Markets and the Joy of "Six," Boeing-Union Tentative Deal, Activism Galore 10/21/24

David Faber (0:00)

Market Insight and Analysis. You're listening to the opening bell of CNBC's Squawk on the Street.

Carl Quintanilla (0:06)

Good Monday morning. Welcome to Squawk on the Street. I'm Carl Quintanilla with Jim Cramer and David Faber at Post 9 of the New York Stock Exchange. Coming off some all time highs, six straight weekly wins for the S&P. That's the longest streak of the year. We go into a week of some heavy hitter industrial earnings. Futures are soft. Our roadmap begins with rally mode. Those six weeks and counting. Why Goldman strategists say the era of big stock market gains might be nearing an end.

David Faber (0:29)

Clusters of the J&J spinoff, it's a while now, but remember that Kenvue, it is starboard value amassing a significant stake in the company or so we're told. And Disney succession plans for Morgan Stanley CEO James Gorman who's been on the board, going to become chairman of that company next year.

Carl Quintanilla (0:48)

Let's begin with the markets in the midst of this six week win streak, as we said, Jim. And now we have some 21% of the S&P having reported so far.

Jim Cramer (0:55)

Okay, I'm coming with a new thesis. I mean, I get that with the investing club members. We have this bizarre situation where we're going in to earning season. We've got this massive $200 billion in money that went to index funds. That is far ahead of what happened last year, and we're already there. So what's happening, you have the index funds sopping up the additional supply, and you just don't have a lot of sellers. Between the buybacks of the companies and the S&P, Dale and David, the buybacks obviously crunch, but the S&P is like crunching. You don't have a lot of stock trading, so you have like a proctor and gamble, which could have been disappointing, and it ends up doing nothing. I just find that when you disappoint, you don't go down a lot.

David Faber (1:37)

You don't go down.

Jim Cramer (1:38)

And when you do well, you soar. So that's an asymmetrical relationship.

David Faber (1:43)

That's a nice market to be an investor, isn't it?

Jim Cramer (1:45)

Well, that's exactly what I'm talking about. It's halcyon time, David.

David Faber (1:48)

You're not taking as much risk as you think you are.

Jim Cramer (1:50)

Right, because you're crunching so much stock with the S&P.

David Faber (1:54)

When you say crunching, will you explain to people what you mean?

Jim Cramer (1:56)

Alright, so when you crunch stock, what that means is it's the float's smaller, okay? That's actually company buyback stock. But when you have S&P, that money doesn't trade. That's static money. So it's not hedge fund money. So you have that stock, it sits there. Remember, we don't have withdrawals, we have money coming in. And so the next thing you know, there's just a smaller group of shares that trade.

And the smaller group of shares that trade will favor the buyer.

Carl Quintanilla (2:27)

So how about this cost to note looking at 3% annual returns for the next decade versus 13 in the last decade?

Jim Cramer (2:33)

Disappointing note, and I like cost.

Phil LeBeau (2:36)

Yeah.

Jim Cramer (2:37)

Thought it was surprisingly negative for David.

Carl Quintanilla (2:39)

He also added that in eras of Fed cuts, you don't get a lot of assets coming out of money market funds or assets. In fact, you see capital flow going the other way.

Jim Cramer (2:50)

Well, I mean, we actually have, look, we have a situation right now where there are a lot of people saying, why did we even have to cut? Economy is so strong. I think this is an aberrant Fed rate cut cycle. I just, I don't see a lot of money come in, but you don't need it, particularly because of the thesis I just propounded.

David Faber (3:08)

Right. Well, that is somewhat counterintuitive as rates drop and conceivably, your money and the money market rate drops that you're not taking money out of it.

Carl Quintanilla (3:18)

Although you would argue that in an era of cuts, that's signs of macro weakness and that's when you go to safety, right?

Jim Cramer (3:25)

Right. But I think that what we're going to have is that weakness is going to be slacked.

David Faber (3:30)

Yeah. This is right. This is not that though, Carl. This period doesn't feel like one where people are particularly concerned.

Jim Cramer (3:37)

We have no crisis.

David Faber (3:38)

Which is why we're probably going to start debating whether the Fed goes 25 or nothing for the next meeting.