Federal Reserve Chairman Jerome Powell made the right choice in leaving interest rates unchanged and preaching patience — and it shouldn’t be seen as him “caving” to Wall Street, says CNBC’s Jim Cramer.
“Don’t listen to the Fed watchers who claim that Powell caved to the stock market or the president,” Cramer said Wednesday after the Fed’s decision-making body concluded its two-day meeting. “The only thing Powell caved to is reality.”
“Some would argue that Powell made a mistake, that he’s simply capitulating to people like me who want higher stock prices. I hate this talk,” the “Mad Money” host continued. “Sure, I love higher stock prices, … but that’s not the point and it has never been the point. […] This is about the economy — who doesn’t want a healthy economy? If Powell had stuck to his plan for a series of lockstep rate hikes, it would’ve been a lot more devastation to Main Street than to Wall Street.”
Cramer maintained his monthslong theory that the Fed’s earlier stance — which included a plan to raise interest rates three times in 2019 — would have brought an end to the United States’ economic expansion.
So, at the end of the day, “while it’s terrific that stocks rallied” after the Fed chief’s statements, “that’s not why Powell chose patience,” the longtime stock-picker said. “He didn’t want to be the guy who ended the expansion. He didn’t want to be the reason we went into a recession.”
“Think of it as a victory of prudence over recklessness,” Cramer said.
Click here for his full take on the Fed’s decision.
Domino’s Pizza is setting out to expand the pizza industry — and its own customer base — with a new tech-forward promotional program called Points for Pies, CEO Ritch Allison told CNBC on Wednesday.
The campaign, enabled by Domino’s machine-learning technology, gives consumers 10 rewards points for each photo of a pizza they send to Domino’s, even if it isn’t a Domino’s pizza. People can submit once a week, and once they hit 60 points, Domino’s will give them a free pizza.
“We don’t know the exact number of how many customers will come on board with us, but as the leader in the pizza category, we see this as a great opportunity not only to grow the overall pizza category, but also to invite new customers in to download our app and to try our product,” Allison told Cramer in a “Mad Money” interview.
Click here to watch their full conversation.
The strong U.S. dollar is more influential on Wall Street than it has been in years, and it’s starting to make a serious dent in U.S. companies’ earnings, Cramer said Wednesday, the midpoint of the busiest earnings week of the year.
“The strong dollar is the great untold story of this earnings period,” he said. “We keep underestimating the strength of the greenback here and the weakness of nearly every other currency under the sun.”
Cramer is struck by how often investors tune out executives’ comments about the strong dollar hurting sales, which happens at U.S.-based companies when earnings in weaker foreign currencies start translating into fewer U.S. dollars.
Even Apple CEO Tim Cook, who spoke to Cramer and CNBC’s Josh Lipton after earnings Tuesday, has taken steps to offset the discrepancy.
“A strong dollar is very bad news for American companies that are trying to compete with foreign rivals, especially when we’re talking about products with a high price point like iPhones,” Cramer said. “The dollar’s the No. 1 reason why analysts have had to cut their estimates this earnings season.”
Click here for more of his analysis.
2019 will be the year of mobile coming to the enterprise, ServiceNow President and CEO John Donahoe told Cramer in an interview on the heels of his company’s fourth-quarter earnings report.
Revenues for ServiceNow’s subscription-based products, the bulk of the business, grew by 33 percent year over year, reaching $666 million in the fourth quarter. In the post-earnings conference call, Donahoe said it was the company’s “strongest fourth quarter ever.”
Donahoe, who previously told Cramer that he wanted work technology to be as easy to use as Uber, said his cloud-based administrative software provider is now on the cusp of making that a reality for its clients.
ServiceNow’s new machine-learning-enabled mobile software, launching in 2019, will let employees take a photo of a technical issue, send it to a system that will scan and identify the issue, and find a quicker fix than spending hours on the phone with IT, Donahoe said Wednesday.
“Getting your issues fixed at work is now as easy as ordering an Uber,” he told Cramer.
Click here to watch Donahoe’s full interview.
Electric utility giant American Electric Power saw the largest increase in energy demand since 2011 last year, and CEO Nick Akins doesn’t see things going too far south from here, he told Cramer in a Wednesday interview on CNBC.
“There continues to be advancement of the economy,” Akins said. “Obviously, tariff impacts are having an issue in play here, along with the world energy economy and certainly the strong dollar, but there are portions of the economy that continue very strongly. And when you look at unemployment in our territory, it’s the lowest it’s ever been. So you’re continuing to see job creation, you’re continuing to see the advancement of the economy in many ways, and I think it’s tempered because of these other items that are going to clarify as we go forward.”
Akins, who is also chairman of AEP, also emphasized the tailwind his Columbus, Ohio-based company gets from inclement weather, saying 2018 was a “strong weather year.”
Extreme cold in 2019 should continue to heat up AEP’s bottom line, the CEO said, telling Cramer that the “consumption is there.”
Click here to watch Akins’ full interview and to find out what AEP is doing for the electric car industry.
In Cramer’s lightning round, he rattled off his responses to callers’ stock questions:
PepsiCo, Inc.: “You want to own PepsiCo. They’re doing terrific. [Former CEO] Indra Nooyi gave them a good book of business. It’s going to go higher.”
Campbell Soup Co.: “Campbell is low-risk, low-reward, frankly, because I don’t think it’s worth as much as it used to [be]. They’ve really denigrated the franchise and hurt the balance sheet.”
Disclosure: Cramer’s charitable trust owns shares of Apple.
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