Squawk on the Street 05/16/24

Carl Quintanilla (0:00)

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

Good Thursday morning. Welcome to Squawk on the Street. I'm Carl Quintanilla with Jim Cramer at post night of the New York Stock Exchange. Faber's on assignment. Pre-market's pretty steady as the Bulls look to defend these all-time highs. Got decent results out of Walmart and Cisco. We're on Dow 40K watch.

10 year 435 on some mixed eco data today. Our roadmap begins with rally mode. S&P eyes its 24th record close of the year. Walmart is on the move. The retailers see some booming e-com sales and wins over some high-income shoppers. And of course, Buffett's big surprise, revealing a secret minority stake in one of the world's biggest insurers in chub.

Let's begin though with the rally. S&P closes above 5300 first time and the Dow does inch closer to 40K. Jim, you said this morning overbought, but things can remain overbought for a while.

Jim Cramer (0:52)

When it gets this overbought, notice when there's so many different fires, and we've had this a couple of times, Chuck Smith, Bill Paul does the great work for the oscillator, basically, for S&P Marketplace.

You can actually have a sustained churn, flop and chop. It doesn't plummet if you're up at these levels. It kind of just marks time. Now, we did have one of these last year where we came in the first couple of days, the NVIDIAs got slammed. The big momentum guys got slammed. Then they came right back. So I know it sounds odd, but you can get it to an exalted level like we are now, and you have some rotation internally, but it's not like when we're like plus five, six, really fast and then boom. So I know, I don't want to be complacent, but when you see a Walmart and you come in and that's the leader, and then the leader yesterday was the industrials, the leader before that were the utilities, that's a really kind of benign rotation.

It's not a vicious whip, and it's not being led by the Magnificent Seven, which is really sensational.

Carl Quintanilla (1:56)

Is that why, good example, talking about the headline indices, Goldman's not moving off 5,200, your Denny today, not moving off 5,400.

Jim Cramer (2:05)

No, I mean, look, I think that, I've been doing this analysis of we have, some managers come on and they really rebel against, said, yeah, there's so much index buying, and I think that as long as people invest, I really don't care how they invest, but you have so much index buying going on, the buybacks are pretty furious, so if you do come in and you want to buy two million shares of even an Apple, you will move the stock up. Apple is a big buyback. Obviously, when you buy S&P, you're buying Apple. So there's a little bit of a short supply. I'm not going for a stock shortage call. That's always too clear.

But I am saying we didn't have the IPOs. We're above last year for IPOs, but not by a lot, so we don't have a lot of new supply. We've got the investing, up 61% of the people now are buying, are back in the common stock. It's the highest since 2008 So you just have a plethora of buyers, not a lot of sellers, and so big buyers move stocks. But again, I come back to the buybacks as being the most significant issue.

Carl Quintanilla (3:05)

Right, now that the windows are open.

Jim Cramer (3:06)

Yeah, they're in there buying. The banks, jeez, the banks buy a lot of stocks. Apple, that buyback turned out to be very, very meaningful. And there are a lot of people who got off the Apple train.

And no, that was a mistake.

Carl Quintanilla (3:19)

Yeah, biggest in history. Meanwhile, the sentiment, Jim, is pretty positive. Journal today, soft landing still is intact.

B of A, stagflation is so 2022 The risk now is a re-acceleration into services.

Jim Cramer (3:36)

I think that one of the things, you gotta go back to the Home Depot quarter. And the Home Depot quarter was a, like I said, it was a downbeat, downbeat quarter. But what really struck me was that they were talking about service inflation.

They weren't so specific as to say that their own customers, the contractors, are charging more. But we've gotta get service inflation down. Look, we're going after rent. We're going after homes. What we have to start talking about services has gone up too much since 2019 And then the very good article in the Journal about hospital costs going up. So I don't believe in stagflation because we have good growth. I do believe that there's still inflation and that the Fed will possibly do a surprise cut, but I think the Fed needs to wait.