There are a lot of theories on why stocks are going down, Jim Cramer told his Mad Money viewers Thursday, but there’s only one theory that’s correct. As he noted on last night’s show, too often investors can’t see the forest for the trees instead focusing on the economy rather than the fundamentals of supply and demand.
For example, many investors are taking their cue from the bond markets, which are far bigger than stocks. They have all sorts of theories as to why bond yields are plunging.
Is it because our rates are better than the rest of the world? Is it because Federal Reserve chairman Jay Powell is right and inflation is only transitory? Or is it because we’re about to see a slowdown in our economy?
Cramer said while he does believe that Powell is correct and inflation is transitory, none of these reasons really explain the action in bonds or in the stock market. What does explain the action, however, is supply and demand.
For months now, the markets have been flooded with new offerings in the form of IPOs and SPACs, and the market has increasingly struggled to absorb them all. Eventually, as it always does, supply outstrips demand and prices plunge, just as they are now. There’s simply not enough cash to buy everything.
So while everyone has their theories, the truth is that employment is strong and inflation is waning. But when it comes to IPOs, the cycle has simply run its course.
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Secretary of Commerce Gina Raimondo
In a special interview, Cramer welcomed back Gina Raimondo, U.S. Secretary of Commerce, for an update on the White House’s economic plans to keep the economy moving forward. President Biden’s latest plans include a $600 billion infrastructure package to rebuild roads, bridges and the nation’s power grid, and a $3.5 trillion budget proposal that includes universal pre-kindergarten and two-year community college, among other priorities.
Raimondo said there are still millions of women out of the workforce because they’re struggling with childcare and elder care. That’s why the latest proposals include investments in caregiving as well as universal kindergarten to give all of our children a head start on their education.
Additionally, Raimondo said we need to invest more in digital literacy and digital skills for our modern world. That includes getting more girls and minorities involved in data science so they can compete on a global stage.
When asked about supply chain disruptions caused by the pandemic, Raimondo called out Friday’s scheduled meeting at the White House, which will include the home building and construction industries, that aims to address shortages in lumber and other building supplies. If we can produce more, prices will decline, Raimondo said, and that’s the goal.
Bull in the Second-Hand Shop
There’s a new long-term bull market brewing in the secondhand marketplace, Cramer told viewers, and it’s time to compare the players and pick a winner. The contenders include Poshmark (POSH) – Get Report, ThredUp (TDUP) – Get Report and RealReal (REAL) – Get Report, along with Etsy (ETSY) – Get Report, which just purchased Depop for $1.6 billion, and the king of secondhand goods, eBay (EBAY) – Get Report.
For comparison, eBay is clearly the largest, with 187 million buyers around the globe. EBay is followed by Poshmark at seven million, Etsy with four million, ThredUp at 1.3 million and RealReal with just 700,000.
Cramer said with 42% revenue growth, his favorite in the space is PoshMark, which appeared recently on the show. He said both eBay and Etsy remain fabulous companies as well, but Poshmark has the growth. ThredUp simply isn’t that exciting at just 15% growth, he said, and RealReal is still recovering from its authenticity issues surrounding counterfeit items on its platform.
Executive Decision: Corsair Gaming
In his “Executive Decision” segment, Cramer spoke with Andy Paul, co-founder and CEO of Corsair Gaming (CRSR) – Get Report, makers of high-end gaming peripherals.
Paul noted that while the number of gamers has increased between 3% to 4% every year over the past few years, gaming hardware has grown by 24%, on average, and gamers continually upgrade their equipment to the latest technologies.
Paul added that if you think about gaming as a hobby or a sport, no one buys just one set of golf clubs or one set of skis. The same applies to gaming, where people start with the basics and upgrade over time.
Corsair is also very active in the streaming space, making lighting and other gear gamers need to broadcast their games live to the world. Paul noted his company’s first foray into gaming cameras, which provides all of the features of a DSLR in a simple webcam package.
A Message to China
In his “No Huddle Offense” segment, Cramer said the U.S. has an opportunity to show the world who we are and to send China a message at the same time.
China has been flexing their muscle recently against Taiwan, invading their airspace and interfering with the country’s ability to buy vaccines. That’s why the country of 23 million people has only six million vaccinated.
Cramer said America has a responsibility to help the world get vaccinated and that responsibility starts with our allies in Taiwan. We could send China a powerful message by sending some of our 80 million dose stockpile to Taiwan as a sign of solidarity.
Here’s what Jim Cramer had to say about some of the stocks that callers offered up during the “Mad Money Lightning Round” Thursday evening:
Rio Tinto (RIO) – Get Report: “I think Rio Tinto is a good company and I want you to hold onto it.”
QuantumScape (QS) – Get Report: “There are other companies that claim they have better batteries and I’m starting to believe them.”
VMware (VMW) – Get Report: “I’d rather own Dell (DELL) – Get Report than VMWare.”
Veru (VERU) – Get Report: “They need to get into Stage III trials before we can get excited about them.”
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At the time of publication, Cramer’s Action Alerts PLUS had no position in the stocks mentioned.