Global Sell-off, Buffett's Berkshire Slashes Apple Stake, Japan Markets Tumble 12% 8/5/24

David Faber (0:00)

Market insight and analysis. You're listening to the opening bell of CNBC's Squawk on the Street. Good Monday morning, and welcome to Squawk on the Street. I'm David Faber with Jim Cramer. We're live from Post 9 Of course, the New York Stock Exchange. Carl Quintanilla is in Paris at the Olympics. Let's give you another look at futures. You just heard Joe and Andrew talking about what is going to be a significant sell-off when we begin trading 30 minutes from now. And as you might expect, of course, that's where we're going to begin the show, that global market sell-off. Stocks are set to tumble at the open amidst worries about an economic slowdown. This follows Friday's weaker than expected jobs report. The Nasdaq, by the way, already is in correction territory heading into today's session. And overnight in Asia, one reason why we're seeing this global sell-off. Nikkei plunged, yeah, that's true, 12%.

That was the biggest one-day drop since Black Monday back in 1987, a day that Jim and I both remember well. We were both working back then, so we've been through days like this, I don't even know how many times, not to mention the global financial crisis. So I always want to put these things in perspective. Japan was unique in a way, though, that kind of a sell-off specific, Jim, to the yen carry trade, to what has been a significant appreciation in the yen as a result of that rise in interest rates there to try to combat inflation. We'll talk more about the connections there, but give me your take on this morning and what we can expect.

Jim Cramer (1:26)

I think that when you see the Dow and NASDAQ decline by a percent every hour, lockstep with Japan, I don't think you can therefore say, you know what, the problem here is the data center slowdown. I don't want to foment problems. There's enough things that are wrong. I don't need to make up anything, but this is all from Japan, and we do have treasuries in a kind of a weird spot where when yields plummet, we all think that there's something wrong. We gotta take a breath here. I mean, the idea that we're in a recession because the Fed didn't move a quarter point, that's a fatuous analysis. The idea that the data center is a black hole and everybody spends on it, that's not reasonable. The idea that you can just go buy it, knowing that these forces that you can't see might still sell, whether it be Buffett selling more Apple, who the heck knows, or whether it be the Japanese coming back in tomorrow, you have to deal with that if you're trying to buy something. Yet, the idea of buying something is not a bad idea.

David Faber (2:25)

Right.

Jim Cramer (2:26)

because there's a lot of stocks that will not deserve to be where the futures take them this morning.

David Faber (2:30)

I would add, you know, in making the round of calls to that group of people that I often call on days like today, I'm not hearing any dislocations in credit. That becomes very important, because we always want to make sure in the sense of, all right, is this spreading in a way that is even more concerning?

Nothing in terms of credit. Liquidity is very high. obviously, in a way, you've already got financial conditions easing, right? As a result of what's going on. And then that question, of course, as to what the Fed will do. There are a number of people popping up today said, emergency meeting, emergency meeting. Yeah, and then I'm curious to get your opinion because there's the division of, would an emergency meeting be good or would it scare people, scare certain market participants if it were to happen?

Jim Cramer (3:15)

Maybe they're behind it.

David Faber (3:16)

Not that it will.

Jim Cramer (3:17)

I've listened to Professor Siegel all my life and I thought that he was, I don't want to judge anyone as good as he is, but I would say he's too adamant. I think that the people who are reacting to the stock market going down are people who are not in touch with what you and I have seen over the years. This could be more like 97, russia, it could be like 98, it could be South Korea. We can react to them, there could be a hedge fund that's on the wrong side of the Japanese carry trade, which we can discuss. But remember, you're selling stocks equally, and not all of them deserve to go down equally. Right. Yes, I do think that Intel contributed greatly to the problem, because people still remember Intel as a great company. It's not. That's okay. There's a lot of companies that is not as good as they used to be. But the idea that we sit here and we judge Nvidia as the reason why things are bad because there's a publication that comes out, and says things are late, when I go back to my July 9th notes of what the company told me, and what the company told me is exactly what they're saying now. So look, I can create the fact that maybe Buffett knows something about Apple that Tim Cook doesn't. I'm not going to do that. Right. Apple's a free rider. They get all the AI they want, and they don't have to spend it in it. That's great.