Cramer Remix: Forget recession, this is simply a rotation

  • Runs from pharmaceutical stocks like Merck and Pfizer have the market pointing to a recession, but CNBC's Jim Cramer thinks it's the result of investors rotating to a cheaper group of stocks.
  • The Mad Money host breaks down some of the obstacles the bull market overcame.
  • PetIQ CEO Cord Christensen sat down with Cramer to discuss how the company is taking advantage of the growing number of pet owners.

Runs from pharmaceutical stocks like Merck and Pfizer have the market pointing to a recession, but CNBC's Jim Cramer thinks it's the result of investors rotating to a cheaper group of stocks.

A jump in a pharma stocks means that the FDA has approved a significant drug, but that's not true this time around, the Mad Money host said. Usually, that means a recession on the way, because investors tend to buy staples like major pharmaceuticals when they're worried about global trade slowing down.

But Cramer disagrees, saying that the stocks are up because of a correlation with ten-year Treasury bonds. Furthermore, he argues that these stocks don't correlate with the economy.

"There's too much evidence of strength — job growth, small business confidence, car loadings — and if you overthink it and interpret these moves a sign of a real slowdown, I believe you will cost yourself a lot of money that you should be making if you weren't betting that the economy's about to roll over," Cramer said.

To hear more about what other stocks are rallying, click here.

Obstacles overcome by the bull market

Joseba Etxaburu | Reuters

On Tuesday, the U.S. markets reached a milestone. The S&P 500 is on track to enter its longest-ever bull market, which began 3453 days ago on Mar. 9, 2009, when the index was at 666. It has since more than quadrupled, reaching a new 52-week high intraday of 2,873.

CNBC's Jim Cramer named the top 10 obstacles the market had to overcome in order to achieve this record. But with news of President Donald Trump's former lawyer, pleading guilty to violating campaign finance law, "investors got a whole new reason to sell," said Cramer. "I can't tell you what will happen with this new set of worries."

Here are Cramer's top 10 worries that the bull market has overcome in the past:

1. Skepticism

According to Cramer, the bull market skeptics actually helped to fuel the rally. "Crucially, this skepticism is the main reason for the bull's longevity," the "Mad Money" host said. "This run would have ended if investors had ever gotten too euphoric."

2. High valuations

Many investors have argued that stock prices are too high given companies' earnings numbers. However, thanks to tax reform measures companies have been able to beat Wall Street's earnings estimates and deliver consistent growth, pushing the market higher.

Read more about what barriers the market overcame to reach this milestone.

PetIQ CEO on increasing pet ownership

Cord Christensen, CEO, PetIQ
Scott Mlyn | CNBC
Cord Christensen, CEO, PetIQ

PetIQ CEO Cord Christensen sat down with Cramer to discuss how the company is taking advantage of the growing number of pet owners. This is the "third year in a row that more pets have been brought home than even babies," Christensen told the "Mad Money" host.

The veterinary products company had their IPO last July without much fanfare. But after reporting strong second-quarter earnings numbers last week, the stock has surged more than 8 percent, closing at $36.79 on Tuesday.

PetIQ has been bolstered by its January acquisition of VIP Petcare, which owns veterinary clinics within pet retail stores. With the acquisition, PetIQ has been able to bring "that veterinarian closer to where more pets existed."

In March, the company announced that it had partnered with Walmart to open veterinary clinics inside their stores. "We're pretty excited about the customer base," Christensen said, noting that Walmart is actually the largest pet retailer in the country.

Watch the full interview with the PetIQ CEO here.

Starbucks rebound on the horizon

An employee passes a drink order to a customer at the drive-thru of a Starbucks coffee shop in Rodeo, California.
David Paul Morris | Bloomberg | Getty Images
An employee passes a drink order to a customer at the drive-thru of a Starbucks coffee shop in Rodeo, California.

Starbucks will start serving its pumpkin spice lattes on Aug. 28, and CNBC's Jim Cramer thinks that the seasonal drink could give the coffee chain the caffeine boost it needs.

The company's stock had a rough June, hitting a bottom of $48.54 on June 28 when Starbucks announced its CFO would retire in November. But the Mad Money host and technician Tim Collins, his colleague at RealMoney.com, believe that the charts are showing that the worst has passed for the Seattle-based company.

"Since Starbucks was the original pumpkin spice pioneers, it tends to give them a shot in the arm," Cramer said.

Read more about what the charts are saying about Starbucks here.

Cisco's shift to software

Cisco CEO Chuck Robbins
Pradeep Gaur | Mint | Getty Images
Cisco CEO Chuck Robbins

Cisco's transformation from a networking hardware company into a diversified business with lots of exposure to software is finally starting to pay off, according to CNBC's Jim Cramer.

Last Wednesday, the company reported earnings of 70 cents per share, excluding certain items, up a penny from analysts' estimates of 69 cents per share. It also beat top line expectations, reporting $12.84 in revenue versus the $12.77 billion that Wall Street estimated. Shares rose more than 6 percent on the fourth quarter results.

The Mad Money host gave all the credit to CEO Chuck Robbins, who is leading the charge to shift from hardware to software-based networking and has aggressively used the company's cash for acquisitions and buybacks.

Under Robbins' leadership, Cisco has snapped up companies like Jasper Technologies, an internet of things platform; Duo Security, an cyber security firm; and Broadsoft, a cloud calling and contact center provider.

"We've been waiting for Cisco to finally give us the kind of truly great quarter that would prove Robbins' plan is working, and I think this was it," Cramer said.

Read more about how CEO Chuck Robbins has led the company to success here.

Lightning round

Norwegian Cruise Lines: "I like Norwegian Cruise Lines. It had a good quarter. The group is looking up, I think it's a good place to be."

MGP Ingredients: "That's a refinery and distillery. It's a really good company."

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