Commercial real estate could be the next sector to see serious weakness, CNBC’s Jim Cramer warned Monday as stocks underwent yet another bout of volatile trading.
“I hate commercial real estate,” the “Mad Money” host told a caller in the lightning round. “Honestly, I think that’s the next thing that’s going to roll over. That’s what this market is telling me.”
If Cramer’s prediction comes true, the weakness would add to existing pain in the housing, auto and semiconductor spaces, which Cramer has called on the Federal Reserve to consider before raising interest rates four more times to combat economic inflation.
He added that the action in the stock of online real estate broker Redfin Corp. was the first red flag for him when it came to the housing industry.
“That was the first stock to tell you that residential real estate was cratering,” he told a caller. “That was the one that sent me running for cover.”
Click here to read and watch the rest of Cramer’s lightning round.
There have only been four times in Cramer’s career when the stock guru and former hedge fund manager sold out of his entire portfolio. And, scary as it sounds, the market action of the past few weeks reminds him of those chaotic moments.
“As much as it pains me to say this, the current situation combines … some of the worst characteristics of those four past breakdowns,” Cramer told investors on Monday as much of the stock market slid into correction territory.
First was the crash of October 1987, a one-day mechanical nosedive that became known as Black Monday. Back then, newly minted S&P 500 futures and insurance instruments that claimed to stem portfolio losses using the futures combined to cause a disastrous bout of selling.
“It was portfolio insurance back then; now it’s algorithms and ETFs,” Cramer said. “They’re like machine guns mowing down any buyers, like we saw today.”
Click here for his full historical recap.
President Donald Trump’s tariffs on China and the Federal Reserve’s plans to hike interest rates in lockstep are both “toxic” for the stock market, and combined, they are souring the prospects for 2019, Cramer warned Monday.
“Higher rates and higher [tariffs] are setting us up for a very difficult end of the year — not to mention 2019 — unless something’s done to ameliorate these two different houses of pain,” he said.
Cramer attributed Monday’s decline to the tariff news, saying that the conflict is “no longer just about trade,” but about an all-out “cold war” between the Trump administration and the Chinese government.
Still, “there is no lesser of two evils here,” the “Mad Money” host said. Click here for more.
IBM’s roughly $34 billion deal to buy open-source software provider Red Hat — the third-largest technology deal in U.S. history — will create enormous value for Big Blue, IBM Chairman, President and CEO Ginni Rometty told CNBC on Monday.
In a joint interview with Red Hat President and CEO Jim Whitehurst, whose company works with enterprises to develop cloud-based applications and solutions, Rometty said the deal isn’t just about the 4 percent revenue boost Red Hat’s business provides.
It will also start boosting free cash flow and gross margins in “year one,” she told “Mad Money” host Jim Cramer. “This is about lifting all of IBM, which is why we’re so bullish about saying this absolutely accelerates our high-value model.”
For Red Hat, the takeover will bring enormous scale, accelerated growth and opportunities for the company’s employees to grow their career paths, among other benefits, Whitehurst said.
Click here to watch and read more about the full interview.
Cramer also heard from Salesforce.com CEO Marc Benioff, who promoted a plan to curb homelessness in San Francisco called Proposition C.
“Our companies are ripping, our economy is ripping here in San Francisco and you can see great companies emerge like Salesforce, like Twitter, like Square, like Dropbox,” he told Cramer. “Yet, at the same time, a huge crisis of homelessness — 7,500 homeless individuals on our streets in San Francisco, 1,200 homeless families with two kids on average each. This is unacceptable. We can’t have on one side the most prosperous, most successful and, as you can see behind me, the most beautiful city in the world, and on the other hand, … have a humanitarian crisis of epic proportions.”
Benioff has been aggressively promoting Prop C in recent weeks, butting heads with Twitter and Square CEO Jack Dorsey on Twitter over its strategy. The plan proposes using a tax of one-half of 1 percent to house homeless individuals and add more beds to existing shelters.
“This is turning into a crisis of inaction and indifference,” the CEO said. “We need to just put a stake in the ground and stop it and that’s why I’m asking everyone to vote yes on Proposition C.”
Click here to watch Benioff’s full interview.
Finally, Cramer spoke with Columbia Sportswear President and CEO Tim Boyle, who issued a warning on Trump’s latest proposal to place tariffs on all Chinese imports.
“I think it would hurt our Chinese business. Our U.S. business is … supported by products sourced from all over the world, but I think it would do significant damage to the U.S. economy to have that kind of impact on tariffs,” Boyle, whose company has been in business for 80 years, told the “Mad Money” host.
The CEO noted that Columbia Sportswear, now a global company, already works around tariffs on apparel and footwear, which “are already some of the most heavily tariffed [merchandise categories] in the United States and, really, the world.”
“We find that one of our strengths is navigating these significant tariffs in order to make sure that we offer consumers the best product at the best price,” Boyle told Cramer. “But when you throw tariffs on a sourcing country like China that’s so important for the rest of the world and so important for the U.S., there’s no way it’s going to mean anything other than higher prices for consumers in the U.S.”
Click here to watch his full interview.
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