Mad Money 01/14/26 | Audio Only

Hey, I'm Cramer. Welcome to Mad Money. Welcome to Cramer America, my friends. Hey, I'm just trying to make a little bit of money here. My job is not just to entertain, but to explain. So call me at 1-800-743-CNBC. Tweet me, Jim Cramer.

You never want to see what's happening right now in the stock market. You see, the market's developing a thesis, and it's not the thesis you and I were hoping for. You can't really spot it in the overall averages. Dow slipping 42 points, S&P losing 53%, but the NASDAQ tumbling 1%.

But underneath, it's there and it's not good. What am I talking about? Simple. The wrong stocks are going higher. Let me explain. In a good market, you want a broad rally led by growth stocks when the cyclical is taking a backseat but still going higher. It's just time, for example, it's okay if the Magnificent Seven rally. By the way, also with their adjacencies and accoutrements, it would help if the bedrock stocks could move higher too. They've been awful. Tech is a huge percent of the S&P 500. It makes for a tremendous leader.

I also like to see the transports rally because they represent the health of the economy. All aboard. Most of all, I like to see the bank stocks go higher. When the banks are winning, it tells you businesses are expanding, need loans, companies are coming public to raise capital. We have mergers and acquisitions galore. And individuals are taking out loans, maybe to buy houses, maybe to renovate. At the same time, I don't mind when high growth stocks like Eli Lilly with the GLP-1 diabetes and weight loss drugs keep moving higher. That's very positive. What I just described is the jovial bull market we had most of last year.

Today though, we saw something very different. This was a market where the winners were consumer packaged goods stocks and the oils, the worst possible leadership groups. The consumer packaged goods are recession stocks. The oils are zero sum, right? That's the kind of relationship they have with the rest of the economy. At the same time, the banks are in free fall, whether they missed earnings that were just reported or not. I'm going to have more on that group later. Problematic. But let's just say the market's reaction to these numbers was just plain miserable.

We won't go into the reality of the bank earnings, but there's a clear perception created by the bankers that if the president puts a cap on credit card rates like he says must occur and that he's going to make happen, the entire economy will be trash. I don't disagree with them. If you cap credit card rates at 10%, then most people simply won't qualify for credit cards. The default rate for these things is 3 to 5%. It's just not worth the risk for the banks to give you an unsecured loan if they can't charge extortionate interest rates if, well, you spend some time not paying them and not paying them back immediately. The only people who qualify for credit cards are the ones who don't need the money, and that is a recipe for economic disaster.

Now I don't think something like the cap really happened. You need a Congress to make the law. And if Trump tries to browbeat the banks into losing money, they probably won't roll over, but it's still a risk and it's not something shareholders want to worry about.

And of course, it's not just bad for the banks. It would also be really bad for retail and travel and a host of other discretionary products. I think that today's market reflects Trump's persistence on this issue. He's not going away. You'd think capping credit card rates would be more of an Elizabeth Warren, senator of Massachusetts, kind of thing. She thinks, by the way, that all the bankers are like Potter in It's a Wonderful Life. It's a surprise to see this coming from a Republican. But then again, when it comes to credit card business, I imagine most politicians think that Tony Soprano had more reasonable rates. So again, I think this policy is unlikely, but the fact that people are seriously discussing it enough to scare investors away, right, I think it's driving money out of the banks into a whole lot of other sectors.

We also live in a points economy. Now, the banks don't make much of anything on points, but the retailers and any of the myriad outlets and outfits that offer them would see their businesses take a severe, ugly hit. It would be a nightmare. It would be like Saks all over again. A whole bunch of other places. So, no credit for tens of millions and no points either. I don't know. That seems scary to me. The president's always talking about a booming economy, but if you tamper with the credit card market, I got to tell you, you're ensuring that the economy goes busting. And that's why I'm so dismayed to see what we call the CPGs, the consumer packaged goods stocks, running today, because that's exactly what you buy if you think the banks will more or less withdraw from the credit card market to cope with a very damaging policy.

So let's talk about Procter and Gamble and then let's talk about a pharma company, J&J. Now, here are two companies that have products that you buy no matter what. You need toothpaste and medicine regardless of how the economy is doing. J&J can thrive in a weak economy. If you look at the chart of the recent action, you might think it's found maybe the fountain of youth. J&J deserves to be going higher, but not at this speed, not at this pace. It's only rallying like this because a lot of money managers went to bet on a slowdown. They are passing on Eli Lilly now because it has a much higher price-to-earnings multiple and those kinds of stocks are too risky to buy.

Procter's a different kettle of fish. They've already told us that business isn't that hot and they have lots of problems. So be prepared for the worst because they've told you the worst is coming. They might exceed that. Yet its stock went up big today. That's because even if it's bad, Procter and Gamble is still going to do fine versus the cyclical stocks which are going to get crushed. When you see this one rallying on bad numbers, it's a real tell that things could go south. We bought Procter for the charitable trust totally just as a hedge, hoping that we don't get a weaker economy. On a day like today, it's coming in very handy. Maybe you should have a hedge, too.

Normally, I'd say that this minor correction might just last a little while, a couple days, until we put the bank credit card assault to bed or we get more great home sales numbers like we had this very morning. I'd assume this selloff was just temporary. Unfortunately, there's another wrinkle. Oil looks like it's headed higher, even if it finished the day in the red, because the president's $50 barrel plan is suddenly going the wrong way thanks to the newfound uncertainty out of Iran and the facts on the ground in Venezuela. You take out Venezuela's leaders and oil goes lower. You take out Iran's rulers and you better believe it goes higher. The result, the real leaders in this market are Exxon and Chevron. Both have tremendous CEOs. Both have long historic records and both represent the very problematic leadership. We don't want the type that keeps you and me up at night. And not just because my wife Lisa just had her knee replaced and there's no sleep to be had without Oxy. And I'm not talking about Occidental Petroleum.

Lisa's no, though, and she wouldn't take the oxy anyway. The problem with the oils is that energy costs are attacks on the entire system. So when this group wins, it means everybody else is losing. The bottom line, we have to hope that these two new leadership groups aren't long-lasting. I don't think they will be. You also need to have some hedges, some Procter, some J&J. Hey, listen, I'll throw in Colgate and Merck if you want to. Just something that keeps you in the game until things get better. You know why? Because they always do. Hey, I want to go to Brett in California to start. Brett.

Oh, Brett, I'm glad you called in. What's up?

Look, I don't mind Southern Copper, but copper has run a great deal. And you've got what I call a parabolic move in Southern Copper. It was up $5 today. It's no longer got a cheap earnings. It's up 20 times earnings. Its 1.98% yield is all you get. The stock's up 25% this year. I got to tell you, Brett, I think you're late. I can't condone it. How about your friend? Let's go to John in Florida. John.

Yeah, people didn't like that last quarter. And the reason why the stock is going down is this company is so darn consistent that when it reported an inconsistent number, I can't believe the jailbreak. I think they're fine. I think the next quarter is going to be better. This company always pivots and always pivots well. I'd be a buyer. We have to hope these new leadership groups don't stick. But it's always worth having some hedges to keep you in the game until things get better. I suggest you gamble on Mad Money tonight.

Earnings season has officially kicked off with the big banks. But Wall Street didn't like what it saw at all. What went wrong with this? I'm digging the situation and tech stocks are struggling to find their footing in the tape. But there's one corner of the sector that's actually working. I'll reveal the names when I go off the charts. And Biohaven, BHVN, had some positive news to share at the JPMorgan Healthcare Conference, maybe better than last year's disappointments. And we had a chance to sit down with the company CEO while we were out in San Francisco. You do not want to miss this exclusive. So stay with Cramer.

In the past two days, we've gotten results from all the big national banks. JPMorgan, Wells Fargo, Bank of America, and Citigroup. And I got to tell you, the market just can't stand it. In just the last two sessions, JPMorgan stock is down more than 5%. Bank of America's off 6%. Citi shed over 4%. And Wells Fargo has just been hammered. So, what the heck is going wrong here? I got to tell you, it's not the numbers. Most certainly not. Do you know that the actual numbers were good? I think it's a combination of high expectations and some cautious commentary as well as the aforementioned presidential assault on credit card debt.

When JPMorgan reported yesterday, they posted a solid top and bottom line beat excluding a $2.2 billion reserve that they took related to the Apple credit card portfolio they got from Goldman Sachs. These guys delivered a 7% increase in net interest income with 17% growth for their markets business. That's fantastic. That's mostly sales and trading. Just stock trading was up 40% alone. These are amazing. But the investment banking business came in light, down 5% year-over-year and 11% from the previous quarter.

That weighed down by weakness in both debt and equity underwriting and that was just plain bad. Of course, even when the numbers are pristine, the reaction of JPMorgan's earnings hinges on the conference call commentary from CEO Jamie Dimon, who's become the almost Confucius-like figure for the financial industry. And he often says things that really do freak out people. Something that happened again yesterday. This time Jamie warned that, I'm going to quote, 'geopolitical is an enormous amount of risk.' End quote. And he also had some things to say about ballooning budget deficits in the United States and around the world. Maybe that's why after opening flat, it was actually up $5 in pre-market trading. The stock ultimately tumbled more than 4% yesterday before slipping another 1% today.

I think JPMorgan stock will be fine. A lot of this was simply because the stock had rallied 35% over the previous 12 months before yesterday's report. In other words, it was due for a breather. What about today's reports from the other three bigs? Okay, Wells Fargo, which we own for the Travel Trust, reported a top and bottom line miss. While sales were up 4.5% year-over-year and earnings grew by 13%, they still came in light, as did net interest income. It was disappointing. That said, a big chunk of that earnings shortfall came from higher severance expense as well. Wells Fargo, by the way, laid off a lot of people and cut costs. When you drill down, the business is doing pretty well, just not quite as well as Wall Street and I were hoping.

Well, as far as efficiency ratio, a key measure of cost, fell from 68% to 64%. Lower, by the way, is better when it comes to that measure, because it's cost divided by revenues. But the analysts, spoiled by CEO Charlie Scharf's relentless cost cutting, were looking for 62.5%. Just not good enough. Now imagine that told a story of a bank that's been unshackled after last year's removal of the Fed-mandated asset cap of 2018. Wells Fargo is now able to grow more aggressively in areas like credit cards and investment banking. And again, you've got to keep in mind that the stock was up, like JPMorgan, 35% over the preceding 12 months. That's one reason why we sold some Wells Fargo for the job yesterday, even in the teeth of the hideous decline. More on that later. I still believe in Wells Fargo longer term, but the stock has to finish going down and I don't think it is yet.

All right, how about Bank of America, which looked fantastic. They posted a small top and bottom line beat with 7% revenue growth, 18% earnings per share growth. Astounding. Their net interest income was up 10%, also slightly better than expected. Yet the stock still sold off 4% today. I think that's extreme. Don't let that mislead you. Bank of America reported a solid quarter. All four of the business lines, they beat revenue expectations with global wealth and investment management and global markets both up over 10% year-over-year. I'm not used to seeing that. Bank of America also sounded confident about 2026, guiding for 5 to 7% net interest income growth this year. CEO Brian Moynihan said, quote, 'While any number of risks continue, we are bullish on the US economy in 2026.' End quote. And thank you. It's tough to poke holes in this Bank of America quarter. Sure, the company got a boost from lower-than-expected credit charges, which helped drive their slightly better-than-expected earnings beat. Like JPMorgan, their debt and equity underwriting was light. That was disappointing. But really, today as a whole, I think this is a really fine quarter for Bank of America, maybe the best. And the stock only got hit today because Wall Street paints with a broad brush. This decline was, I think, pure guilt by association. I'm pronouncing it innocent.

Last but not least, there's Citigroup, which delivered another good, solid quarter, the latest in a long line of no-drama results under CEO Jane Fraser, excluding a one-time charge related to the bank's sale of its Russian operations. Citi saw 8% revenue growth, while earnings per share were up 35%. Citi had the best net interest income of all the banks, up 14%, also ahead of expectations. But as with Bank of America, they benefit from a smaller-than-expected provision for credit losses, which signals confidence in the economy, but it's not an operational number. Below the top lines, where it hurt was a mixed bag. Citi's services business and its banking business both beat, so did the markets business, but that was driven by fixed income as equity trading fell a bit short. The company's personal banking in the United States had a shortfall, and I was hoping that would start coming. I like that business. It needs to really climb, as did the wealth unit, though. The wealth shortfall was very small.

Basically for Citi, this was another professional quarter, and for a turnaround story like this, it would have normally been enough to send the stock roaring. Remember, Citi's much, much, much cheaper than its peers, even after shooting up 66% last year. But today, with the overall market down and Wall Street deciding these bank earnings were just yawners at best, another solid result from Citi wasn't enough to send the stock up. We're all used to seeing a jump after earnings. One of the more interesting tidbits about Citi today didn't even come from the quarter. In an internal memo sent to employees, which was then picked up by basically every major financial news outlet, Fraser, CEO, said that her bank's transformation efforts are more than 80% complete. The memo also included news about more layoffs and some interesting commentary about how Citi's adopting AI. But it matters that the bank's self-help efforts, which have moved the stock so much, are nearing completion. I got to wonder how long Citi stock can keep running if the company's no longer being graded on a curve. For now, though, I think it's just too cheap to ignore. It's probably the first one I would buy of the ones I just mentioned. Bank of America, too. They're both good.

Now, here's the bottom line. The big national banks have all reported, and though we've seen generally strong results, that wasn't enough to prevent Wall Street from turning against these stocks. I'm not sweating this too much because the banks have had some major runs here. So, I think they were due for a pullback. After looking at the numbers, my verdict is that these stocks can keep working this year as long as the economy doesn't deteriorate from here, but they are taking a breather after coming in way too hot. We get this credit card rate cap to the sidelines, the rally will start, even maybe sooner than I expected. Oh, I expect some pain for the next at least week, maybe 10 days. Mad Money is back after the break.

Until last fall, this market was absolutely in love with all things artificial intelligence. Since though, it's been a little more conflicted about AI stocks, not particularly enthusiastic about enterprise software either. Holy cow, they're thinking about Adobe service now. But there's one part of tech that really has been holding up surprisingly well. You know what it is? Old tech companies that have reinvented themselves for the modern world like IBM, Cisco, and even Intel. That's why tonight we're going off the charts with Bob Lang, the founder of explosiveoptions.net. Also, of course, the author of Know Your Options, in order to take a closer look. Bob, I've known Bob for a very long time, and I thought this was a really cogent set of charts. Let's take them one by one.

Start with IBM, which has become an incredibly strong performer with a stock that's nearly tripled since late 2022 when it broke free from its old all-time highs. It's also rallied over 40% over the past 12 months. First, take a look at all the daily charts here because this paints a very encouraging picture. First, Lang points out that IBM has always faced challenges from the new line of tech. Whether we're talking about Dell personal computing, Microsoft with software, Amazon, Oracle, and cloud computing, but IBM stood tall in the face of change and transformed itself into a juggernaut. They've got terrific hybrid cloud and AI businesses, a very strong consulting business that's also bringing a ton of AI. And yes, they've got quantum computing. Even better, at this point, IBM's putting up the strongest sales growth in years. Their CEO, Arvind Krishna, is top-notch. And you know what? He sees the future better than almost all CEOs, not just in tech.

So, what does the chart tell us? Okay, IBM stock rallied like crazy into last November. You can see this thing was just a powerhouse. Okay, and then it stalled out and started to pull back. But over the last couple months, the stock has put in what we call a double bottom. Really good sign. And it's now rebounding like crazy. Lang points out that IBM has broken out above its 50-day moving average. And they were looking at the blue. You can see it broke right through there. And just this week, with force, the stock's now at $390. He sees a ceiling of resistance at $315 with another potential ceiling running from, excuse me, $335 to $345. That's not on the chart, but it would be up here. Okay.

If it can break out again, when a stock rockets higher, then trades sideways for a while, then starts running again, which is where IBM is right now, that usually means there's more upside. We're witnessing the next leg higher. Not too late to buy IBM. What else? When you look at the moving average convergence divergence, or what we call the MACD line, which is an important momentum indicator, IBM just made what we call a bullish crossover. And that's the black line going over the red right there. When that happens, this is one of the most reliably positive signals out there. At the same time, there's the on-balance volume, the OBV, this is all the way down here. This is a volume-based technical indicator that adds volume on up days and subtracts volume on down days to gauge buying and selling pressure. I really like this index, and as you can see with IBM, the on-balance volume line just keeps making new highs.

Even better, the relative strength, now we're going RSI index at the top, another key momentum indicator, is still a long way from being overbought. That would be all the way up here. Then we'd have to be worried. When IBM got overbought in the fall, it temporarily lost its mojo, but it can really rally a good bit now because the relative strength index is saying it can go to higher levels. That's where it tends to stall out. I like the last quarter from IBM very much and I bet Krishna can deliver again when the company reports later this month. It's inexpensive relative to its growth rate and runs very lean, as Krishna runs a very tight ship.

How about, and this one makes me so happy because it's a charitable trust name, Cisco. Yes, the online networking play is a little different. Cisco spent years struggling to reinvent itself. You can see years there, and this is just from July, but trust me. And admittedly came late to the party. The stock didn't really start running until the second half of 2024. Lately though, Cisco's got its act together, regularly picking off new clients from competitors. Reminds me of the old days when the company was a fierce competitor that regularly drove its rivals to the brink of destruction. Even though it took roughly 25 years for Cisco to regain its dot-com era highs. Wow. It was the largest cap stock at one point in the country, in the market. The company's been putting up stellar numbers over the past few quarters. I think it's finally found its place in the modern world.

So what's happening in the daily chart? All right. After a strong performance in the first 11 months of last year, and here you can see that we just had some nice, nice performance. Okay. This stock got hammered in December. It was really kind of surprising, ultimately filling in the gap from its big rally in November. So it goes up, goes up, and comes down, fills up this gap.

Now though, Cisco started bouncing off its lows and Lang thinks it's ready to roar. Although the stock has to break through its 50-day moving average first, so it's got to take out this line. Could happen. That's almost two bucks from where it's currently trading. Of course, the volume trends have been mediocre here and the on-balance volume is just starting to turn higher after taking a real beating. Still needs to go higher, frankly. Okay.

Lang notes that Cisco sold off hard in December on high volume. And that's usually a real bad sign because volume is like a polygraph in this business. High volume means a move is telling the truth. However, he thinks that the selloff has come to an end. Thank heavens because this has been a very tough time for me in the trust with some of my techs and Cisco became part of it. The MACD line is still flashing a sell signal but Lang believes it's bottomed. Basically, he sees Cisco making a run at its downtrend line and if we get a few good days, the bulls are poised to take control. He's betting the $74 stock can change toward its old highs around $80. And then, Charles, get this, $100. I sure hope he's right. That'll be later in the year. We already have a nice gain in the trust, but I really am getting greedy. I want more points with CEO Chuck Robbins. Now, I've got to tell you, I think that we had a little leveling off. I think you buy Cisco right here.

Finally, let's talk Intel, which has been way too hot for me. Last year's most surprising comeback story. The chipmaker seemed like it was being eaten alive by Nvidia and AMD. The former co-pack practically raided the ground with his ambitious plans to build semiconductor manufacturing facilities. It got to the point where Intel looked like a corner. A lot of people were worried about this national treasure. But then they brought in Cramer fave Lip-Bu Tan as CEO and he has managed to wrangle a bailout from the federal government which took a nearly $8 to $9 billion stake at some really good prices. Once Uncle Sam got on board, even Nvidia made a $5 billion investment in Intel. The stock's been on fire ever since because once they cleaned up the balance sheet, Intel instantly became a much better story and the investors had a much better bottom line.

When you look at Intel's daily chart, you see a textbook uptrend. The stock made a terrific move higher into September. It's been making a pattern of higher highs and higher lows ever since. The MACD line is now flashing a buy signal. Remember what I told you, that when it goes over that line, it's bullish. The on-balance volume has been steadily marching higher. Nice progression there. The only fly in the ointment for Intel is that the relative strength in this RSI has reached overbought territory. We don't want it over that line. Going to have to mark some time. That's why I say it's been too much rocket ship, but these stocks can stay overbought for weeks before the share price starts coming down. So, I think we're okay here. Right now, he thinks that Intel's making a run at $55. Oh, man. And can see it eventually going into 2021 highs in the high 60s. It's a shocking move and perhaps only the federal government and Jensen Huang, who did the investing for Nvidia, really caught the bottom. By the way, Jensen Huang, very good friends with Lip-Bu Tan.

Here's the bottom line. The charts as interpreted by Bob Lang suggest 2026 could be the year of old tech companies that have found a place for themselves in the modern world. Which is why he likes IBM, Cisco, and Intel. It's why I think you should be buying Cisco right now. I think Bob Lang is going to be right. I want to take calls. I want to go to Fatty in Ohio. Fatty.

Okay, so ServiceNow, wow, is it a one-year low? It is down a hundred bucks. Holy cow. All right, so why is ServiceNow going down? Enterprise software, whether it be Adobe, which has really been hammered, whether it be Salesforce, which is not doing well, the chart that is, or ServiceNow, it's pretty awful. I am not going to call the bottom of ServiceNow. It is just too darn hard for me.

The charts by Bob Lang suggest 2026 could be the year that legacy tech, I'm talking IBM, Cisco, my favorite, and Intel make a new name for themselves. I'm inclined to agree with them. Much more Mad Money, including my JPMorgan Healthcare exclusive with Biohaven after selling its lead asset Nurtec ODT to Pfizer, of which I was a huge user, by the way, full disclosure, a few years ago. I'm learning more about what the company has in its pipeline, how it's positioning for future growth. And close viewers know I am not a fan of trading, but there's a trading strategy dealing with a technical stock that could help make you some money. I'll reveal it. And of course, all your calls rapid fire in tonight's edition of the lightning round. So stay tuned.

This week we got a slew of announcements from Biohaven, the drug company created when the old Biohaven Pharmaceuticals sold its lead asset to Pfizer about three years ago. The remaining Biohaven has a bunch of drugs in development for neuroscience, immunology, and oncology. And they're making good progress with a number of their pipeline programs. Although last year was a tough one for the company as it had some very high-profile failures in some key clinical trials. Earlier this week when I was out in San Francisco for the JPMorgan Healthcare Conference, I got a chance to speak with Dr. Vlad Shures. He's the chairman and CEO of Biohaven. Take a look.

Dr. Shures, welcome back to Mad Money.

Okay. So, Vlad, days matter. What does it mean, days matter?

Well, I should disclose that I have an agreement with you, and it's in the fantastic deck that you have. I just want people to know that it's not about necessarily how I feel about my drug, but thank you for purchasing it. What can I say? It's about tinnitus and I'm glad that you mentioned it.

Okay. So, let's talk about what happened last year and how most people counted you out and that was quite wrong given all the new things you're doing this year.

Go ahead, tell us. You've got the floor.

Let's talk about obesity because yours is novel. The other guys don't have it. It would be welcome for everyone. It's a better version for a lot of people.

Are you able to fund all the things that you talk about given the nature of what happened last year?

Talk to me about degraders. What do they do?

Okay. So, that's a great indication, but could there be many more? Could it be a bigger drug, bigger method than we think?