazing decline in the birthrate. don't forget stock prices are going higher. combination of more household formation, higher housing and the improvement in the stock portfolios creating a wealth effect. the numbers are too broad, too compelling to think otherwise. there is more shopping for the simple reason things are better for the american consumer, even without a lot of employment growth. people feel wealthier because they are wealthier. it's not zero sum. it's a growing pot. one that i feel like throwing soupy sales-like at the nay sayers. i say you better get out of the way if you think it's not happening. sorry. you're just plain wrong. stick with cramer. [ male announcer ] when a major hospital
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