Cramer Remix: What Trump’s endgame with China could really be about

  • "Mad Money" host Jim Cramer breaks down President Trump's strategy on trade and why he has taken a hard stance with China.
  • Cramer also reverses his stance on Jack Dorsey, the CEO of Twitter and Square.
  • In the lightning round, Cramer warns against investing in a home security stock.

Sometimes, even CNBC's Jim Cramer struggles to understand President Donald Trump's trade strategies and how they could affect stocks. So, on Monday, he came up with five new theories.

For one, the "Mad Money" host wondered why stocks didn't fall Monday after tensions flared between Trump and other world leaders present at the G-7 Summit meeting, including the prime minster of Canada, a longtime U.S. ally.

"What does it mean to anger the leaders of America's traditional allies so much that they feel compelled to respond in public? Does Trump want to end the G-7?" Cramer asked rhetorically.

Cramer also wondered what Trump's end goal was with China, with which his administration has been involved in ongoing trade talks.

His best guess centered around intellectual property, which many have pegged as the real thrust of the talks.

"The only way to anger the Chinese to the point where they give up and just totally remove themselves from any possibility of trade cooperation is to ban any investment by the Chinese into the United States," Cramer said.

"That will most likely happen by the end of this month," he added. "That's right, I think by the end of the month, China won't be allowed to buy any American companies of any size."

Eli Lilly: Encapsulating market sentiment?

An employee works on the production of insulin pens at the factory of the US pharmaceutical company Eli Lilly in Fegersheim, France.
Frederick Florin | AFP | Getty Images
An employee works on the production of insulin pens at the factory of the US pharmaceutical company Eli Lilly in Fegersheim, France.

While markets were tepid on Monday ahead of a historic summit between the United States and North Korea, Cramer noticed a separate pattern taking hold on Wall Street.

"While the market certainly looked comatose, we're witnessing some tremendous breakouts all over the place, breakouts that typically would be held back by the gravitational pull of profit-taking or higher interest rates or, yes, politics," he said.

Strangely enough, Cramer didn't see many of those bearish theories meaningfully weighing on stocks in Monday's session. Instead, analysts took to the tape to raise their price targets on stocks of companies they thought needed value-related boosts, he said.

Cramer pointed to Eli Lilly. Until recently, shares of the pharmaceutical company had been toiling in the low $70s after several of its latest earnings reports had failed to impress investors.

But over the past several months, the stock has been "sneaking up, seemingly for no good reason," Cramer noted. That, he said, prompted J.P. Morgan's pharmaceutical industry analyst to issue a very positive note on the drugmaker.

We're sorry, Jack Dorsey

Jack Dorsey, CEO and co-founder of Twitter and founder and CEO of Square
Mike Segar | Reuters
Jack Dorsey, CEO and co-founder of Twitter and founder and CEO of Square

It's no secret that Cramer has long thought that Jack Dorsey, the CEO of both Twitter and Square, needs to stop splitting his time between the two companies.

The "Mad Money" host would go from questioning how Dorsey could run two companies at once to calling him a "part-time CEO," arguing that he should focus on running one company, not two.

"And you know what? I was dead wrong," Cramer said Monday. "Jack Dorsey has been doing a dynamite job at both companies. And because I'm a big believer in accountability, I've gotta tell you: Dorsey deserves a lot more credit than he's been getting."

In a sweeping mea culpa, Cramer admitted that Dorsey has pulled off running two separate, complicated companies at the same time: Twitter, a sprawling social media play, and Square, a tech company trying to disrupt old-line payment systems.

On the Brink's?

Cramer also commended Doug Pertz, the CEO of Brink's, for his hands-on leadership. When shares of the cash management company were in the house of pain at the end of May, Pertz didn't sit quietly and let it happen.

"In one bold move, on the last day of May, Brink's got its groove back: the company announced a major acquisition," Cramer said. "They snapped up an outfit called Dunbar Armored, one of their main competitors, and Wall Street absolutely loved this deal."

Shares of Brink's, whose ubiquitous armored trucks offer cash-based businesses a secure mode of transportation for their earnings, vaulted 16 percent in a single session after the news broke.

"In one fell swoop, Brink's changed the narrative: rather than being a broken momentum stock, which was what it had become, this thing turned into an acquisition-fueled growth story," Cramer said. "However, the stock has been a real wild trader and as much as I like the Dunbar deal, this thing could be a lot more attractive on a pullback. And if you're patient, I think you'll get one."

HP vs. ... HP?

Finally, Cramer addressed a Wall Street theme that serves as both a blessing and a curse: "nothing in this business matters more than expectations,"he said.

For him, few stocks exhibit this better than HP Inc. and HP Enterprise, the two halves spun out of the Hewlett-Packard breakup in 2015.

When the split occurred, most market-watchers expected HP Inc., the personal computer and printing business, to be a slow-to-grow dividend play, and HP Enterprise, the hardware, software and information technology business, to drive HP's growth story.

But what's happened has been quite the opposite. In the last two years, shares of HP Inc. have vaulted 78 percent while shares of HP Enterprise have gained just 45 percent.

"The bottom line? This business loves upsetting expectations. HP Enterprise was meant to be the golden child here. HP Inc was meant to be an afterthought. Two and a half years after the breakup, though, and it's the other way around," Cramer said. "And even after its magnificent run, you know what? I'd still be a buyer of HP Inc here."

Lightning round: Not so secure about ADT?

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

ADT: "Disagree [that it's got a lot of potential with its security system product]. Disagree. I think it's just a disaster. I mean, they put it together with some other companies, they loaded it up. They'll probably have to take it private again. It's pathetic."

Automatic Data Processing, Inc.: "You should [buy more] because [CEO] Carlos Rodriguez turned out to be amazing. I am a huge believer in Carlos and he didn't let us down. He made us big money."

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