In today's Daily Rundown, Jim discusses the market and FAANG, the initial reaction to UnitedHealth Group's (UNH) earnings, why the announcement that Walmart (WMT) will leave CVS Caremark Commercial and Managed Medicaid Retail Pharmacy Networks will be minimal to CVS Health (CVS) , Goldman Sachs (GS) ahead of Wednesday's earnings release, Citigroup (C) , an analyst upgrade of Viacom (VIAB) , and more!
As a reminder, our January members-only conference call will be this Thursday at 11:30 a.m ET. For more information on how to access the live event, please see here.
Katherine Ross: Good morning y'all. I'm Katherine Ross with Action Alert PLUS. I'm here on the floor of the NYSE with Jim Cramer. Jim, how are the markets looking right now?
Jim Cramer: Well, look, I think that you have two markets. You have the market before the opening, which indicated that, that was when oil was tepid, where people were sellers. Then oil moved up. Market opened up. I don't like huge up openings, because they're based on nothing. What is nothing in my vernacular? There are a lot of ETFs based on FANG. Netflix goes up, someone says comments about Facebook, Barclay's that are like yesterday, and it goes up. And I've been emphasizing two things. When a stock goes down over and over again, on the same news, stop selling it. But when a stock goes up over and over again on the same news, like Facebook doing better, don't buy it again. So we're up on a little bit of a spike based on nothing. The stocks that I'm looking at that are really important, that are tells for this market. Apple, I mean Apple won a case against Qualcomm. When that Qualcomm news and the Manheim court where they did win the initial, that sent the stock down a dollar, so the stock should recover that. Netflix putting through that price increase does matter. It tells you that maybe Apple can put a price increase through for its service revenue streams. It tells you that Amazon could put a price increase through. So that's reverberating throughout the market and lifting stocks.
Katherine Ross: What about UNHs earnings this morning? What are you thinking?
Jim Cramer: Yeah, this is. Okay. So UNH is going to meander, is going to be up, it's going to be down and be up and down. What they did was outline at the end of November what they would make, and they did a little better than what they would make, but there are people who are finding fault and saying the medical loss ratio wasn't good enough. That's nonsense. UNH, when it was down four, and it'd probably be down four again, because people don't understand that you have to match what they said in November with what they're doing now. And you would realize they're a conservative company that's doing a great job. We recommend it wholeheartedly.
Katherine Ross: And let's just stick with the healthcare sector for a second. So, CVS and Walmart this morning-
Jim Cramer: Look CVS. CVS is very disappointing on the short term. Why? Because the merger with Aetna is so disruptive that nobody wants to play it, is the way I would look at it. Nobody wants to play it. And CVS is such a buy right here. Walmart is less than five percent. So it's pennies, the stock's going to still make about seven bucks. And you know, CVS is the cheapest I've ever seen it. I really love the combination. If we didn't own so much, I'd be a buyer. I just think it's such a screaming buy on this. I expect that someone might still downgrade it, but it won't go down, because I think the yield is too good. And because the franchise is intact. And Larry Merlo really gets it. So, you know Larry Merlo, when you see something like Walmart pulling out, believe me, Merlo thought about this when he merged with Aetna. He's not a blind man.
Katherine Ross: We just talked about the banking sector over on our Facebook Live video. So what are you thinking about Goldman Sachs tomorrow?
Jim Cramer: Well, there's a very good piece in the New York Times by a very good reporter whom I know and talking about the Goldman Malaysia problem. And if Goldman doesn't say, listen, Goldman's in a tough spot, because let's say they reserve 7 billion. Well then that's what they're going to be sued for. Goldman has to start naming names beyond who was involved. And the biggest problem of Goldman is that what kind of compliance did they really have that they didn't see that the amount of money they're making on a bond deal was so big, and that was bad. So Goldman's going to be tainted. We own Citi, and I talked last night on Mad Money, but earlier written in real money that Citi's the big winner because their Asian franchise. I think Goldman's going to be hurt reputationally in Asia. I think the company's going to do inline earnings. That's not enough. But in the end, when you buy something like Goldman, what you're buying is an amazing franchise that's going to figure it out. If you're selling it, you're selling it on news that will be solved six months from now in terms of the payments. Litigation's very hard. They're going to figure it out. Goldman is, I don't know, it could be 10 down and 100 up. And 100's still not even overvalued. That's what's so crazy.
Katherine Ross: Viacom just got upgraded this morning by Pivotal Research.
Jim Cramer: That stock should be at 33.
Katherine Ross: Well, okay. So that's a great point because I was talking to Jeff Marks this morning and he asked me a question that I thought is great, so I'm going to ask you. Is it time that Viacom gets the respect it deserves?
Jim Cramer: It sells at like seven times earnings. I mean when I look at the multiples the stocks sell at, they're so compressed. If Viacom merges with CBS, which is the natural, that stuff's going to go to 40. So I mean, I don't know why anyone would sell that. I have a lot of stocks that I don't know why people would sell. Viacom, why would you sell if something is seven times earnings? Why would you be selling Citi at seven times earnings? Why would you be selling Goldman at six times earnings? And the answer is because you have no capability of taking pain. And we are pain takers. You know, one of the things that, oh my, the 11:30 conference call on Thursday on our 10 lessons about the bear market. You have to be willing to take pain, and if you can't take pain, then you really should just be in an S&P. And by the way, S&P index funds are terrific. But when you look at companies, let's say about China, where you're worried about China. So you sell Nike, eh, you know what? That's probably what. You sell Apple, well that may be. I'm seeing stocks that are reflecting all the bad and none of the good. And that's because people can't take pain. And if you can't take pain, I'm going to buy stuff that you sell.
Katherine Ross: All right, Jim, thanks so much for joining me. It's always a pleasure.
Jim Cramer: Don't forget, 11:30 conference call. The markets going to be be rocky here, because there's lots of ETF action that's moving FANG and moving the S&P and moving the XLF. So I want everyone to be careful and recognize that when an XLF moves down, maybe that's when you swing in and buy Key. When an XLF moves up, maybe say I've got to be careful. Wells. Although Wells I think was all right. But pluses and minuses, but mostly stop trading. It's a bad trading environment. It's a very good investment environment.
Katherine Ross: So you can find Jim again on Thursday at 11:30 on ActionAlertsPLUS.com. All right guys. I'm Katherine Ross with Action Alerts PLUS. I'll see you guys tomorrow.