Rebound Rally, Disney Falls Despite Beat, Shopify Soars: Its President Talks Earnings and AI 8/7/24

Jim Cramer (0:00)

It's Jim Cramer here. You're listening to the opening bell of CNBC's Squawk on the Street. Don't miss a minute of the action.

David Faber (0:07)

Good Wednesday morning. Welcome to Squawk on the Street. I'm David Faber with Jim Cramer, live from Postline in the New York Stock Exchange. Carl Quintanilla, he's at the Olympics in Paris. Let's give you a look at futures as we get ready to begin trading on this Wednesday, half hour from now. That's looking like a very strong, quite strong open. Not sure how you want to characterize that, Jim, but I'll just go with it.

Jim Cramer (0:29)

I would have called it early since the market hasn't opened yet.

David Faber (0:31)

Thank you for that. Keen sense for the obvious, my partner there. Our roadmap begins with the extension of a rebound rally for stocks. A Bank of Japan official promising not to hike rates while markets are quote unstable. Disney leads the earnings parade. We got plenty of them, though. As for its streaming business, well, it did turn a profit for the first time, but the company says it experienced weaker demand at experiences, namely theme parks. Stock looking down. Shopify is amongst the morning's biggest gainers, however. AI helping to fuel its quarterly results and guidance. We're going to speak with the company's president. That'll be later in the hour. All right, let's start with the markets continuing to rebound from Monday's big sell-off. Of course, we had a rebound yesterday that by the end of the day didn't really show that much. We're up as much as 2.5% at various points. Where do we end the day? Up around 1%.

Interestingly, SP, NASDAQ, Nissen 7, Russell 2000, all up similar amounts. No real diversion, dispersion, diversion, what do you want to call it?

Jim Cramer (1:35)

Anemic is what I want to call it. Then last night, when I went to bed, our futures were down. Then when I got up about a half hour later, our futures were up. The only thing that happened was a Japanese central banker said, hey, listen, don't sweat the program. So David, it does call on the question, the whole idea, that maybe this thing really was the so-called Japan carry trade, where there's just unwinding, that hedge funds do a lot of things that we can't see. Remember the Viacom?

David Faber (2:03)

We say, by the way, we say hedge funds, really we're talking about a much larger group. That's sort of a catch-all.

Jim Cramer (2:09)

These are multiple billion dollar funds.

David Faber (2:12)

Trillions, as overall in terms of, when you talk about the big algorithmically traded funds or the quantitatively driven funds, the same, similar, what they call the CTAs, and there is so much money out there, and a lot of it is trading on, this does this, then we do that.

Jim Cramer (2:28)

You're so right, because people at home might think, how could a tail wag the dog? In fact, in many cases, they are the dog. And so when they all do this trade, and it's a very crowded group, crowded meaning that a lot of people have the like minds, and something happens, like the yen suddenly does this big move in interest rates, well, they start to take rates up. It does surprise people that some people feel they didn't telegraph it. I don't want to spend too much time on it, other than to say it can jar markets all over the world.

David Faber (2:58)

And it jarred ours. And it did. And we should point out, though, the yen now has fallen dramatically for currencies against the dollar. I think we're talking, we can take a look at the yen as you take a look at the S&P, as much as 2%.

That's a huge move. That obviously is beneficial, at least, to those who are still in this trade, where you're borrowing in yen, you're buying dollar, you're buying, and then you're buying baskets of potentially magnificent 7 and stocks of that nature. But there's a look at the gain that the dollar has on the yen this morning because of those comments, again, just to hit them again from the Bank of Japan governor, saying they will refrain from further rate hikes when markets are unstable, which, of course, that seems to be the case right now.

Jim Cramer (3:39)

And so you've gotten basically, that would be J-PAL saying, you know what, I saw the market on Friday, it was really bad. I saw the market on Monday. You know what, I'm going to have to take action. No, we don't do that because I think that we have a little better, what I would call decorum. But David, as soon as that statement was made, the VIX plummeted. Yes. Now the VIX has been a very good proxy for the MAG-7, believe it or not. And may I just say that before we go crazy about the MAG-7, there's a super micro quarter, which indicates that one of the hyperscalers has put a lot of margin pressure on them, but the black will will be late. They don't expect anything in the first quarter. And against that is Micron, which has been my key to the market. People don't talk about it enough. Just resumed a big buyback. And Sanjay Marotra, I mean, he literally says there are improved conditions. This is the Japan Central Bank of our semis. You don't expect someone who's a very calm guy. Sanjay, I got to tell you, family guy, when I talk with him, I mean, you just very quickly devolve the S-file. My wife is doing, you always get in it. But why? Because he is a calm, considered man. So for him to do this buyback here says enough already. And he has great credibility.