CNBC's Jim Cramer warns that the U.S. Commerce Department's move to ban more Chinese enterprises from doing business with American enterprises spells bad news for U.S.-China trade talks. The "Mad Money" host checks in with Domino's Pizza CEO Ritch Allison to get a read on delivery competition after the company's fiscal third-quarter earnings miss. Later in the show, Cramer peruses the chances for a major sell-off in the S&P 500 and sits down with Emory Electric CEO David Farr after an activist investors gets involved with the firm.
The U.S. Commerce Department announced that it had placed an additional 28 firms on the so-called Entity List that American companies are banned from doing business with. With U.S.-China trade talks scheduled to resume later this week, the major stock market indexes all fell more than 1% during Tuesday's session.
"I can't fault the Commerce Department for cracking down on Chinese companies that enable some horrific human rights violations, but they did kind of pick a worst possible time to do it, right before the big trade talks," the "Mad Money" host said. "So I think you need to be very careful as this market readjusts and recalibrates its expectations."
Domino's Pizza CEO Ritch Allison expressed confidence in the odds his pizza chain's revised outlook will outlast mounting pressure from third-party delivery apps.
Venture capital-backed delivery services, such as UberEats and Postmates, that offer users discounts have cut into Domino's own delivery orders, which led the company to reduce its long-term sales guidance after missing earnings and revenue estimates in its fiscal third-quarter report.
Domino's, which handles its own delivery, is facing competition from the growing number of restaurants that can outsource delivery on the app-based services.
"We do think there's some irrational pricing out there in the [delivery] marketplace right now funded by venture capital," Allison told Cramer in a one-on-one interview. "We don't know how long that'll last, but as we look out over the next two to three years, at the revised guidance that we've given, we've got a terrific business model."
The technical analysis that correctly called the market bottom in December is now calling a top in the S&P 500, Cramer said.
A colleague of his at RealMoney.com is warning that "we're really cruising for a bruising" beyond the 1.56% decline Tuesday by the index, the host said.
Bob Moreno, chartist at RightViewTrading.com who projected in February that the market had more room to run, warns of a possible plummet in the large-cap index.
"Now those same charts tell Moreno that we're approaching an important moment and he's predicting a major sell-off from these levels, a 10% decline in the S&P," Cramer said.
Activist hedge fund D.E. Shaw in recent weeks has announced it's taken a position in Emerson Electric, which means a shake-up may or may not be in store for the company.
Cramer spoke with Emerson Chairman and CEO David Farr to get his thoughts on the intervention. In response, Farr said "we know what to do" as far as management and the board is concerned.
"We're going to take cost actions to try to grow earnings and create value in a marketplace that I think we're looking at for the next two years potentially zero, low growth environment for a global industrial company like Emerson," Farr said.
In Cramer's lightning round, the "Mad Money" host zips through his thoughts about viewers' favorite stock picks of the day.
Roku: "I don't think it should ever have spiked as high as it did. I think it's regarded as being a play on what I would call the cord cut, and that story's getting a little long in the tooth."
Hexo: "That is the most speculative."
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