Cramer Remix

Cramer Remix: Why the Fed needs to pay attention to Amazon’s rampage

Key Points
  • "Mad Money" host Jim Cramer made the case for why the Federal Reserve needs to keep a close eye on e-commerce giant Amazon.
  • Amazon's aggressive push into everything retail could signal deflation, Cramer said.
  • Cramer also sat down with IBM CEO Ginni Rometty for her take on Trump, Warren Buffett, and business.
Cramer Remix: Why the Fed needs to pay attention to Amazon’s rampage
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Cramer Remix: Why the Fed needs to pay attention to Amazon’s rampage

Even though Jim Cramer hates bonds for how boring they are compared to stocks, he cannot discount their intelligence when it comes to predicting day-to-day market activity.

On Tuesday, investors watched as bonds rallied and interest rates fell, signaling a slowdown. And while the "Mad Money" host made a point of saying stocks are not doomed due to the bond market's signals, he stressed the importance of paying attention to bonds when they seem to suggest that economic demand is weak.

One of the three factors that made bonds signal deflation came from Amazon announcing its new Prime Wardrobe service on Tuesday, which will allow customers to try clothes on at home and send back the items that do not fit, Cramer said.

"We can laugh, but Amazon's rampage is now getting out of control. This company is now wrecking the price structure of everything the consumer buys," Cramer said. "The whole consumer price index is being Amazon-ed and we're now at a moment where the Fed might need to acknowledge, 'Wait a second, Amazon's mowing down inflation to the point where maybe we don't need to raise rates anymore.'"

IBM CEO Ginni Rometty: Trump, Technology, Buffett & More

CEO of IBM Ginni Rometty
Neilson Barnard | The New York Times | Getty Images

When it comes to the rise of technology, especially as it relates to the United States' workforce, IBM CEO Ginni Rometty finds it imperative to prepare workers for tech's inevitable effects.

"You know, I've been quite focused on how, for a country, we have got to work on our skills and prepare not only this current generation, anyone, for work because all work's going to include technology," Rometty told Cramer on Tuesday in a wide-ranging interview about Washington, Warren Buffett, artificial intelligence and her business.

Rometty has been demonstrably vocal about developing programs in schools that bring about a "new collar" generation of workers who can work side by side with artificial intelligence and other technologies.

But when it comes to IBM's own ventures, Rometty argued that the conversation in the technology community about artificial intelligence was first rekindled by IBM and its AI platform, Watson.

"We are the ones that woke up the AI world here again," Rometty said, stressing the distinction between AI that consumers see and use and IBM's AI area of expertise, business-oriented AI programs.

Off the Charts: Is the Slowdown Lasting?

Getty Images

Then, Cramer addressed the market's momentum with the help of technician Larry Williams, whose charts predict the market could be on the verge of a minor pullback.

"Just to be clear, Williams does not believe we're headed into a bear market, I want to make that point. But there's a very important pattern that makes him think that a meaningful decline could be looming in the not too distant future," Cramer said.

The "Mad Money" host turned to the daily chart of the Dow Jones Industrial Average plotted against an indicator called the decennial pattern, which tracks the stock market over a relatively cyclical 10-year pattern.

"Williams insists this decline will not mark the start of a bear market even though it's pretty hideous," Cramer said. "Eventually he expects we'll get oversold, which will ultimately lead to a bounce. That's because the real cause here is the 10-year pattern."

And while the pullback may hurt for some, Cramer says that prepared investors should treat it as a chance to do some discounted buying.

Wix.com CEO: Huge Growth

Avishai Abrahami, Co-Founder & CEO of Wix.com
Adam Jeffery | CNBC

Finally, Cramer sat down with Avishai Abrahami, the co-founder and CEO of cloud-based website development platform Wix.com.

The CEO said that while competitors are abundant, his company has managed to stay one step ahead of the game with better technology, Super Bowl advertisements, and a partnership with supermodel Karlie Kloss.

"Today there is a lot of smaller platforms, mostly in the United States. Squarespace would be one, Weebly would be another. But I think that the technology gap between us and them is so huge," Abrahami told Cramer on Tuesday. "We are selling in 190 countries, we are global. They are a bit localized."

Although Wix's stock has fallen slightly over the last several weeks, Abrahami said the company is seeing "huge growth everywhere we are," even despite its low-cost pricing system.

"It's actually true, you can come to Wix and build a website for free. And then when you start to use more business fixtures – you want to have e-commerce, you want to have ways for people to book your services – this is where we charge," he told Cramer.

Lightning Round: Destruction, by Amazon

In Cramer's lightning round, he sped through his take on callers' favorite stocks, including:

Smart & Final: "They've been around for a long time. I used to go there. But I have to tell you, it's the kind of stock that is just going to keep going lower because everyone's decided that Amazon's going to destroy everything, including Smart and Final. I don't think it's going to happen, but it's going to keep going lower."

SemGroup: "Alright, I was going over it with my group today for [my charitable trust] ActionAlertsPlus.com, and I'm not kidding, anything in this sector, anything – oil, pipeline – people just want to sell, sell, sell. I'm not getting in the way of it. It's got a 7.4 percent yield, but I'm not going to get in the way of it because I know they're going to go lower for a bit. Let's keep our powder dry."

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