Cramer Remix: Higher interest rates could create the leadership this market needs

  • "Mad Money" host Jim Cramer explains how bank stock leadership could emerge from higher interest rates and why that's good news for the market.
  • Cramer also sits down with the CEOs of Etsy, XPO Logistics and Zebra Technologies.
  • In the lightning round, Cramer grows concerned about RV maker Thor Industries.

CNBC's Jim Cramer has told viewers time and time again that the 10-year Treasury yield rising above 3 percent wasn't necessarily a doomsday signal for the stock market.

"It's something we should embrace because it shows you that the economy is doing better," the "Mad Money" host said on Wednesday after the 10-year topped the key 3 percent level.

With low unemployment and little wage inflation, the U.S. economy is currently strong enough to sustain rising rates, Cramer said.

"So, in this environment, the yield on the 10-year going to 3 percent doesn't wreck the market. In fact, it provides precisely the leadership this stock market is looking for: the banks," he said.

"Banks are my favorite group to lead the charge higher," Cramer continued. "Why? Because you get the best pin action as it's all about growth with no inflation."

When the 10-year crossed the 3 percent threshold on Wednesday, Cramer saw money flood into shares of J.P. Morgan, Bank of America and even the scandal-ridden Wells Fargo.

"This matters because historically the banks give us fantastic and long-lasting leadership," Cramer said. Later, he went over how a single research note from Morgan Stanley sparked a rally in everything cloud.

Defending Disney and Walmart

The logo of Flipkart is seen on the company's office in Bengaluru, India, May 9, 2018.
Abhishek N. Chinnappa | Reuters
The logo of Flipkart is seen on the company's office in Bengaluru, India, May 9, 2018.

Cramer was taken aback when shares of Disney and Walmart got slammed after the companies announced new investments.

Shares of Disney closed down nearly 2 percent on Wednesday after the entertainment giant revealed that it was spending heavily to boost ESPN Plus' online offerings.

Walmart's stock also lost more than 3 percent of its value Wednesday after agreeing to take a majority stake in Flipkart, an Indian e-commerce company.

But Cramer wouldn't cave to the sellers' fears. He pointed to what Disney CFO Christine McCarthy said on the company's conference call: that investing in its technology platform would allow Disney to "monetize much more programming than ESPN can now."

He also talked about the benefits of Walmart's investment, lamenting that companies like Amazon, Netflix and Tesla seem to "get a free pass" when they make large investments in their businesses while Disney and Walmart, "trapped by the four walls of the spreadsheet," get criticized.

Etsy CEO on fending off Amazon

Josh Silverman, CEO, Etsy
David Paul Morris | Bloomberg | Getty Images
Josh Silverman, CEO, Etsy

When Amazon entered the handmade business, many investors thought Etsy was doomed.

But Amazon's push into crafts hasn't derailed business at Etsy, which has seen its stock rise more than 100 percent since Amazon launched Amazon Handmade in 2015.

For Etsy CEO Josh Silverman, who took the helm of the specialty retailer in March 2017, Etsy's ability to fend off Amazon stems from differing business priorities, he told CNBC on Wednesday.

"If you think about the traditional strategic advantages of the mass e-tailers, it's about price, it's about convenience and it's about selection," Silverman said in an interview with Cramer.

Companies like Amazon typically achieve their low prices by buying products in bulk — 1,000 or 10,000 at a time — and passing the discounts on to consumers.

"Well, if you can buy 1,000 of anything, it doesn't belong on Etsy," Silverman said. "In terms of convenience, they warehouse everything in advance so they can ship it to you [the] next day. Well, a great many items on Etsy are made to order, so you simply can't warehouse them in advance."

As for selection, Silverman emphasized that Etsy's pool of 1.9 million sellers produce some 50 million handmade items for the website. Although Amazon's total product count is in the hundreds of millions, "no one else comes close" in the handmade world, he said.

XPO Logistics CEO: Enabling e-commerce growth

Brad Jacobs, CEO, XPO Logistics
Scott Mlyn | CNBC
Brad Jacobs, CEO, XPO Logistics

Amazon may be growing at an astonishing 45 percent clip, but under-the-radar players like XPO Logistics enable that expansion, XPO Logistics Chairman and CEO Brad Jacobs said Wednesday.

"We have Amazon as a customer. We have many other e-commerce players as customers. We're facilitating their growth," Jacobs told Cramer in an interview.

With a new service called XPO Direct, Jacobs' shipping giant will open its network of 75 facilities to clients, allowing e-commerce companies to leverage XPO's warehouses, last-mile hubs and hybrid services for smaller shipments.

"The problem that we're solving for them is they're now closer to the customer," the CEO said. "They're within 95 percent of the whole population within one or two days. It's very, very big."

For more on XPO Logistics — and how it's using drones and robots to simplify shipping — watch Jacobs' full interview here.

Zebra Technologies CEO on fast growth in health care

Anders Gustafsson, CEO, Zebra Technologies with Jim Cramer on "Mad Money."
Scott Mlyn | CNBC
Anders Gustafsson, CEO, Zebra Technologies with Jim Cramer on "Mad Money."

Since its inception, Zebra Technologies has transformed from a productivity enhancement provider to a tech player that helps companies across industries execute on their corporate strategies, Zebra CEO Anders Gustafsson told Cramer in a Wednesday interview.

"If you're, say, a retailer and you're looking to implement an omnichannel strategy, you need to have our type of technologies to give you the capabilities to deliver that," the CEO said.

Over the last several years, Zebra has also been making its way into the health care arena, which currently represents the company's smallest, but fastest growing segment.

"In hospitals, we help connect the physical to the digital," Gustafsson said. "We can take all that data about the patients and put it onto their medical record to make it easily available, and [it] basically helps to both improve the efficiency of how to run a hospital, but also the quality of care."

Lightning round: Trouble at THO?

In Cramer's lightning round, he shared his take on callers' favorite stocks:

Thor Industries: "OK, well, they did have an inventory buildup which was not good and they did have expenses go higher because they're assembling some of their best vehicles in Indiana, [which has] the lowest unemployment rate in the country. So it's been hurt by both of those. We've got to see what happens with the quarter because those are negatives, and I'm not denying it. Those are negatives."

Zendesk Inc.: "The more I hear about it, the more companies just love working with them and turning that stuff over to them for customer support. I like ServiceNow, but, you now, Zendesk could end up being one of our cloud princes because that's how good they're doing. So I'm not going to suggest selling it."

Disclosure: Cramer's charitable trust owns shares of J.P. Morgan and Amazon.

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