The consumer and industrial economies are telling conflicting tales this earnings season, and it could be enough to trigger a change in Federal Reserve policy, CNBC's Jim Cramer said Thursday.
"The industrial economy is so weak that [Fed Chair] Jay Powell now has plenty of ammo to justify cutting interest rates," he said. "And if the president rolls out new tariffs on Chinese imports — that $300 billion — if oil goes down, then one rate cut will not be enough."
After a string of earnings reports last week that revealed the strength of the consumer, the "Mad Money" host thinks the earnings cycle has "suddenly gone completely schizophrenic" and sent the major averages down on Thursday.The Dow Jones Industrial Average shed nearly 129 points during the session. The S&P 500 dropped 0.53%, and the Nasdaq Composite plunged 1%, a day after setting record closes.
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China's economy is slowing down, but the head of the Royal Caribbean Cruises told CNBC that business there is "working beautifully."
Things are going well because the cruise line was prepared for the slowdown, CEO Richard Fain said in a one-on-one interview with Cramer. The Chinese gross domestic product in the second quarter eased to 6.2%, its lowest output in nearly three decades, as the country grapples with the ongoing trade war with the United States.
Royal Caribbean got ahead of the slowdown about five years ago by improving its messaging, its distribution system and how its products are sold, Fain said.
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Align Technology CEO Joe Hogan on Thursday blamed business in China for the company's shortfall in the second quarter, but he predicted that output will improve.
The maker of Invisalign clear aligners saw better international growth elsewhere — 39% growth in Europe, for example — but the company greatly missed expectations in China, Hogan said in a "Mad Money" interview.
"We were expecting about 70% growth out of china and we achieved about 20-30%," Hogan said. "It's just basically a consumer backlash right now, we feel, from a standpoint of making decisions on going ahead with aligners or not."
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In Cramer's lightning round, the "Mad Money" host zips through his thoughts on callers' stock picks.
Zuora: "No. I want you to hold for now. It's in the penalty box … because they missed the quarter so badly last time that I just think that you have to wait a full quarter to see if they can get it together. The subscription economy is good, but their business is not."
Lithia Motors: "It's a total outlier. They are a fantastic company, fantastic people. Their stock goes higher."