Mad Money w/ Jim Cramer 12/11/24
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Hey, I'm Kramer. Welcome to Mad Money. Welcome to Kramerica. I'll be with my friends. I'm just trying to make you less of money. My job is not just to entertain, but to explain. So call me at 1-800-743-CBC. Tweet me, Chip Kramer.

The age of antitrust tyranny is over. In its place, we could be looking at four years of relatively unfettered capitalism, likely with higher stock prices, especially for the Magnificent Seven. It's why the Nasdaq crossed 20,000 for the first time today, up 1.77 percent, record high. Dow dipped 99 points, S&P gained 0.82 percent.

Today is indeed a very big day. It's a celebration based on the replacement of big corporate nemesis, Linda Kahn, the current FTC head, by a pro-corporate regulator, Andrew Ferguson. He's also on the FTC.

ftc we know what he's done he's pro-business it's fabulous news for the tech titans because the hectoring the threats the ellis pass litigation maybe they will soon be over hence the nasdaq hoopla the changes at the fdc as well as the shift from leadership at the antitrust division of the justice department make me feel that we have seen the high tide government interference for the companies we love house of pleasure

But now we have to ask ourselves specifically what's driving the individual MAG7 stocks to these record highs beyond just the changes in government. First, people are always dumbfounded at these stocks that keep going up. You hear them, right? They're in disbelief that it can happen again and again. Me, on the other hand, I'm in disbelief that people still don't get it. They know nothing! These companies do amazing things. They keep changing. They keep inventing. They have all the money in the world, which allows them to hire the smartest people on Earth.

They are sovereign states with better balance sheets than any country. Let's take them one by one. Let's show what happened, which was up nicely earlier today before pulling back and close. Today, Apple announced the release of iOS 18.2, which they say has a brand new set of Apple intelligence features, including ChatGPT, Image Playground, used to create funny Genmojis. We tested Genmojis by giving me my old hair back, but we couldn't do it. You son of a...

I told you to cut that. All right, it made us laugh. It's making you laugh. It's making everybody laugh. Hey, yeah, they're laughing at me. But I said, oh, you know what? I can handle that. Because it doesn't, it doesn't, not one bit. I'm cool with it. Oh, then we asked Siri something. We said, what would you do with a family of four in NYC in the winter? It replied, I'll need to use ChatGPT to write that. Should I go ahead? That's nice. We said yes. And then it gave us five terrific ideas emphasizing it.

Thank God they took that down. Emphasizing the winter aspect of this great city. I thought they were great ideas. Coherent, cogent. Pretty much what I thought. It's kind of what I thought as someone who's lived here for 40 years. I got a lot of those ideas, but then there were others that were better. Succinct, terrific. Tim Cook, great job. I loved it. But there might be something else at work behind Apple's recent strength. We're likely seeing the end of the Biden administration's hairband attempt to hobble

Just like Kathy Bates hobbled James Caan in Kramer Fade Misery, one of Stephen King's best, by the way, although that particular scene is still a little difficult to watch.

Watch back on March 21st. The Justice Department sued Apple for monopolizing the high end smartphone market. In fact, they invented a whole new category of smartphone just to make this argument. Just went after Apple for charging more because Justice charged. Well, you know, whatever. They forgot that you can get it mostly from Verizon. I'm tired of the Andy Williams song already. OK, Apple exerted pressure everywhere, suppressing everything and everyone that competed against him, says Justice. Left out of the investigation. We can't live without these darn phones for heaven's sake.

Because they're so good. They're great. And hey, if you don't like it on my online, just go buy a Samsung. Go ahead, make my day. I think common sense will take over under Trump's Justice Department, which seems far more concerned with ideological issues involving free speech. Apple will be fine under that because they're not a media platform. That's why the stock can keep rallying. It's yet another reason why Apple's giving you, get this, a 250,908% gain since coming public 44 years ago. Take that, S&P.

Next, Amazon just won't quit up five bucks today. And this time it's all about President-elect Trump's pick for the FTC chair, Ferguson. He'll be replacing Khan, who, as I mentioned, was relentless in her attempts to smash Amazon. Boy, did she hate Amazon because she thinks it's too powerful. As she put it, quote, Amazon's actions allow it to stop rivals and sellers from lowering prices, degrade quality for shoppers, overcharge sellers, stifle innovation and prevent rivals from fairly competing against Amazon. End quote. What's missing? Help.

the fact that Amazon Prime is the greatest bargain in the world and it's managed to lower prices for 200 million users. But if you're a merchant and you don't like their platform, just go to Shopify for heaven's sake. It's not like Amazon's sending a mafia to put its rivals out of business. It's just great at what it does. How could the FTC be so out of step with America? How could it be?

How could it be so ideological, so not respectful of Amazon or its reputation of its own organization? Amazon, by the way, is up 306,913 percent since it came public on May 15th of 1997. You know, that doesn't happen if you're a relentless bad actor.

Like the FTC would have you believe. Alphabet may still have a problem with the authorities, not because they're so good, but because some members of the Trump team really do believe that Alphabet's trying to brainwash us with liberal ideology. That said, the Biden Justice Department's been trying to dismantle this business, and I bet they no longer are going to do that under Trump. Plus, with GM's self-driving business shutting down, Alphabet's Waymo is down a competitor.

I think that greatly boosts the value of Waymo if Alphabet ever wants to spin it off. Still one more reason why this stock has rallied 9,086% since it came public August 19, 2004. Meta platforms, it's up huge. Now, some of that's because Meta's more than a year hounding by the FTC is now over.

even if the original investigation started during the Trump first term. On November 13th of this year, a federal judge ruled that the case can go forward. The market's breathing a sigh of relief because it's going to go forward under Andrew Ferguson, not Lana Khan. That makes me feel that things will work out and be okay for Meta. Another reason why Meta stock is now up 1,565% since it came public on May 18th of 2012. In a last-minute attempt to slam as many Mag7 stocks as she could, Lana Khan decided to go after Microsoft a couple weeks ago.

Maming for Bundling its cloud computing offerings with office and security products. You can't make this stuff up if this person was doing. Khan also wants to examine the company's growing power in the AI segment. She just can't stand big tech. I think its investigation now goes nowhere. And that's how Microsoft can continue its long run. Now rallied, by the way, 615,798% since it became public in 1986. Can you believe these numbers? Outgoing Jeff's department was looking deep into NVIDIA to see if it was engaged in monopolistic practices. Were they abusing the power to determine who gets the latest and greatest trips?

I think the incoming Justice Department will come as close as possible to congratulating them for being the best in the world, allowing NVIDIA to continue its winning streak. By the way, the stock's up 557,140 percent since it came public in 1999. Finally, the GM out of the robot actually raised. It's just Tesla versus Waymo. And Elon Musk has made it clear that his cars will be the first mover, even though Tesla's done none of the regulatory paperwork that Waymo's done. I believe him simply because he's tied with President Electrode.

The White House can make the interstate highway system a test lane for Tesla, and it will thrive on it in the economics of a Tesla tax year dramatically cheaper than a Waymo. Looks like Tesla can keep its winning ways up 37,381% since IPO 2010.

I am of two minds about this. I understand how Linacom might think that every one of these dominant companies is too powerful. It could certainly become a problem in the future. But the Magnificent Seven are dominant because they're extraordinary. They're largely loved. They're the envy of the world. And they are ours. They're ours. And hey, if you want, you can have a piece of them, too.

They've done well, and now with the antitrust regulars out of their hair, I expect even better returns. At the very least, they only need to worry about innovation from other companies, not punishment from the feds. The bottom line, we don't want our government to prosecute these mega-cap companies unfairly, and we don't want the government to bail them out either. We just want these amazing businesses to compete for our affection and our dollars, which is exactly what they do every day, 24-7. You know what? It's a remarkable thing.

Jake in New York, Jake. What's up, Kramer? How are you? I'm just celebrating how great the MAG7 are tonight, and the government's going to get off their back. How are you doing? I'm okay. I'm hanging in there, man. But I'm wondering about a stock, and I think you're the man to tell me about it. I'd be the man.

So two days ago, Cintas dropped like 10%. I didn't see any news. Maybe you know a little bit more about it. But, I mean, I know everyone's a little scared about, like, the health care segment, and everyone's very excited about the small business segment. So what do you think? I think you buy Cintas. I was going to put this in the bullpen for the Charitable Trust.

I was actually thinking about putting this in. I had been talking to Jeff about it. I think this is one of the Jeff, Jeff Morris. I think it's one of the greatest stocks of all time. And they have just a huge pastiche, if not mosaic of great, of great customers by Cintas. I disagree with the sellers. Let's go to Jill in my homestead, New Jersey. Jill. Hi, Jim. I bought Royal Caribbean back during COVID. You'd be genius. Uh,

I gained over 200 percent since then. And I'm wondering now if it's a buy, a hold or a sell. I want to hold Royal Caribbean. The other day I was speaking to Jeff Marks and Ben Stoddard. I said, look, I don't like the fact that every day another analyst comes up and raises price targets. So let's just say no more buying of it right now. I like biking more than I like Royal Caribbean right here. We can't keep buying up and up and up on the same set of earnings. Look.

I don't want the government to punish our fantastic companies that you and I love. I just want to allow them to compete for our money and our affection, which is what they do every single day. Now, there's more power ahead for a utility player called Sempra. I'm talking to the CEO about the energy landscape.

I like the non-volatility aspect of his stock. Then the latest earnings report from all price retailers always bargain out across the tape yesterday. I'm breaking down the quarter to see if it can compete with the bigger players in the space. Plus, is the Santa Claus rally really coming to town? I'm going off the charts on the latest moves in the VIX and the S&P 500 and what they mean for the market. And I am glad that Genmoji is finally down. So stay with Kramer. What does it take to design and deliver a corporate strategy with confidence?

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All these data centers are being built to handle artificial intelligence. Don't forget that they consume insane amounts of electricity. And it's not just the independent power producers you're seeing a surge in demand. Even regulated utilities stand to make fortunes. Take Semper, one of my favorite growth utilities. Beyond owning regulated gas and electric utilities in California and Texas, they're

They've got this huge energy infrastructure business that includes natural gas pipelines in New Mexico, liquefied natural gas export terminal in Louisiana, and more LNG projects in the works that will finally be able to move forward once we have a fossil fuel-friendly president back in the White House. SEPA's up about 17% for the year, which isn't bad, but nearly half that gain came a month ago when the company reported this really bad

bang up quarter. Besides, he has to be up close to 28% for the year. I'm betting that this one's got room to play catch up because of the history we're going to go into. Don't take it from me. Let's check in with Jeff Barnes. He's the chairman and president and CEO of Sempra. One more. Mr. Barnes, welcome back to Bad Money. Thank you, Jim. It's great to be here. Okay, so if you were to tell people that there was a non-tech stock that

that was up 2,192% since this century began versus the S&P up 559%. And you had to say it was the utility. I'd say it's just not true, but you did it. We did it. And I think what's exciting is we continue to be bullish on utilities generally. So what's different today, and those statistics you recall went across multiple market cycles. What's different today is we think the utility sector is in a super cycle.

So we expect that the earnings growth from utilities generally will outpace the growth rates that it's posted historically. And we're certainly seeing that show up at Semper today. We have a portfolio of new capital opportunities all across the energy value chain, as you described in your opening, with a real focus on transmission and distribution. So with higher expected growth,

a strong dividend in what I think will be a constructive interest rate backdrop. We think simple shareholders are set up for some good value creation in the future. - Okay, well this is important because I want to get people to buy stocks.

But I'm afraid that people often buy the wrong stocks, Jeff. They buy the stocks that have a super high beta, that don't have any utility dividend, that are so dicey that they could lose everything. But Semper's been pretty consistent the whole time. And it's because you're in the two best growth areas, Texas and California. That's right. You know, I would make a comment here that you're making, which is today, California is the number one economy in the United States.

Texas is the number two economy. We have a leadership position in both marketplaces. And one of the reasons we think we can continue to outgrow our sector is we've got opportunities both on the utility side in the markets you described, but we also have a whole suite of opportunities in our energy infrastructure business, including LNG. When you put those two platforms together, it sets us up where I think is strong growth in the future. Well, I had GE Renovo on this morning. I've got to tell you, I came away with two good things.

One is that there's just incredible amount of demand, and two, they can solve it. But then I started thinking after I was reading about seeing you, maybe we can't solve it. Maybe we don't have enough power to be able to have all these data centers in this country. Well, you're on a very important point. I believe today that America has a long-term competitive advantage in technology and innovation.

But the question in front of us, Jim, is can we keep it and maintain it as a country, or does some of this industry goes overseas? And the critical success factor is are we prepared to invest the capital to ramp up electricity production and expand and modernize the grid? And I'll say this.

Data centers, hyperscalers, artificial intelligence, as you noted in your opening, are intensive in terms of energy consumption. And that's why in Texas, which I believe Jim is ground zero for most data centers being cited,

The regulators stepped forward and said that the overall electricity demand is expected to nearly double by 2030. So the competitive response from my company is to say, at Semper, we're going to ramp up capital expenditures. We have a $48 billion capital program today, and we've already indicated, Jim, on our February Q4 call, we're going to significantly increase our capital campaign. And here's what I think is the key takeaway for your viewers.

if you want access to american technology and invasion if you apply artificial intelligence a low-risk way to play it is to the american utility sector and specifically semper we have more exposure to data center growth in any company in the sector through the state of this is what i want i want to own stocks that can go in all markets and that's what your percentage shows from two thousand and what you just said shows that you can grow a bog with much less risk it's almost inconceivable that there is such a thing but you're doing it now

I am really excited about your LNG because you did not have panic. You know, Biden in January said that the pause. I mean, you have one of the greatest growth engines in the world. And by the way, geopolitically, maybe our biggest weapon. And they paused it.

Does that pause go away day one? Yeah, here's the way I would think about it is this is a great American growth story. The best! Today, the United States is a market leader globally in the export of LNG. We have a 25% market share. And what's interesting is if you just look at landed LNG in continental Europe,

50% of that originates from the United States. So as you think about looking across the decade to 2030, the United States will continue to take market share. And I think that SEMPRA will be a big part of it. Think about this. We've got a very large export facility in Louisiana. Jim, we have two under construction, a very large facility in Port Arthur, Texas. I bet you employ a lot of people when you build those. Yes. In Port Arthur, Texas. And we have one on the West Coast.

but maybe more important, we have a backlog of very large development projects in the queue that will benefit from improved regulatory certainty from the new administration. And I would conclude with this.

Our allies in Europe and Asia are looking to American leadership to improve their energy security. And it'll be companies just like Sempra that make the capital investments to support their energy needs. And when will you invite us down so we can witness some of this great construction, maybe even go on one of these ships? Let's make the commitment to do it in 2025. I will do it because I think what you're doing is really incredible. And I can't get people to invest in the right stocks.

until I have someone as smart and as coherent as you to be able to make the case. That's why I love having you on. That's Jeff Martin, Chairman and CEO of Sempro. Will you please look this stock up? I urge you, everybody who wants a stake in data center, go for the ones that have made money consistently, not episodically. We'll be right back.

Coming up, Ollie's Bargain Outlet is known for selling good stuff cheap. But can you still get the stock for a bargain? Kramer's browsing the aisles and giving his take next. Regular viewers know that I've been a longtime supporter of Ollie's Bargain Outlet.

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Outlet Holdings, one of the big off-price chains that offers, quote, good stuff cheap. Ollie's buys excess inventory in the system, paying next to nothing and passing on the savings to its customers. It's a great business model. One reason I'm a proud enlisted man in Ollie's Army. Their 15 million strong loyalty program. Quaker Town's my home base. But while there are a bunch of big off-price chains...

The excellent TJX, which is known for the travel trust, along with Ross Stores, Burlington Stores, Ollie's has always felt a little different from the rest of the group. Other than TJX's home goods brand, the other off-price players are mostly focused on apparel. Ollie's also has tons of home goods, toys, books, all sorts of stuff. I once bought a book that was water damaged, but who could tell? I could read it. It didn't matter. Just pages stuck together. Sometimes they even source directly from manufacturers, not just retailers. If they need to fill out their assortment of merchandise,

They do it. At the same time, Ollie stock has typically lagged behind TJX. That's the best read. And even in all stores. I don't know if that's right. Plus, this one got hit particularly hard when things turned ugly a couple of years ago, falling nearly 70% from its 2021 highs to its lows in March of 2022. Since then, the stock's been marching steadily higher. And yesterday had a huge breakout.

surging 13% into response to the latest service report, to the point where it's within spitting distance of the all-time highs. After that quarter, I think Ollie's deserves to be considered a full-fledged member of the off-price cohort, a stock you can mention

Even in the same breath as Kramer, Fabe, TJX. Why? Look at the quarter they reported yesterday morning. While all these sales came in a tad light, both for total revenue and for same-store sales, their profitability was better than expected, with surprisingly strong margins.

Management also shaded down their full-year forecast for same-store sales growth and net sales, but it left everything else unchanged. Now, just looking at these headline numbers, the whole thing sounds kind of lackluster. How the heck did the stock go up 13% then? Well, first, much of the revenue softness can be explained away by the weather, specifically two big hurricanes and an unseasonably warm fall, made for a tough time in October. Meanwhile, the liquidation of big loss with trial for bankruptcy in September, that added some extra pressure. But down the road, that's an opportunity for Ollie's.

because their whole business model is about devouring the carcasses of failed retailers. More on that later.

Apart from those one-off problems, things are going nicely for Ollie's. The company said it saw strong demand for consumables like cleaning supplies, food, and candy. Management touted, quote, growing relationships with major manufacturers of these categories, end quote, which is allowing Ollie's to offer a more consistent assortment of everyday goods, which I want because I don't want to waste my time when I go there. Ollie's also saw strong demand for certain discretionary-related categories like furniture and outdoor living.

Well, early November wasn't great. Ollie's did say that, quote, as weather normalized and we approached the Thanksgiving Day holiday, we saw accelerated trends in our seasonal categories, end quote. And they sounded pretty happy about their Black Friday numbers. On the conference call, CEO John Swigert said that Ollie's is benefiting from two big trends. First, consumers want value. We know that. We talk about it all the time. Second, suppliers need bigger partners. We know all about the first trend. That's just been a major theme. So let's focus on the second one.

Basically, the success of big box stores like Walmart and Costco means that these retailers are making huge block orders for branded products. But with these ever increasing order sizes, there's more and more excess product from the parts of those block orders that don't get sold. That's where all this comes in. While they're obviously very competitive on price in the normal course of operations, those big box retailers don't want closeout level prices on the shelves next to their full price merchandise. So a call goes out about a

quality name brand merchandise that needs to be moved. And because Ollie's is the biggest player in the space with great relationships, they're the one who gets the call. You can see a lot of brand names at Ollie's. When yesterday's call, much of the discussion was about expansion. After mostly growing organically over the past several decades, one store at a time, adding up to a few dozen net new stores per year, Ollie's now has a stated goal of growing its store count by 10% per year. They now have 557 locations, and they're planning to accelerate their expansion plans to

Earlier this year, Ollie's acquired a bunch of 99-cent-only stores in Texas, 11 of them. And only last night's call management said proudly that the company soft-opened some of these stores as a test in August, and several of them were top-performing stores right out of the gate. Okay, then there's that big loss bankruptcy I alluded to. This defunct chain has been gradually auctioned off its real estate, and so far, Ollie's has snapped up 17 locations, including seven that were won just last week. Ollie's management sees these stores as similar to the 99-cent-only stores,

as they, quote, right-sized location located in great trade, I'm sorry, in good trade areas, have attractive rents and leasing structures, and have been serving value-oriented customers for many years, end quote. So suddenly, the unit growth angle to Ali's story feels, maybe it's a little more conservative than we thought. Management did say that their initial plan was to open a minimum of 56 new stores in 2025, which would be in line with the goal of growing its footprint by 10%. But I think there's

upside to that number. And it seems like much of Wall Street agrees. All this itself said that its store openings in 2025 will be front loaded as a result of buying these big chunks of stores in the late big lots. And I think about what I said before.

about how Ollie's is winning because it's the biggest player in certain parts of the closeout space and often gets the first call from retailers looking to move major blocks of product. That angle to the story only grows as Ollie's gets larger. I think the stock shot up 13% yesterday because the market finally woke up to the fact that the unit growth story is much better than previously understood. It used to be very episodic. And there was some trepidation raised by an analyst that turned out to be unwarranted. Now, keep in mind, Ollie's is undergoing a leadership change in a couple of months.

with President Eric Vandervalk assuming the CEO title from Swigert early next year. But Swigert will still stick around as chairman. The move was well telegraphed, announced roughly six months ago. That's why I don't expect any major disruption. Bottom line here. After hearing about everything that's going right for Ollie's, I think we have to consider this company a member of good standing in the off-price club, especially now that it's decided to grow its store count much more aggressively. No, Ollie's, with its 500-something stores, is not yet TJX with over 5%.

5,000 locations in nine countries. But they're a legitimate force in the oil price space. And even after this run, I think the stock is as attractive as any of its peers. Let's take questions. Let's go to Joe in New Jersey. Joe. Hello, Mr. Crater. Thank you for taking my call. Of course, Joe. Always good to hear from you. What's going on?

Yes. With the merger not going through and Albertsons getting a $600 million breakup free, should I still hold on to Albertsons? I think Albertsons is OK. I just don't like to be honest. I've seen the pattern of these deals when they break down. Albertsons had like Rite Aid. They may have taken the royal off the ball in the last few months. I have to say.

I don't care for the trade. I do like Kroger more. Let's go to Robert in Illinois. Robert. Hey, Jim. What's going on with Kava? It was going along greatly beginning of the week. It was in 150s, and now it's 120s.

I think there's profit taking. I think there's absolutely nothing wrong with Kava. We are seeing this pattern in a bunch of the high flying stocks of this year, particularly considering the restaurants. And typically what happens is because of insider selling. When you see insider selling and there was tremendous insider selling in this one, I get nervous and I say to myself, let's be careful out there. All right, let's go to Jonathan Pennsylvania. Jonathan.

We got Jim. Happy holidays to you. Same to you. And happy Thanksgiving for the rest of us. There you go. Why not? You can never get enough Seinfeld, even still. What's going on? No, never. Hey, man, you always teach the club to focus on quality, only speculate a little bit. And I'm pretty sure the company I'm going to ask you about isn't the most high quality. I don't know if it's speculative or not. I want to know what you think about Flowers Feeds.

I've known Flowers Foods since 1978, and I will tell you that I think it's a I want to be very nice to these people, but it's a very how about this? It's a very tough business and I like it easy, not tough. All right. Ollie's is no TGX, but is a legitimate player in the all price retail space. And the stock, I think, looks pretty darn attractive. I may have money tonight.

We're going off the charts. We've got to look at volatility, see what could mean. Does it tell us anything? Plus, FOMG, Brnova's top brass this morning. I'm getting into data centers and addressing where I stand on the demand for them. And, of course, all your calls are up and running tonight, so you should go anywhere. So stay with Kramer. ♪

For the last couple of months, I have been telling you that the market's getting a little too complacent for my taste. All sorts of stocks have soared to excessive levels, including lower quality stocks of unprofitable companies. That's what I worry about. We've gotten too used to seeing stocks rally endlessly since the election because there just haven't been that many sellers coming out of the woodwork to slow down the momentum.

But as I've said repeatedly, that prop could fall apart very quickly the moment something goes wrong or when people remember that they don't have a profit until they ring the register.

That's why tonight we're going off the charts with the help of Mark Sebastian. He's a brilliant technician. He's the founder of OptionPit.com. And he's also, by the way, our resident volatility expert. We've got to do that in order to get a better read on the situation. Now, he likes to keep an eye on what we call the VIX. That's the CBOE Volatility Index, which is also known as the fear gauge because it tells you when investors are terrified, when they're feeling confident, and when they're downright complacent. For example, right now, everyone's betting on another Santa Claus rally.

As Sebastian sees it, they're front-running Santa because in most years, that's what works. Traders just assume the market will keep going up, and when the market goes up, all the volatility gets pummeled. Mark it up.

But while the Santa Claus rally is a reliable pattern, it's not perfectly reliable. And it doesn't mean stocks will rally through the entirety of December. Now, look at this. This is a chart of the S&P 500 and the VIX last December. From December 1 through the middle of the month, the S&P went straight up. OK, you got that. But Sebastian points out that the VIX bottomed on December 12th, a sign of rising fear, something that ultimately signaled a vicious sell-off in the stock market, with the S&P getting slammed in a nasty session December 20th.

Santa Claus interrupted. Sure, we had a nice rally over the following week, but the rally in the VIX indicated the market was in for some turbulence. That's exactly what we got. That's why we're looking for these changes. It's proactive. It tells us it's predictive. Now, how about 2022? Look, in 2022, we didn't even have a Santa Claus rally. Back then, Sebastian notes that the VIX bottom on December 2nd, which was just after the S&P peaked. OK,

From there, the market spent the rest of the month going lower. In fact, the S&P finished down for December of 22. More like a lump of coal market. That's why Sebastian is so adamant that these Santa Claus rallies are never a sure thing. We've got to stop being so complacent about it. Why don't we take a look at where we are right now? Check out the action in both the S&P and the VIX over the course of this year. For the bulk of 2024, Sebastian says the VIX hasn't been sending out any warning signals. When the S&P goes up,

The VIX goes down. When the S&P goes down, the VIX goes up. That's exactly what you'd expect from a fear gauge. However, he points out there was one big exception here. October and November, in the lead up to the election, the S&P traded sideways and the VIX hung into. According to Sebastian, that's highly unusual. Normally when the S&P does nothing, the VIX is getting crushed.

didn't happen in this case you have to remember that the volatility index is calculated based on s p 500 option prices it's the cost of insurance for owning stocks when people expect a lot of volatility like when we're headed into the uncertain election people pay more for insurance in the form of options since the election though we're back to normal with the s p warring while the vix gets pummeled that's exactly what should happen okay that's normal that's rational however sebastian says things have tightened over the last month

So why don't I take a look? Let's zoom in on the S&P and the VIX over the past month. Just make it tight here. OK, throughout November, the S&P 500 climbed higher while the VIX tanked. And last week, the VIX fell below 13 for the first time since July. That is classic bull market behavior. Then, though, the VIX bottomed on December 6. OK, right here.

Since then, it's gotten a pretty nice bounce on what's been a fairly modest pullback in the S&P 500. More important, Sebastian points out that over the course of just Monday and Tuesday, the S&P dropped about 56 points. That's less than 1% over two days. And then we repeal pretty much that whole decline today. Yet while the S&P barely got dinged these past two days, the volatility index shot up from 12.8 at Friday's close to almost 14.2 Monday and Tuesday. That's a big move.

According to Sebastian, there are no real red flags coming out of this chart, at least not yet. But in this big buy, right now the S&P is sitting just below its all-time highs, while the VIX is up nearly a point from Friday's close. So we have a mild sell-off with a big overreaction in the volatility index. Then today we had a rebound in the S&P, but the VIX doesn't pull back nearly as much as you'd expect.

Basically, the S&P has erased Monday and Tuesday's losses, but the VIX hasn't erased its gains over the same period. See, as Sebastian sees it, that's because banks and hedge funds are buying options to protect themselves against volatility. The big boys are starting to get a little nervous.

Here's what would make things truly worrisome for Sebastian. If this pattern holds up tomorrow, then we might be at the beginning of a moment where the volatility index starts to have a positive correlation with the S&P 500. That's a problem because when the VIX and the S&P march in the same direction, it usually means that the S&P is headed for a serious reversal.

especially concerned that if this pattern holds, then the S&P could end up in the red next week, maybe deep in the red if something goes wrong. If we do get a serious sell-off next week, this could turn into a 2023 situation where stocks roared until about a week before Christmas, then pulled back hard before rallying into the holidays at the end of the year.

the case. And even if we get a Santa Claus rally this year, Sebastian thinks it might merely bring the S&P 500 back to where it's currently trading after a nasty decline. So here's the bottom line. The charts interpreted by Mark Sebastian make two powerful points. First, the so-called Santa Claus rally is never guaranteed, people, never. And second, even if Santa does come, it might not make much of a difference if the market experiences a mid-December swoon like it did last year. Right now, Sebastian hasn't spotted any severe warning signs, but the volatility index has started to rise alongside the S&P 500 at

That's not rational. If that keeps going, it will turn into a serious red flag. Definitely something to keep an eye on because we really don't want to be complacent here. That's my theme. See, it's been too good a year to let our hair down. It's terrific time to book some measured gains. That's exactly what we're doing, as people know, for the CNBC Investing Club. We have money back after the break. It is time. It's time to play the squad.

And then the lightning round is over. Are you ready? It's time for the lightning round. It's Jerry Missouri. Jerry. Hey, Jim. Thanks for taking my call. My pleasure. Jim, Lisa Sue is making me nervous. Her interviews make it sound like her stock should be much higher, but my position is down over 17%. What should we be doing with our AMD holdings? All right. This is very difficult, and you're absolutely right to bring it up. I'm glad you did. Here's the problem.

It is absolutely true. It is absolutely true that they're not doing as well as Nvidia. It is true that they do not have the big Amazon orders that I've been looking at. But can we just remember that Lisa Su has built an amazing company, taking a lot of share from Intel. It's got the number two when it comes to the data center, when it comes to AI.

And come on, she just did this great deal where she got all these engineers to come in. I think the stock is actually cheap and it should be bought. And we are buying for the travel trust. And I wish I had bought some yesterday in the weakness. And I hope I am emphatic enough, which is why I took the beginning of this lightning round. No, no, I'm just kidding. I could go on and on and on about AMD. And I probably will. And you'll get sick of it. But I really like it. OK, let's go to Lucas in New York. Lucas. Hey, Jim, how are you? I am good. How are you, Lucas?

Good, thanks for asking. I've never liked Bitcoin. I feel like it's something I missed out on. Now with ETFs like IBIT allowing traditional investors a way to invest in Bitcoin, and with Bitcoin passing 100,000 again today, and on top of it, Michael Saylor predicting Bitcoin could hit 13 million by 2045. Is it time to say...

If you can't beat them, join them. Okay, yes. If you can't beat them, join them. I suggest you do this. I want you to buy the ETF. I do believe in Bitcoin. I believe passionately in crypto. I think that if you want to have 10% of your position in crypto, which I think 20% is a little too high, I think you buy it down. I think you buy some right now, tomorrow, and then you wait to 95, and then maybe you get to 90. I do want you to buy it, though. I'm a believer in cryptocurrency.

I think it's an alternative to the $36 trillion that the federal government has to pay that I don't know where the hell they're going to get. Let's go to Paul in Maryland. Paul. Hi, Jim. Pleasure to speak to you. Right back at you. I've watched your show for many years.

And I've learned a lot from you. I appreciate you. I have a question about a stock that I purchased a few months ago. I'm down 14 percent. And I'm wondering if you think I should hold it or possibly sell it or possibly put a stop loss on it.

It's Constellation Energy. Constellation Energy and Longfish are really high beta stocks. I very much prefer Sempra to these. I don't want you to sell Constellation Energy. It has a habit of bouncing back because it's really involved with the data center. But it has got way too much volatility for me. And I think that when it gets back to 250, 260, I think you should take some off the table and go put it in Sempra. Let's go to Raja in Washington. Raja.

Hi, Jim. I am an avid club member and I've been a follower of the show since it premiered in March 2005. Great show. Wow. Bringing all the all the value investment advice and discipline that you bring to the retail investor. Well, that's what we're doing. We're teaching here. We got out of that game, the hedge fund game to do some teaching. And obviously it's working. So thank you. How can I help? Yes.

Let's go to Aiden in Indiana. Aiden.

Hey, Jim. I'm an 18-year-old investor from Bristol, Indiana. I bought $1,000 for the thing. I'm sorry. I did not get to hear the name because I mistakenly pressed the applause button. The stock is...

JD.com. Oh, JD.com. Oh, man, you know, like I'll go for Alibaba, but it's too much of a stretch for me to do JD.com. You're 18. I don't want you to fall behind April. Let's move into it. Let's do Baba if you want to own China. That one is not good enough for you. Let's go to Joe in Florida. Joe.

Jim Cramer, the Hall of Famer. Our question is J&J, Johnson & Johnson. Oh, man, this stock is just so low. It's 3.3% yield. It's got really fabulous drugs. I know the whole drug stocks, the whole cohort is down. But if you can get this company for 14 times the extra zone, this is J&J. Even with the tab litigation, I do want to buy it down here. Drug stocks are way out of favor. We're not done. Let's go to Sean in Rhode Island. Sean.

Booyah, booyah, booyah, Jim. Love Jim. Triple booyah. Triple booyah. You catch that? That's a lot of booyahs. A lot of booyahs over there. Yeah, go ahead.

So my question for you, Jim, is Netflix, is there any more runway? You bet there is. Netflix is a subscription business. I'm going to throw in Spotify, okay, and Amazon, and Costco. Those are the four. I may do it as peace tomorrow. Maybe people don't watch every single show. And that, ladies and gentlemen, the conclusion of the lightning round.

Did we suddenly forget that the growth of the data center remains one of the most compelling stories of our time? It feels like Wall Street forgets this fact periodically. We suddenly forgot it the other day when Oracle talked about putting up as many data centers as it could to meet the demand. And what did the market do? Didn't seem to matter that demand for data centers is indeed insane after that quarter. Demand for Oracle stock, well, that evaporated. Did they forget when Taiwan Semi told the world yesterday that orders surged 34% in November?

Largely because of data center demand? I guess it didn't register, and that's a big reason why NVIDIA, which outsources its manufacturing to Taiwan, sent me. So its stock fell hard yesterday. Just a nightmare that caused still another round of buyer's remorse. Fortunately, NVIDIA bounced back today as our collective data center amnesia cleared up.

But sometimes you have to go outside the orb of tech to truly appreciate the scale of these trends. This morning on Squawk on the Street, we interviewed Scott Strasick. He's the CEO of GE Vernova, which makes the equipment needed to generate electricity for the data center. And we heard a tale that sounded like the greatest story ever told. Strasick's power business is so much demand that he's basically filled up his order book till 2028.

That's how desperately we need these turbines that turn natural gas into energy. Sure, we know that the tech titans, the hyperscalers, whatever you want to call them, are power hogs. They need energy for all the computing power that's required for generative AI, for genetics. That new word that stands for invisible agents handling things no one else can do, perhaps because people are too harried and don't have the data, while the agents are unflappable and tireless. NVIDIA, which got the ball rolling on this, is turning these data centers into knowledge factories.

And these knowledge factories have to be powered by something, something called the NVIDIA platform. That's a mixture of hardware and software. We know these tech companies also want to cut their carbon footprint. They love they would love these data centers to run on just nuclear, wind and solar. But these alternatives can't handle the 24-7 demands placed on them. The base load is natural gas. That's what's going to power the knowledge factory and GE Vernova's specialties.

It's amazing how all this happened in just the last couple of years. I remember jostling with GE Aerospace CEO Larry Culp about how he was going to spin off the power division with an investment grade balance sheet when he was running GE as a whole. And that was before the data center burst on the scene. He said it could happen. I said, without concrete evidence, the Vinova spin-off was doomed, doomed to failure given the slow growth of the utility system. Culp said, the vision, I didn't.

Because suddenly there's tremendous growth. And of the three GE health components, health care, aerospace and Vrnova, it's Vrnova that's looking the best with the gigantic cash flow. I just announced six billion dollar buyback, a 25 cent per share dividend. That's an incredible transformation since Cope announced the breakup three years ago. It's a testament to the insatiable demand for all these knowledge factories causing us to need more gas turbines.

But geez, for Nova's blessing, we got the data center thesis right back on track. Next thing you know, we're beginning to rethink the negative NVIDIA stance because when you look inside these data centers slash knowledge centers, you don't see a lot of NVIDIA competitors. No one can design such powerful chips to say nothing of NVIDIA's building cloud native software platform. They are on a plane by themselves. And please do not let others lead you astray. And believe me, they will try.

So the next time you read some obituaries about the growth of the data center, just remember that reports of this theme's death, like so many good stock stories that we tell on Mad Money, have been wildly exaggerated. I like to say there's always a bull market somewhere. I promise that just for you right here on Mad Money. I'm Duke Maymer. See you tomorrow.

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