Mad Money 09/09/26 | Audio Only

My mission is simple, to make you money. I'm here to level the playing field for all investors. There's always a bull market somewhere, and I promise to help you find it. Mad Money starts now. Hey, I'm Kramer. Welcome to Mad Money. Welcome to Kramer, my friends. I'm just trying to make you a little bit of money here. My job, not just entertain, but to teach. So, call me 1800 743 CBC. Tweet me at Jim Kramer. Oil controls this entire market. When it goes down, most stocks go up. When it goes up, two stocks can rally. IT REALLY IS THAT SIMPLE. RIGHT NOW, WITH Brent crude slicing through $100 a barrel, only a small group of stocks are going higher away from the oil stocks, of course. And the rest are indeed headed lower. Dow sinking four to five points. S&P declining 48%. NASDAQ edging down 64%. Before I go into what's wrong here though, there's suddenly a lot going wrong, let me just say I am an optimist at heart and historically that's been the correct stance. When I first walked down the street right out here, Wall Street 45 years ago, Dow Jones Industrial Average stood at 853. Today it's at 52,380. Long-term, it really doesn't pay to be bearish. At the same time, there are tremendous number of stocks that have created multiple millionaires as long as you're willing to stick with them, of course, and that's going to be continue the same. So, I don't want to give you the sense that I'm turning bearish here. I'm just acknowledging that there's a very real negative, and it is oil. Tomorrow, when we hold our noon meeting for the investing club, I'm going to have six ideas that I think make a ton of sense to buy right here, right now. I also want to pitch you on an accidentally high yield or a stock that's gotten so low that its dividend sports the same 5.3% payout as the 30-year Treasury. At the end of the day, my negativity right now revolves around just one thing, but it's a big thing, and it is the price of oil. We've been acting under the illusion that somehow oil was about to go down. We thought there was something going on that would end the war with Iran, either through diplomacy or maybe our bombing campaign doing enough damage to force them to the table. But we're getting a very different picture now, aren't we? The Iranians seem to almost welcome this war. If anything, they want to poke the bear to demonstrate that their drones give them a level of military equivalence. The result, oil's going back over $100. And that's not just a magic number that inspires selling. It's a number that's been breached before. Yes, it inspired a wave of selling then, but then the bears were brought to heal because President Trump assured us that peace was at hand rather than real peace. Though this was more like the Neville Chamberlain peace in our time. Normally, I wouldn't be too concerned about oil at these levels. The last time we got there was July 23rd, right before the breach. The president said that oil was going to come down. It stayed up on the 24th. Then Trump paused his air strikes over the weekend. On the 27th, he said he was having good talks with the Iranians. Just, you know, oil drops 8.7% one day and we put the triple digits behind us. Or so we thought. See, this time it could be different. First, we've decided to wage an economic war, something that so far seems feudal. Iran is already the most san heavily sanctioned country on Earth. What else can we do to them economically? Not much. Besides, Iran's not waging an economic war. They're waging an actual war. They don't didn't close the straight of remuse with sanctions and as long as the straight's nearly impassable, which it is, we've got a serious problem. Second, tomorrow we learned how much of our strategic petroleum reserve has been released. When the war started, we had 415 million barrels of oil in the strategic petroleum reserve. That number fell to 286 million at the end of August. 31% decline. I know that still leaves plenty of crude, but I think that we now need to be on some sort of oil watch countdown. Wall Street analysts will soon be telling you what day the strategic petroleum petroleum reserve will run out of oil. And it will. The climate gas prices have been steady. Premiums $512 on average. Diesel record $5.94. I And that is passed through. Believe me, I always tell you that we're a service economy and the service economy may be about to sputter. The stocks of the retail complex are certainly predicting that exact thing. >> The house of pain, >> even the most reliable of change, take an outfit like KC General, okay? It flubbed this morning, sending the stock down more than 14%. Okay, you think you haven't heard of it? It has 3,000 stores, people. And it is a perfect bell weather because it sells gasoline on the outside, then it's all that got all that convenience store stuff on the inside, snacks, beer, others. You're selling really badly, beverages, the uh breakfast, pizza, which I love so much. Management was quite upbeat about the numbers. However, you can't help but notice that when the price of fuel goes up, people spend less money in the stores. And the inside same store sales growth fell from 5.5% last quarter to just 3.2%. 2% this quarter. Percentage base is big. So, Wall Street came up to a simple conclusion. It just chose not to pay any attention to management's commentary about how strong certain snacks were or how, by the way, ready to drink liquor did quite well even when beer was bad. Instead, the market decided that the price of oil's gotten too expensive and it's now causing a decline in sales of staples, which has been my biggest fear since the Iranians closed the straight and now it seems to be happening. This is the first tangible sign that gasoline is now finally having a real delterious impact on the economy. The street was quick to send down anything retail today. Anything that sold in retail, anything that was inside the anything discretionary like monthly cable bills from Comcast, crushed, staples, plain old food stocks, hammered homegoods hardware smashed. So the question is why not just turn ultra bearish? The answer is three-fold. First, we have very strong rally in the data center stocks once again, especially the semiconductors. Of course, that's not good for all of tech. Apple put out some really cool phones, including affordable one that's listed for nearly two grand. The high price has to do with the chip shortage. So, we're in zero some territory there. Still, there was enough excitement that Apple was able to bounce off a $3 low to finish just 88 cents down. Second, the banks were strong. Now, I know that's a little counterintuitive. We have to do some drilling down here. We're going to listen to Bank of America CEO Brian Moyahan later in the show. It seems like high oil has yet to hurt America's savings perhaps because unemployment is still very low. Third and most important, if the surface economy stocks bled over to the banks and the remaining tech stocks started rolling over. I believe the White House will adopt a new strategy on Iran, they'll start talking peace again and that usually is enough to send the market way up. Now, I the only reason why I don't think it's going to happen quickly is that the S&P is only down a couple points from its high. In other words, just when you get too negative though, like we did in the last week of July, the narrative changes typically for the better. That will take the pressure off oil, which will ripple to gazzly, make us forgetting about the declining strategic Brazilian reserve. Why do I think this? Here's the bottom line. I'm an optimist now for the same reason that the Dow's up 51,527 points from where it was trading 45 years ago when I got started. Historically, it pays to figure out how things could go, right? because more often than not, that's exactly how it plays out. Let's go to Mark in Arkansas, please. Mark. >> Booyah. Jim, first time caller. >> Excellent. Mark, thank you for calling. I really appreciate it. How can I help you? >> Enjoy watching Mad Money and Squawk on the street in the morning. Great shows. We appreciate everything you're doing for us. >> Thank you. Thank you, buddy. How can I help? >> Thank you. Hey, I have got a question on applied materials. What are your feelings on having it as an as a long-term hold? I want to do more than that. I want to do a long-term buy because I listened to Gary Dickerson today. He was being interviewed by my pal David F. And by the way, Faber did Faber crushed it today. A lot of us don't say enough about our other guys. Faber crushed it at that communicia, which I called cornucopia by mistake and all the young people laughed. Haha. But AAT is real good. I think you should stick with it and buy some. Let's go to Joseph in Washington. Joseph, >> hey Jim, love the show last night, especially the stock draft. >> OH, thank you. Thank you. Yeah, I mean Gibbs, man. Gibbs was uh Nvidia, the people at Nvidia were thrilled that David that it was Gibbs. I think a lot of people thought that it was uh it was going to be Momes. Totally wrong. I think he's still an undrafted free agent. How can I help? >> Yeah, I was born and raised in Buffalo, so go Bills. And maybe we'll see each other in the Super Okay, look, I picked Cook. Okay, I picked Cook number eight. You know, he's a TOP FIVE RUNNING BACK. I GOT LAUGHED at all day. And they You know what? They're all going to be laughed. I'm going to be laughing at every one of them. Cook is terrific. I'm a first time caller. I'm a first- time caller, new viewer, and new club member here after my book club read How to Make Money in Any Market earlier this year. >> Okay. And I will see you tomorrow at 12 at our conference call. I want everyone on that call. It's going to be explosive. What's up? >> I'll be on. Since reading that, I've sharpened my investing strategy and built my basket of stocks to deliver some big winners, including four stocks with 100% plus gains this year alone, including cyber security club names Crowd Strike and Palo Alto. But I need your help with a sticky one. >> How can I help? >> Since the recent spin-off, since this recent spin-off, this stock has been up, down, and all around. I have a sizable position I'm underwater on, and would like your guidance on how to manage this pick heading into earnings. What say you about FedEx Freight? >> Okay. Now, what we're doing is we're holding back to buy more. You see, it's still a small position. We can't seem to be able to get out from under the oil price. It's trading with oil. It shouldn't as a it has a pass through. It has not been a successful investment so far. I don't hide that. I always admit that right at the top of tomorrow's show, but I we are not adding in the position yet until we see a bottom and we see oil start coming down. It's one of those stocks that we just want to have as a hedge in case oil does go down. But thank you for saying all those nice things about the club and thank you for Buffalo. All right, you can be negative you want. I don't it's fine with me. All right, but remember longer term it pays to figure out how things can go right, not wrong. Make money tonight. I'm getting a key read on the state of the consumer, the broader economy, and the country's financial backdrop. When I sit down with the CEO of Bri Bank of America, Brian Linhan. Then Jersey Mike just reported his first quarter's public company. I'm finding out the state of affairs with the CEO. And as retail stocks are getting crushed under rising oil prices, could a K-shaped economy help the parent of Coach and Kate Spade buck the curb? I'm getting with Tapestry's top brass, so stay with Kramer. Don't miss a second of MadMoney. Follow at Jim Kramer on X. Have a question? Tweet Kramer #madmentions. Send Jim an email to madmoney@cnbc.com or give us a call at 1800743cnbc. Miss something? Head to madmoney.cnbc.com. You know, these days there's so much speculation about the state of the consumer. I don't like to speculate. I prefer to go straight to the source. And nobody takes the pulse of the consumer and the broader economy better than the Bank of America, the nation's second largest bank by assets, which by the way has put up a nice 14% gain year to date. Earlier today, I had a chance to sit down with Brian Moan, chairman and CEO of Bank of America, right here at the New York Stock Exchange. Our conversation comes as we approach the 25th anniversary of September 11th with Bank of America making new commitments to organizations dedicated to honoring the victims, first responders, and their families. Take a look. I want to talk about 9/11. We're on the eve of it. I think your bank both charitably and as a commercial enterprise responsible for a lot of the rebirth here. Why don't you talk to me about Bank of America and your role in an amazing turn that is downtown. >> So if you think about Bank of America and this building is uh an important part of the tragic legacy around 911 because you know this is where America's epicenter of the financial markets happen and the job was to get this back up and operating. That was the job because we had to get the securities market started. But if you think about the legacy, we had Bar Lynch is now part of the company. We had Fleet Boston which was the quick and specialist business and then we had Bank of America. We had US trust and so all those companies were are now part of one company. So as we look back the stories from my teammates about going through that day are amazing. And the story is immediate. We're going to not let them get us down. We're going to beat this back. We're going to reopen. We're going to put America back in. And all of us worked in this industry who are fierce competitors worked together to say how can we get the uh securities markets back up. A lot of corporate issuers remember said we're going to buy back a bunch of stock on Monday. We got it go going and it and it recovered and it was a lot of work and there was a lot more work but it was a story of resiliency unity among the country and just fabulous personal stories of recovery and resiliency horrible stories of loss and grief. Um just and you know I I think back about it a lot because I was literally on my way down here when that plane hit and I and I I just wonder it just that was terrorism at its terrorism worst because they took something as ordinary as flying and turn it into a terrorist act and America felt unsafe and the President Bush the city the stock exchange all the financial services companies all over Manhattan recovered and then since that you've seen this. This is a vibrant place now. My daughter lived down here for a bunch of years. Kids are back down here running around. It's just a whole different place than it was in the aftermath. It was like it's never coming back. And then even we built our building at Brian Park out in a place that was not well built back then, you know, off of Time Square. Uh we built that building with uh Liberty Bonds they were called to help rebuild Manhattan because nobody was invested in Manhattan. And we put the building out and we end up occupying by 2007 or 8 or whatever it was. So, think about how fast for 51 floor skyscraper to go up. So, and we're not alone, but our and our company supported veterans, first responders, and we just recently announced another grant to tunnels to towers. And we've been doing a lot of work across the last 15 years, probably $100 million for veterans and first responders. >> You were always, I felt a soft touch, candidly. >> Well, we we're hard business people, but we have a hard time. >> I You do. You do. Now, let's talk about uh present day. We're in a remarkable moment. uh you have the best data >> and the data show that things are pretty darn good in the country. >> Yeah. So think about what would be the indices take the opposite. What would be the indices of problems? Consumers wouldn't be spending. Consumers spent in the month of August about 4% more than they spent last August which is a pretty good month because that's after liberation day the recovery. Uh last quarter it was 5%. So it's it's kicking along. That's consistent with a strong growing economy. The second is should be credit. Our credit statistics are as good as they've been for years. The charge offs and consumer delinquencies in credit cards. You hear about record outstanding balances and credit cards, but the economy is, you know, 40% bigger, whatever it is since 19. Everybody compares it. So, what you've seen is a recovery back to trend. And then you look at businesses, business credit's very strong. People are using the lines of credit investing. That's been a little slower to come back after the pandemic because just the uncertainty of trade, tariffs, you pick the issue of the moment. But, you know, they're strong, their credit's strong, they have the applicability. It's more costly and and the place that higher rates affect is small medium-sized business who borrows on lines of credit. That's the big place affects mortgage rates, but where it really affects the short-term rate structures there. So that's but they're borrowing. They're using the lines. The credit quality is good. They're they figured out in a world where a lot of things are changing. They figured out a path forward pretty much. They still worry about gas prices or how it affects product prices, but everything we see is fine. The capital markets had a bang, you know, gang buster second quarter. Fantastic. The year-over-year numbers are are great growth stock numbers. >> Yeah, they they would our earnings were up 30% and things like that. You know, we had a great quarter. What's interesting is that level, you know, will help be hard to sustain the growth rate that level, but the aggregate level, the S&P and stuff has stayed and that's good for the wealth management business. Investment banking fees are a little bit, you know, sort of bounce around a little bit, but you know, it's just a lot activity. Last year in comparative, it was a good quarter. But we feel very good about deposit growth, loan growth, the stuff that makes the American economy visualizing and consumers are spending and consumers are employed and wage growth. We see wage growth in a lower income group because we see their paychecks coming in. >> The lower income we had that K structure. We converge a little. The most recent numbers you have are very encouraging for the people who are less welloff in the country. >> Yeah. So there's an affordability issue out there in people because it's real. gas prices were up a dollar a gallon or whatever the Labor Day to Labor Day that's real in people's mind rents and things like that. What you saw is some of those things mitigated were mitigating across time >> and what you're seeing is wage growth catching back up. So you had a period after co where wage growth in the great resignation remember we all talked about that wage growth was very fast then wage growth slowed down and now wage growth is back on. The encouraging thing we're seeing is two things about we split our data into lower, middle, and upper income just by a thirds. In lower income strata, you're seeing wage growth of about 3 and a half to 4%. And you're seeing spending growth come up with that. That's very good because that's a lot of people and that means that they're feeling pretty good about their positions. Unemployment is very low. New claims for unemployed gasoline, but job getting a job not so hard as as it's been in the country. The fact is is that the credit situation has been made to sound like we should be worried, but it is a bigger pie. >> One of the statistics that drives me crazy is is the Fed reports these delinquencies, but if you were charged off two years ago, you're still in the Fed's data. If you reported the bureau having char the reality is the charge off rates that are going through bank P&Ls and the people who grant credit which would cause them not are as low as they've been in many years. And so that's that's great because we're going to you we're as aggressive with credit rating as we can possibly be being judicious and responsible. Now what could go wrong? There's a prayer horribles out there. The Iran war doesn't solve fast. The Ukraine Russia war doesn't solve fast. There's escalation of a Southeast Asian issues or something. There's a lot of things that people could say. But meanwhile, here goes the US economy predicted to grow in the mid twos this year. And we don't see anything in this way. Even with Fed hiking rates, we still see the economy growing through that. >> Okay. Now, you have always hired a huge number of people in the summer. It's been a great time. Everyone knows that you've got a great uh program. >> Have you cut back the number of people you're making offers to because of AI? Or has AI made it so each person is so productive that you just want to continue to hire? >> We we hire about call 2,000 summer interns a year in 2000 kids from schools in a defined recruiting program. So, 400 schools for 2,000 kids, 2,000 a summer. We haven't changed it. We have we are now being careful as we think about those kids career path. Get them to places where there's you know and move them around a little bit more. Re redeployment as we call it. That's a responsibility of management to show them places they can go cuz yes the uh AI techniques being used in investment banking today make that analyst more effective. But there's you know thousands and thousands of other jobs as talented teammates can do plus we could just do more productivity and more business. So what's interesting I think managers that I talk to mean CEOs and others and my team we're all trying to manage the impact on the human side of this because the end day we need talent need lots of talent and I thought Dar from Uber said it well two years ago when he said you're not going to lose your job day you're going to lose your job to you may lose your job to somebody who knows how to use it that's why he talked to you learn it make it your oyster the world's ahead of you go drive it and they are enthusiastic and as we get to the next recruiting class their people have had AI their entire college career. You've now made a jump. So they they don't know what we're talking about when we talk about AI as a change for them. They're saying, "I've been using it." And so it has all its pluses, minus, all debates in the educational process and how kids use it and all that stuff. Universities and high schools are figuring out. But the day these kids know how to use it and that's terrific because they're going to make us better. >> All right. Now, are you ever concerned about getting more young people in as savers? For instance, we read about Robin Hood with 28 million accounts. Uh uh is that's a threat to Bank of America, some of these companies where they start, they get people in through maybe crypto, maybe through gambling, but then they end up IRA and next you know the 401k. I mean is it something Bank of America has to worry about? >> Well, we have Marilledge which is a great product and Marilledge is uh develops about 10% more customers every year. Average starting balance is $100,000 plus dollars. So it's a it's a more you uh substantial investor and we drive that and that's our viewpoint. I I was talking to your colleague about when was the last time I rang the bell and I think it was 2006 we announced zero dollar trades on equities in uh Bank America securities. Everybody thinks it's a new concept. We we did it back then because we had an online brokerage so-called and so we feel very good about that business. I think the key is to get people to um budget, save, and then save for retirement. And I was talking to a young fell the other day and he said somebody said maximize my 401k and I said that's the answer. Maximize your 401k. It's important. Now, I I know that you have more uh emphasis on cyber security than pretty much any other company in the world. How are you feeling? I mean, how are you feeling about about what the machines can do to us, about the machines breaking in? It seems like it's more perilous than maybe it is. You can tell me this because you're the guy who's seen it all. >> Well, we we're lucky that we have a very talented group of 3,000 plus people work on this full-time. Um we have a temperament among the whole company that this is job one most important job. Don't debate the costs that come allocated to you know business line leaders getting allocated. Don't debate that just let it go. Uh they work closely with the industry. Our industry actually the banking industry the financial service has been very good at this and worked hard. These new tools present interesting questions. The the way that they can find vulnerabilities fast is unbelievable and they're good at it. And so what we've been doing is using them in cooperation with the frontier model providers and others to figure out how to run them against that whether it's open source, closed source, proprietary software, run it and figure them out. What I I was talking to an expert in this field the other day. He said you have to remember Brian on the other side of this is this will also help you harden your systems faster. So what you right now you feel like oh my god vulnerabilities and patching and go go go. There'll be a time when you tip over that they can help you find. Are there some interestingly uh fascinating stories going on right now? They're a little bit uh uh science fiction oriented where the takeovers and stuff that that we have to do. And I think I think the companies that make these models are starting to realize they got to be much more careful about the guard rails and the things and they're trying to figure out how to slow that down. >> And that's not slow down the ingenuity, slow down the the negative side of the >> we have to do that, don't we? I mean, you can be a leader in that because you are a leader in cyber security among many other things including a leader in banking. I want to thank Brian Williams, the chair and CEO of Bank of America, BAC. Great stock. Terrific job. Thank you. >> Thanks. >> Coming up, did Jersey Mike deliver in its first public earnings report? Kramer is checking with the top brass next. What's happen with Jersey Mike subs at the end of July? This Blackstone back sandwich chain came public with not enough fanfare as far as I'm concerned. Finished down 6% at the time I told you by by. But the stock really didn't catch on until today. This morning, Jersey Mike reported an inline quarter with better than expected guidance for same store sales. And that's why the stock jumped over 7% today. Now I'm wondering if this might be the start of a longer term rallying. Let's take a closer look with Charlie Morrison, old friend of the show, CEO of Jersey Mike Subs. You might remember the run that he had at Wingstop. It made a lot of people money. Mr. Morrison, welcome back to Mad Money. >> Oh, it's great to be back, Jim. Great to see you. >> Well, Charlie, I know you as someone who uh has been able to put up some pretty darn good numbers at the previous place, so you're one for one with me. Now, I got to ask you, your outlook today was incredible. A great forecast. And what makes you so confident that you can deliver on those numbers? >> Well, we've got a lot of momentum in the brand already, Jim. At the beginning of the year, we really started in earnest rethinking how we do advertising as a brand. Over many years, we've had incredible success as a brand, growing same store sales for more than 20 consecutive years, but we also weren't really advertising in the digital space to that younger consumer and a broader, more diverse audience. And so, we made some small shifts in our advertising spend. That's over 200 million a year that we spend. We made some adjustments to get more digitally savvy, engage new customers and get them ready for the road ahead and bring them in with a much higher frequency than we see from them today. So that includes the Gen Z population, a more diverse audience, notably a Hispanic consumer, both of which are pretty underserved from Jersey Mike's perspective, but love subs and love the opportunity to come along with us. >> Well, that would mean that you have a lot of room for more locations in the country. You put up some pretty bold numbers that I think would really uh if you looked at the cadence give you multiple years on growth, not unlike Wingstop. >> Absolutely. You know, we have over 3,300 stores in our chain today, but we have a lot of runway to go. We have we estimate over 7,500 stores for the US alone, another 7,500 for international. We have a pipeline of domestic commitments that's 1,600 units strong, of which 1,400 of those are already signed and only a couple hundred left in final negotiation. We also have 600 units in our pipeline for international development. We're getting ready to open in the UK. So, we've got a lot of white space ahead of us, Jim, opening close to 300 stores a year on average over the past few years. We feel very confident in our ability to deliver very predictable unit growth for a long time to come. And how do you feel about average unit volume going forward? >> Well, right now we're at 1.4 million, which generates about a 40% or more cash on cash return for our franchise owners. That's excellent, especially against competitors in our own category. We believe the opportunity is presented for more than $2 million average unit volumes from stores. We have a lot of experience above that level. In fact, over 6% of our stores are already above 2 million. U more than that, over 1.8 million. our stores can handle that kind of volume. And I think that by continuing to expand our customer base, appealing more and broadly to a broader mix of customers than just to those that we've marketed over the years will create that opportunity for us to achieve $2 million and hopefully beyond. >> All right. Now, newer viewers may not know it, but Charlie taught me and our viewers a great deal about franchising. And one of the things that that was at the top of the list for you was you do not give franchises away to people who can't make them work. Are you continuing with that balance sheet analysis, making sure that your franchises are are uh liquid and capable of handling whatever comes their way? >> Absolutely. Um we want people who are fully committed to executing the Jersey Mike's model the way we've defined it. The good news here is we have a wonderful group of franchises that are building restaurants and growing this brand and have for a long time. In fact, that pipeline of over 1,600 stores is made up almost more than 90% of that is out of existing franchises. So, we don't have to go recruit a whole lot of people to bring them in to grow the Jersey Mike's brand. Um, our existing operators are hungry. They really want to grow and they're enjoying great cash on cash returns. That's why we think um that pipeline of growth is not only predictable, but we can easily get to that 7,500 stores over time. >> All right, that's decision. One last question. I know you're going more digital marketing. I think that's great. But less than 1% to 20%. But does that mean we will not see that much Danny Devito and Eli Manning on ads when we watch football tonight and this weekend? >> Quite the opposite. You're going to see Danny and Eli back at it again. That friendly competition of who's the spokesperson and who's the football player. We'll have some fun with that. And we're launching a new product this week. Mike's Hot Italian. It's a product we tested and executed well in the first half of this year. We're going to bring it back uh for another run. We know it's a fan favorite and the two of them are going to bring it alive much as they did before. And so we're really excited for football. We're going to be in the NFL games this year more so than we ever were before. Um redeploying our advertising, hitting those targeted areas we want to be in. And the NFL is a great property for us. >> And the N works out. You you tell me that Eli Manning can sell subs outside of this New York, New Jersey area. >> Oh yeah. No, I think Eli has a great presence. Danny is anchoring all of this. I mean, he's New Jersey born and bred, but people across the country, around the world love Danny. We're excited to have those two back this fall. >> Well, okay. And then one thing I wanted to ask you, we know that Blackstone owns a lot. Are you in contact with them in terms of them cutting down their position? Can we feel good right now that they just want to back Charlie and stick with you? Oh, ab you know, Blackstone, obviously, we're just a newly public company, but Blackstone certainly appreciates and understands the need for liquidity in the market. We stay in constant discussion about that over time, and I think c certainly over time you'll see that uh they recognize what the market wants here, which is uh an opportunity to continue to build their position over time. >> Well, I am so glad you came on. I want people to be in this stock, Charlie. And I'm saying that because initially I was not sure cuz Troy Aman was part of your previous outfit and I wasn't so quick to recommend him. Eli like he's a neighbor of mine. That's Charlie Marcy. He's the CEO of Jersey Mike Sub. Charlie it's so great to have you back on. It really is. >> Thanks Jim. I really appreciate it. It's great to be back. >> Okay. Absolutely man's back after the break. Coming up, Kramer's talking to the CEO of Tapestry to figure out how the fashion brand can begin to bounce back. Next, what the heck went wrong with the stock tapestry, the parent company of Coach Kate Spade, went a little less than a month ago. The company actually delivered a pretty strong set of results, but the stock got obliterated, plunging 16.5% a single session. Since then, the pain hasn't stopped. It's down 30% over the past month. Even though Tapestry posted a healthy top and bottom line beat, 28% earnings growth driven by incredibly robust results from coach. Oh, maybe the forecast was a little bit light. I don't know. I'm trying to figure it out. Let's check in with Joanne Kvasser. She is the CEO of Caption. Find out. Mr. Kasarat, will you please help us here? Because I've got to tell you, your investor date financial targets, you did them two years early. The numbers were blowout. Help me understand what's going on with the stock. >> Well, what I can tell you, I I'm not an expert in that department, Jim, but what I can tell you is there are so many good things happening at Tapestry right now. We have, as you said, delivered an outstanding year. We delivered double-digit growth around the world. We acquired 11 million new customers to our brands. We did that at increasing profitability. You talked about our earnings growth and the best is yet to come. We're just getting started. This is a muscle that we've built and a growth engine that we've built by design and we provided an outlook that showed growth on top of the year we just delivered and we see that well into the future. >> Well, were there Samanos who just felt it it can't continue as if you know the law of large numbers you had done so so well that maybe people think you can't follow up. Well, what I can tell you is that we see tremendous opportunity going forward. We have redefined our market. And as we've redefined our market, our purpose is to give more people the power to bring their own style and story into the world. And the operative word in there is more people. Our brands appeal to a broad audience. And that audience, that's our opportunity of people who have the potential to buy our bags. And I'll just throw out one statistic. Did you know that this year, Jim, in the markets we currently serve, 25 million women will turn 18 this year? This year and every year for the next 10 years. And those are people, consumers who have we have an opportunity to meet and deliver their first luxury bag purchase. And when we win with that consumer, not only do we win their first luxury bag purchase, we win a customer for life. And that's a place that we've always played. And it's a place that we continue to show and demonstrate that we can build our business and drive growth into the future. >> It seems like to me when I read your last conference call that the greatest opportunity is overseas, particularly China, also Europe. There's just a huge number of people with a price point by the way that is that is not super premium but a nice premium price that can be afforded by lots of people. >> That's exactly right. We see our opportunity both in North America as well as the international markets. And as we talked about during our investor day, over 70% of our growth will come from international markets. And you can see the success and the traction that we're gaining already by developing those brand building capabilities to bring more consumers into our brands, right? The marketing investments and and how to make those investments, the the delivery of new experiences in those markets. We're driving double strong double- digit growth in China and in Europe and that's powering our growth and we have so much opportunity beyond the near term. >> No, it it's not like you're not discounting. This is the there is just premium pricing. No one is lowering price to promote and get rid of merchandise. This is an extraordinary time for you. That that is that's also a really great point Jim because we have been very intentional about what we're building and we're building again we it starts with this obsession around the consumer right to really understand what they want where their values are where the tensions are in their life and then creating the brand building capabilities to build out our brand world and meet those consumers where they are and that's a price point yes but it's also with the innovation that they desire and the creativity ity that they desire and we see the consumer responding and so we're not trading on price. We're trading on emotion and value and versatility and meeting the consumers where they are. That's a muscle that we've developed over the last 5 years and one that we'll continue to exercise going forward. >> Another muscle you guys have under uh your stewardship, you return cash. I mean, you don't just idly sit there. I know there's been a huge number of shares bought back. It would seem to me given the fact that I can't find a thing that is necessarily to blame or justify the stock's decline. This is a decent opportunity for a company to be able to stay in there, so to speak. >> Absolutely. We we see Tapestry as a great investment and we're putting our money where our mouth is. We uh have returned $1.7 billion of of cash to our shareholders last year. We see that going forward. We made a commitment uh at our investor day to return $4 billion worth of cash to our investors and we are well ahead of that pace right now. And and what's really important is when we talk about the earnings growth, the margin expansion that we've delivered while we're delivering incredible topline growth, it's the disciplines of operating our business with real intention. And that's helping us not only drive this new customer acquisition, but doing it in a profitable way that drives tremendous cash flow and optionality for our business. >> I want to be sure, last time we saw each other, we did end uh at a at a Kate Spade store. I know you can't be satisfied with Kate Spade's numbers, but I also believe that it's a great brand. What's your intention? >> Oh, Kate Spade is a beautiful story in the making, Jim. We know that Kate is an iconic brand, and I'll give you three reasons why I'm so confident in the potential in this brand. First, last time I was at the stock exchange, I walked out and a customer walked up to me right here and said, "Let me tell you about my Kate Spade story. I have a Kate Spade bag that I love to wear. It brings me outside joy. These are her words. Every time I open the kiss lock at the top and close it, I I feel this uplifting feeling, right? Uplifting, outside joy. This is a distinctive brand that has a real emotional resonance with consumers. And the second reason I'm confident is we just hired Jonathan Saunders uh as our new creative director. This is a person who really values and understands the heritage of the brand, but will bring it forward in a modern and relevant way with his understanding of color and pattern. So, I'm excited about what he's going to bring to the brand. And last, I'll talk about that store experience. You know, we got a chance to walk that store. It's beautiful. >> It's a great store. You know what we hear from young customers? They give us 60 seconds. They'll walk into a store. It'll take them a minute to decide whether they want to stay in that store, whether it's a brand for them. So, we know we don't have a lot of time. We're investing in improving that store experience. Yes, the elements of the store, making it feel inviting and warm, but also investing in training and development of our teams with all of this consumer knowledge that we have. We're bringing it forward and making that experience even better so that we can grab her the second she walks in our door. >> Excellent. Okay. And you did covered all bases and I come to the conclusion that I want to be with the company which is buying and that's what matters. That is Joanne Kvassar. She's the CEO of Tapestry. And I've got to tell you, it's very rare that you see this stock this down with the fundamentals this up. Money's back. Coming up, you've got questions, Kramer's got the answers. Get charged up for a fast fire lightning round next. It is time to light up. Remember that's by social credit. My step is going to be play and then the lighting routes over. Are you ready to keep that? Let's go to Eric in Michigan. Eric Jim, what's going on man? I miss the days used to throw the chairs. I miss it. >> Well, what do you think about >> what do you think about Akami, man? Give me something on Alchemy. >> Uh Alami, the cyber security company I think is terrific. And uh by the way, I thought that Cloudflare net that was one of my favorites. Let's go to Chris in New Hampshire. Chris, >> hey Jim, what do you think of builder's first source? >> Look, my travel is getting the getting the stuffies knocked out of it by Home Depot. I'm not going to go down the chain and go to the Builder's First Source. No, thank you. Let's go to Blake in South Dakota. Blake, >> hey Jim, this is Blake. I'm out here in South Dakota. Thanks for having me on. Uh my question for you today is about the outlook on Applied Digital. I know you don't love the stock right now and I know they've got a lot of >> I don't you know look I've got you know I'm really focused on companies that are making money. I just think it's worth it. I'm trying to focus on people getting off getting off of margin and getting to situations where companies are making money. And that ladies includes of the LIGHTNING ROUND. >> The lightning round is sponsored by Charles Schwab. Coming up is the AI judgment day coming for us all? Don't go anywhere. Kramer will be back with his thoughts next. Tomorrow, kick off the trading day with Squawk on the Street live from Post 9 at the NYSE. >> This is dark stuff we got going on here, Carl. >> Well, I mean, the sexist we should talk about. >> Well, look, when you wake up and a guy says we're all going to die, and then another guy says, "Hey, listen. There's really only a 10% chance we're going to die. I don't feel all that reassured, David. >> It all starts at 9:00 a.m. Eastern. >> Hey, Jim, your mission has been very successful in our family. >> I listen to your show multiple times a week for investing knowledge. >> I just want to say thanks. I love your show. Thanks for always looking out for the little guy. >> A huge thank you for all you've done to make me a better investor. >> I got to call Kramer because I can't make a move without this guy. I want to make people better investors. If they make money, fantastic. Let's go to work. When I was a little boy, after we said the Lord's Prayer and the Pledge of Allegiance, we were led over to our cubbies for a duck and cover drill. When the whistle blew, we had to stick our heads in our cubbies and keep them there. The rest of our bodies couldn't fit in, but we were told it was good enough to do the job. And what was the job? preventing our deaths in the event of nuclear war with the Soviet Union. I was too young and too gullible to realize that sticking my head in a wooden locker wouldn't save my life. There was actually something comforting about it all because the teachers assured us it could make a real difference. I haven't thought much about that daily duck and cover drill until today when a man named Jacob Coxin told us we're all going to die from AI. No cubby hall haven here. Cox is not some popoff. He's someone who just resigned from anthropic. He had some choice tweets about what was going on like this one. quote, "The people building AI earnestly believe that it could kill us all by the end of the decade. This is not a marketing stunt." End quote. Oh, I said to myself, "Good. I was afraid they were merchandising death for bigger profits." He said, "They're gambling with our lives." Soon enough, we got a ride post from a man named Evan Eubinger, also from Anthropic, who wrote, quote, "Jacob's correct here. We really do earnestly believe AI could kill all humans. I personally think it is greater than 10% within the next decade." End quote. Maybe a touch of I don't know, humor. He said that Anthropic is doing its best to prevent the AI apocalypse risk, but they don't yet have the plan to solve the alignment for super intelligence and they're clearly not on the track to get there anytime soon. Ah, 10%. Much better. Maybe I'll skip a couple old this time. Now, seriously, maybe more seriously than our teachers in 1959. I did not take a soul a lot of soloulless in that 10% figure. Unless you're about to die anyway. Doctors don't want to authorize a dangerous surgery. Is just a 95% chance of success. 90% is not good enough. I've never been a doomsayer about AI. I think we'll tame it. When I listen to Kesher from Palo Alto Networks or George Kurts from Crowdstrike, I feel reassured. I also think that we'll get smarter as people. I don't think that we will all end up like the humans in Stephen King's best the stand when a virus escapes from a secret US lab and kills almost everyone. Although I don't want that book near Claude or Open AI and don't let them watch Terminator or 2001 either. Nevertheless, I think that this these days of ignoring this stuff, they've come and gone. The casual nature of this mass casualty discussion is way too bloodless. We have to figure out a way to get our heads out of the cubby holes, even if it's only to slow things down until we have more of an alignment. To quote Evan Yuber, we never got a chance to learn how many of us would live if the Russians dropped H bombs on our kindergarten. But at least the Cold War was about ideology. I really don't want to see what happens if AI gets too out of control. Fortunately, it's still early enough for us to do something about it. I like to say there's always a bull market summary. I promise I'd find it just for you man money. I'm Jim Kramer. See you tomorrow. 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